In a Budget day surprise, the Chancellor earmarked the cash for spending on tighter border controls and other measures to prepare the country for “any outcome” in the negotiations over leaving the bloc.
And he signalled that Britain will not put up with Brussels bullying as negotiations over the exit from the EU reach a “critical phase”.
“No one should doubt our resolve!” he said.
Mr Hammond’s extra cash for Brexit preparations over the next two year was a key measure in a £25billion Budget spending splurge designed to get Britain “fit for the future.”
Following intense speculation about his position, the Chancellor loosened the Treasury purse strings to lavish cash on measures to tackle a string of challenges facing the country.
Mr Hammond scrapped Stamp Duty for first-time buyers purchasing properties worth under £300,000 in a radical move.
New measures costing more than £15billion to encourage housebuilding to ease the homes shortage were also unveiled.
And he announced an extra £7billion for the NHS over the next five years, promised pay rises for nurses and poured cash into benefits to ease the introduction of the new Universal Credit system.
But his extra £3billion for Brexit contingency planning, on top of £700million previously pledged by the Government, surprised Tory MPs who had feared the Chancellor was resisting pressure to make preparations for a “no deal” outcome in the floundering Brexit talks.
In his Budget speech, Mr Hammond vowed that the Government was doing everything necessary “to embrace change, to meet those challenges head on and to seize those opportunities for Britain.”
Making progress in the Brexit negotiations, ahead of a crunch deadline next month, was the Government’s “top priority,” the Chancellor said.
“The negotiations on our future relationship with the EU are in a critical phase,” he said.
His remarks followed confirmation that Theresa May will meet European Commission President Jean-Claude Juncker on December 4 for talks ahead of a crunch EU Summit later in the month.
Announcing the £3billion war chest, the Chancellor added: “I stand ready to allocate further sums if and when needed. No one should doubt are resolve.”
Treasury officials said the cash – separate from the expected multi-billion EU divorce payment – will be available for the Home Office and other Whitehall departments to make necessary preparations for the UK fully cutting ties with Brussels.
Brexit campaigners welcomed the Chancellor’s move last night.
Richard Tice, co-chairman of the pressure group Leave Means Leave, said: “After months of applying pressure on the Chancellor to acknowledge the economic benefits of Brexit, we are pleased he has finally taken our advice.
“This is the first time the Chancellor has had anything positive to say about Brexit and it is a small step in the right direction. However more must be done.”
Mr Hammond announced that the cash to fund his £25billion of public spending measures will come from cash set aside by the Treasury in previous years rather than tax rises or increased Government borrowing.
And his spending pledges were announced in spite of a drastic downgrading of forecasts for economic growth over the next five years from the Office for Budget Responsibility.
Poor productivity would mean Britain’s national output (GDP) would only grow by 1.5% this year rather than 2% predicted in March, the official financial watchdog said.
Mr Hammond announced an extra £8billion for his National Productivity Investment Fund – raising the total to £31billion – to try to tackle the productivity crisis and accelerate growth.
He declared that his Budget would lay the foundations for a “global Britain” after Brexit “where talent and hard work are rewarded, where the dream of home ownership is a reality for all generations, a hub of enterprise and innovation, a beacon of creativity, a civilised and tolerant place that cares for the vulnerable and nurtures the talented, an outward looking, free-trading nation, a force for good in the world.”
His Budget was a “balanced” package to set the economy “on a path to a new relationship with our European neighbours and a new future outside the EU,” Mr Hammond said.
Concluding his hour-long speech, he added: “We are at a turning point in our history and we resolve to look forwards not backwards, to build on the strengths of the British economy, to embrace change not hide from it, to seize the opportunities ahead of us and, together, build a Britain fit for the future.”
Mr Hammond’s speech was enthusiastically cheered by Tory MPs in the Commons.
Backbench sources thought the measures would help to ease the pressure on the Chancellor following speculation he could be sacked in a New Year reshuffle.
“It looks like the Chancellor has done enough to keep his job,” said one Tory MP.
Confederation of British Industry director-general Carolyn Fairbairn said: “Against a sombre economic backdrop, the Chancellor today gripped the steering wheel on the UK economy.
“This is a Budget that balances support for people on squeezed incomes with vital action to help grow the UK out of austerity. But delivery is everything.”
November 23rd, 2017: Express