Brexit: Labour demands inquiry into ex-chancellor's claims Boris Johnson backers set to profit from no-deal

Philip Hammond said 'radicals' in 10 Downing Street do not want an EU withdrawal agreement

Labour is demanding an independent conflict of interest inquiry into the prime minister, following allegations by Philip Hammond that Boris Johnson‘s wealthy supporters stand to profit from a no-deal Brexit.

In a blistering attack on the PM, the former chancellor claimed that Mr Johnson is backed by speculators who have bet billions on a disorderly exit from the European Union.

Writing in The Times, Mr Hammond said the “radicals” advising Mr Johnson in Downing Street “do not want a deal” with Brussels.

Mr McDonnell has written to the government’s most senior civil servant, cabinet secretary Sir Mark Sedwill, to ask for an investigation into alleged conflicts of interest with currency speculators

In his letter to Sir Mark, the shadow chancellor said there had been widespread reports of increases in short positions taken against sterling in the lead-up to a possible no-deal Brexit.

Mr Johnson and the Conservative party had received “a significant sum” in donations from no-deal backers, a number of who are involved in hedge funds, he said. Meanwhile, the PM has made it clear he is ready to go ahead with a no-deal outcome to the UK’s withdrawal from the EU.

“These three facts have caused concern that the prime minister may have a conflict of interest,” wrote Mr McDonnell. “Donors to the Conservative party and/or the prime minister could stand to gain from a no-deal Brexit – even if only through cushioning losses by adopting short positions. The prime minister could reasonably be seen as having an interest in securing a no-deal Brexit to financially benefit his donors.”

He added: “It is becoming increasingly apparent from public comment that the prime minister is bringing into doubt whether he is upholding the highest standards, thereby further undermining public confidence and trust in him and his government... It is important for public confidence and trust in the House of Commons that any real or apparent conflict of interest is investigated.”

Mr Hammond, who said he will not be attending the Tories’ annual conference for the first time in 35 years, also claimed the party he first joined is “suffering a convulsion that makes it – for now at least – unrecognisable to me”.

The MP, who had the Tory whip removed for voting against the government to block a no-deal exit from the European Union, wrote in an article for The Times: “Boris Johnson asserts, ever more boldly, that we will leave the EU on 31 October, ‘with or without a deal’.

“But as his sister has reminded us, he is backed by speculators who have bet billions on a hard Brexit – and there is only one outcome that works for them: a crash-out no-deal Brexit that sends the currency tumbling and inflation soaring.

“So they, at least, will be reassured to see no evidence at all that his government has seriously pursued a deliverable deal; still less that it has been pursuing a deal that could get us out by 31 October.”

The former chancellor condemned the 'incomers and entryists' at the top of government – led by Dominic Cummings (PA)

Speaking earlier this week, Rachel Johnson, the prime minister’s sister, was asked on BBC Radio 4’s World at One who could be behind the strategy to deliver Brexit in any shape or form.

She replied: “It could be Dominic Cummings advising the prime minister to be extremely aggressive and to face down opposition from all sides of the establishment in order to secure his position as the tribune of the people.”

Ms Johnson continued: “It could be coming from my brother himself, he obviously thoroughly enjoys being prime minister. It could be from – who knows – people who have invested billions in shorting the pound or shorting the country in the expectation of a no-deal Brexit. We

Downing Street declined to comment on Mr Hammond’s remarks on the eve of the party’s annual conference when approached by The Independent, but business minister Nadhim Zahawi said they were “completely untrue”.

“Philip, you let yourself down by claiming speculators on no deal are interfering in us leaving the EU. This is an ugly smear that is completely untrue. If you know anything about finance or the City then you will know that,” he said.

Labour MP David Lammy, however, claimed: “It’s official. Philip Hammond in today’s Times confirming that Boris Johnson is committed to a hard Brexit because the disaster capitalists who backed his campaign will make millions.”

In his article for The Times, Mr Hammond added of his party: “Gone is the relaxed, broad-church coalition, united by a belief in free trade, open markets, fiscal discipline and a fear of the pernicious effects of socialism, but tolerant of a wide range of social and political opinion within its ranks.

“In its place is an ideological puritanism that brooks no dissent and is more and more strident in its tone.”