Brexit ministers have demanded Philip Hammond pays for hundreds of extra officials amid fury that departments have been forced to find cuts.
Senior figures in the three Whitehall departments delivering Brexit have told this newspaper the Treasury must agree tens of millions of extra funding.
Failure to do so would would undermine “Britain’s trading future” and a drive to forge new links across the world, ministers will argue in spending talks.
Both the Foreign Office and the Trade Department have been ordered to outline 6 per cent spending cuts – though the Brexit Department is exempt.
The growing row comes after a damaging week for the Chancellor as he was forced to scrap a key part of his first ever Budget.
On Wednesday it was announced that a planned rise in national insurance for the self-employed would be ditched because it clashed with a manifesto promise.
The U-turn triggered speculation that Mr Hammond could be forced from his job amid reports Number 10 was infuriated by Treasury briefings against them, including those reported in this newspaper.
Some backbenchers now want Mr Hammond “gone by May after the local elections”, with one Tory MP saying: “He is in last chance saloon.”
Cabinet ministers also believe they have a better chance of securing extra money during negotiations with the Treasury after the blunders.
“Everyone thinks the Treasury is weak. People are looking at the battles and wondering whether they can push them further than thought,” said one cabinet source.
Now in a new row, senior figures in departments delivering Brexit have told this newspaper they want the Chancellor to agree more funds to help deliver Brexit.
A senior figure in the Brexit Department said: “We need more officials. The Department is growing but we have got a big task starting in just a couple of weeks’ time.
“We certainly need a couple of hundred more. The stuff we are doing is unbelievably technical.”
The sentiments were echoed by a senior Trade Department figure: “The expectation is that Britain will be delivering a number of free trade agreements and progress in other trade areas. It will need people and expertise to deliver those.”
“We do need to make sure it is properly financed. We don’t want Britain’s trading future, such an important part of this Government, to be impacted because we don’t have the capabilities to deliver.”
Foreign Office sources also questioned whether they should not be protected from the efficiency savings demanded by the Treasury.
“The Foreign Office can’t continue to have cuts to our budget if we want to achieve Global Britain,” a Government source said.
“We’ve already undergone efficiency savings. Hammond himself asked for increased spending when he was in the Foreign Office.”
Over the coming months ministers are expected to meet the Chancellor and his team as he plans his Autumn Budget.
Meanwhile Number 10 moved to end speculation over Mr Hammond’s future, warning that sacking him now could harm the Prime Minister.
“A reshuffle to move the Chancellor this May would be very damaging and look very weird,” revealed an ally of Mrs May.
“Within a year of forming a Government to have a reshuffle would look like a sign of weakness.”
Senior Eurosceptics have also moved to quell reports they are critical by reassuring the Treasury that only a handful of MPs are briefing against him.
In a sign of acceptance they made mistakes, Treasury officials are understood to have apologised to the Chancellor for not spotting that raising national insurance clashed with the Tory manifesto.
Approached about the spending row, spokesmen at the departments in question played down suggestions of tensions with the Treasury.
David Gauke, Chief Secretary to the Treasury, said: “We are confident that departments have the resources needed to ensure we get the best deal for Britain as we leave the EU, and have the right skills to make the most of the opportunities that lie ahead.
“Recognising the crucial role the Department for Exiting the European Union will play in our forthcoming negotiations, it has not been commissioned to model savings for the Efficiency Review.”
“The Efficiency review is about Departments looking for opportunities to make improvements and deliver the best value for money for taxpayers.”