The chancellor has been accused of undermining Britain’s negotiating position © FT Montage/Tolga Akmen/Getty

Philip Hammond faced a wave of fury from Eurosceptic Conservatives on Thursday, as former chancellor Nigel Lawson said he should be sacked for adopting Brexit policies that came “very close to sabotage”.

Mr Hammond insisted this week that he would wait until the “very last moment” before releasing large amounts of money to fund contingency plans for Britain leaving the EU without a Brexit deal.

But his comments have been seen by Eurosceptics as the latest example of the chancellor undermining Britain’s negotiating position, and fuelled their calls for him to be fired.

The Daily Mail on Thursday accused Mr Hammond of treason, saying he had approached Brexit with an attitude that was “dismal, defeatist and relentlessly negative”.

More worryingly for the chancellor, prime minister Theresa May is also growing increasingly frustrated with him.

“[The chancellor] can’t help winding up the sceptics,” said one friend of the prime minister. “Every time he behaves like this, it gets harder in Brussels. He lets his vanity get in the way of doing the job.”

Nigel Lawson told the BBC: ‘You have to spend money from time to time, and there is nothing more important than preparing for what has always been the most likely outcome’ © AFP

Tensions flared on Tuesday at a tense cabinet meeting in which Michael Gove, environment secretary, made the case for spending more money on contingency planning for a “no deal” scenario.

The next day, Mr Hammond attempted to assert his authority on the issue. He wrote in The Times that he would fund “no deal” contingency plans but would only spend money “when it’s responsible to do so”.

The article was cleared by Number 10, but the resulting headline — “Hammond refuses to budget for hard Brexit” — led to speculation in Downing Street that the article had been deliberately spun by the chancellor’s team.

Even Mr Hammond’s supporters concede he can have a maladroit understanding of how the media will interpret his words — he said he was “surprised” by the headline — or the political impact of his interventions.

“He has a political tin ear,” said one minister who backs the chancellor.

Mr Hammond’s allies say the Times article was intended to send a signal to critics that he “owned” the debate over contingency planning.

“He wanted to show that as a Conservative chancellor, he would not spend large amounts of money unnecessarily,” said one colleague.

But the result of the article, and a subsequent two-hour appearance at the Commons Treasury committee, was a backlash from Eurosceptics, who have long viewed Mr Hammond as an obstacle to Brexit.

Iain Duncan Smith, a leading Eurosceptic, said it was “slightly bizarre” for Mr Hammond to argue that spending money on vital contingency planning would make less available for schools or hospitals, adding that the chancellor should simply have argued money would be released “as and when required”.

Lord Lawson, a Conservative former chancellor, told the BBC’s Daily Politics on Thursday: “You have to spend money from time to time, and there is nothing more important than preparing for what has always been the most likely outcome.”

Asked what Mrs May should do about the chancellor, he replied: “I think probably a reshuffle.” And in response to a question on whether Mr Hammond should remain in his post, the former chancellor said: “I fear not . . . I fear that he is unhelpful.”

During June’s general election campaign, Mrs May refused to deny that she intended to sack Mr Hammond after her expected handsome victory. But the election left her weakened and unable to reshape her cabinet.

That has not stopped some Eurosceptics, however, from urging her to remove a chancellor who is due to deliver an annual Budget next month.

Tory MP Nadine Dorries was the first Conservative to call openly for Mr Hammond to be sacked last weekend, saying: “We need a can-do man in the Treasury, not a prophet of doom.”

But Anna Soubry, a pro-EU former business minister, said Mr Hammond’s Eurosceptic critics should “shut up” and that it was vital he stayed in post at a perilous economic moment for the country.

“His background is in business, money,” she said. “He gets it.”

The battle over when Mr Hammond should start funding contingency planning for a “no deal” Brexit is a proxy for the wider debate on Britain’s future. While Tory Eurosceptics publicly favour a negotiated Brexit, most are relaxed about the possibility of the UK leaving the bloc in March 2019 without a deal.

For them, early preparations for a “no deal” outcome not only put pressure on the EU to face up to the reality of Britain walking away from the talks. They also make such an outcome more politically palatable at home.

But Mr Hammond’s intervention this week sounded like a cry for help from his European counterparts to help him keep Britain close to the EU — a signal that while he was holding the line against Eurosceptics at home, he could not hold out for ever.

“We really need our European partners to engage,” he said on Wednesday in unusually impassioned comments to the Treasury committee. “We are simply asking them to start talking to us.”

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