PHILIP Hammond has vowed to splash the cash on schools, hospitals and the Armed Forces if MPs give Brexit the go-ahead this week.

The Chancellor will dip into a £16billion-plus “insurance pot” he has squirreled away in case Britain leaves the EU without a deal.

He is expected to announce the end of the ten-year spending squeeze in his Spring statement on Wednesday – but only if Brexit can be settled.

Mr Hammond said it would give him the “luxury” of choosing how to spend an emergency fund on “whatever you fancy”.

The nest egg stood at £15.4billion last October but booming tax receipts have pumped it up even further.

Treasury sources hint the cash could be used to tackle knife crime, boost school budgets, or improve the NHS – with some left over to cut taxes or pay off debt.

One said: “There’s an enormous pot of potential once we get Brexit done.

“We have all this money locked in the safe and we’ll be able to choose for ourselves how we spend it.

“It’s a bit like discovering that you no longer need to keep cash in the bank in case the car breaks down so you can spend it on the new kitchen you’ve always wanted.”

But Mr Hammond is only prepared to take the brakes off spending if MPs back the deal 24 hours before he delivers his statement.

He said: “This is clearly the crunch point. What I’m saying is that if you’re a Brexiteer you should think very hard about whether the perfect should be the enemy of the perfectly decent. The Prime Minister’s deal is a perfectly decent outcome for the UK.”

Sources say if Brexit can be settled, he would be able to “share the proceeds” when he begins his spending review later this year.

The Chancellor added: “Do we want to continue pursuing getting the deficit down as fast as possible?

“Do we want to release that bit of headroom to more public spending: police, schools, defence, whatever you fancy? Do you want to do even more on public investment? We are already at a 40-year high.”