May and Hammond clash over swansong spending

Theresa May and Philip Hammond are at odds over the prime minister's wish to announce billions of pounds of extra spending before she leaves office, the Financial Times reported.

May wants to bow out as prime minister by putting spending in place for domestic policies that were crowded out by the pressure of Brexit, the paper reported. These include billions of pounds to improve schools and further education as well as initiatives on mental health, parental leave and the tech sector.

But Hammond, the chancellor, wants to keep his £27bn "fiscal war chest" intact until leaving the EU without a deal is ruled out. The Treasury thinks May's ambitions for her swansong could cost more than £10bn.

May stands down as Conservative leader on Friday and will continue to be prime minister until the party elects a new leader in July. She is said to be unwilling to let her successor take the credit for extra spending after her ambitions to improve people's lives were thwarted by constraints imposed by Brexit uncertainty.

A person close to the talks told the FT: "There have been several high level meetings on this … Philip has made it clear that the headroom is there as a cushion against a no-deal exit."

Tory leadership contenders are promising tax cuts and extra public spending that critics, including Hammond, have said are irresponsible given tight public finances and economic uncertainty.

May's main goal is to announce a big increase in spending for education, including more money for failing schools, and teachers' pay and training. A minister told the FT May's view was: "Why should those who blocked her and stopped her spending the money get the benefit of it?"

May and Hammond are former allies who have fallen out over public spending and Brexit. May intended to sack Hammond as chancellor after the 2017 election but was too weak to do so after losing her majority.