New UK cabinet tensions over budget as Philip Hammond intervenes over plastic bag levy promise

Theresa May has reportedly been warned to "butt out" of Philip Hammond's planning for the next Budget, as the Chancellor interrupted his holiday to slap down a plan to hike plastic taxes.

Downing Street wants Hammond to use November's Budget to increase the levy on plastic bags from 5p to 10p.

But in a pointed intervention during his week off, Mr Hammond tweeted that all options for cutting pollution "remain open and under active consideration".

He added: "I will be saying more at the Budget about how we can use the tax system to meet this challenge."

A source close to the Chancellor meanwhile took aim at May, telling the Sun: "Philip is insistent that it’s his Budget not hers, so her people should butt out.

"She doesn’t write it, he does. And he will not take edicts from No10 like this."

It is understood that Hammond - who has also given plans to introduce a so-called 'latte levy' on coffee cups short shrift - favours using tax breaks to encourage businesses to slash pollution, rather than passing the cost on to consumers.

The latest clash comes amid an increasingly strained relationship between the Treasury and Downing Street.

May publicly distanced herself from Mr Hammond's warnings over the economic impact of a 'no-deal' Brexit yesterday, insisting his estimate of a £82bn hit to the public finances if the UK leaves the EU without a deal was based on an old forecast.

“They were a work in progress at that particular time,” the Prime Minister said.

Mr Hammond also earned a rebuke from International Trade Secretary Liam Fox, who said the Chancellor's warning was “hard to swallow”, while Brexit Secretary Dominic Raab rubbished the Treasury's ability to make accurate long-term forecasts.