Amber Rudd revealed she “accepts” no deal needs to be part of Brexit “leverage” with the EU, despite believing it would be “bad for the economy”. The Work and Pensions Secretary also outlined the “two parts” of a no deal Brexit that would impact her department. Ms Rudd told the BBC’s Andrew Marr Show: “I still think that no deal would be bad for the economy, bad for security and bad for the union. So one of the good things is that both candidates feel that they are committed to trying to get a deal.

“But I have accepted that we now need to allow no deal to be part of the leverage to make sure that people compromise more.

“That’s what I’m doing, I am doing a bit of compromise and I would hope that the EU would compromise, and that the ERG will compromise too.”

Earlier in the programme, Mr Marr asked in reference to no deal: “A leaked document from your department went to The Times a little while ago, and it said that ‘civil servants needed to explore how we would deal with a rise in homelessness and other potential impacts, like a rise in suicide rates or an increase in food banks used’.

“That is the advice going around in you department and I’m asking you as the Head of the Department, have you seen that, and do you agree with it or not agree with it?”

Ms Rudd explained: “So there are two parts to no deal that would impact on my department, one of them is are we ready for it in terms of making sure that we pay the pensions, we pay the benefits overseas, as we would need to if there was a no deal.

“And the answer to that is yes we are ready for that. The second part, which is more difficult to assess, is would there be a loss of employment, would we enter some sort of recession, and that is difficult to judge.

“But if we did, the Work and Pensions Department would have to be ready for that and there would be consequences.”

The BBC presenter questioned: “You told MPs that you had a hardship fund being prepared, is that ready?”

The Tory MP for Hastings and Rye replied: “We will be ready, should we need it.

“But one of the things if I may say that I am pleased with in Jeremy Hunt’s plan is that he is very frank about the difficulties that come with no deal Brexit and he has set out the plans and the money needed to be able to ameliorate that.

“So for instance, he said there will be £6billion for farming and fishing, and in my constituency of Hastings that’s really important.”

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The comments follow Chancellor Philip Hammond warning Britain will lose its say over what happens at the borders if no deal becomes a reality.

The Chancellor of the Exchequer has provided £4.2billion for no deal Brexit preparations., but he believes no sum of money will fully prepare Britain for an exit scenario without an agreement in place.

He said a no deal Brexit would see the UK losing control of what happens outside of its borders, with Britain no longer able to have a say regarding what happens, for example, in France’s Calais.

Asked if the UK can control Brexit, he told BBC Panorama: “We can’t because many of the levers are held by others – the EU 27 or private business. We can seek to persuade them but we can’t control it.

“For example, we can make sure that goods flow inwards through the port of Dover without any friction but we can’t control the outward flow into the port of Calais.

“The French can dial that up or dial it down, just the same as the Spanish for years have dialled up or dialled down the length of the queues at the border going into Gibraltar.”

French officials said in October they will ensure “fluidity” of trade even in a no deal scenario – rejecting the suggestion they could resort to a “go-slow” policy to avoid chaos and queues between Dover and Calais.

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