Relations between Theresa May and Philip Hammond have sunk to a new low just days before the Budget amid claims that the Prime Minister is being ‘poisoned’ against the Chancellor by her exiled ‘Rasputin’.
Mr Hammond’s Budget on Wednesday will be one of the most critical in recent memory, with the fate of the Government potentially riding on its success.
But the Chancellor’s allies complain that his task has been rendered a ‘nightmare’ by Mrs May’s ‘hostile’ attitude to him, which they say is a legacy of the feud between Mr Hammond and her former Chief of Staff, Nick Timothy.
Next week’s Budget has become a ‘nightmare’ for Chancellor Philip Hammond (pictured right) after his relationship with Prime Minister Theresa May (pictured left) hit an ‘all-time low’
They also claim that Environment Secretary Michael Gove is behind negative briefings about Mr Hammond – because he wants to land the Chancellor’s job.
The Budget is expected to focus on measures to improve living standards for the young voters who have swung behind Labour leader Jeremy Corbyn, with Mr Hammond pledging to ‘build a country fit for the future’ – including a £1 billion boost for new technologies, with plans to put driverless cars on UK roads within four years.
The Cabinet has been bitterly split over housing, with critics claiming Mr Hammond has not released sufficient funds.
Treasury sources counter that they have been stymied by Mrs May’s reluctance to build on the Green Belt.
Mr Hammond’s relationship with Mrs May has never recovered from his toxic rows with Mr Timothy over economic policy, which had been expected to lead to the Chancellor’s sacking. Instead, Mr Timothy was forced out for his role in the backfiring Election campaign.
Mr Timothy – dubbed Rasputin because of the beard he sported in No 10 – has since made repeated public attacks on Mr Hammond.
Last week, he accused the Chancellor of having no ‘burning desire or imagination’ to improve the lives of ordinary families.
The Hammond ally said: ‘Philip feels that every time the PM stares at him, she is raging inside that Philip is still sitting there while Nick has gone.’
The attacks have so infuriated the Treasury that one official recently went in to No 10 to confront Mrs May’s aides over whether Mr Timothy was acting under orders.
A friend of Mr Timothy said last night: ‘Nick hasn’t even seen the PM since the Election. Hammond sees her several times a week.
Sources close to the Chancellor claim Mrs May is being ‘poisoned’ against him by ‘Rasputin’ Environment Secretary Michael Gove (pictured)
‘If he’s worried about the relationship, he should think about his own conduct and performance.’
Allies of the Chancellor also claim he is being undermined by Brexiteers who want to install Mr Gove in the Treasury.
Speculation that Mr Gove might move to the Treasury has increased after Brexiteers privately championed his cause as an intellectual who could ‘challenge the Europhile orthodoxy’ in the department.
Downing Street has been worried for months that a misfiring Budget could threaten the stability of the Government – either through a Commons rebellion by Tories, or because disenchanted MPs will be spurred into adding their names to the list of rebel MPs who want Mrs May to step down.
It is understood the rebels are still about a dozen names short of the 48 needed to trigger a leadership contest. But one leading rebel source said they expect that to change if the PM makes a mess of any post-Budget reshuffle.
The source said: ‘The danger is she is making enemies faster than making friends.’ Any reshuffle is now expected to take place in the New Year.
A spokesman for Mr Gove declined to comment.