Chancellor Philip Hammond gave himself a Brexit war-chest to spend if quitting the European Union damages the economy, as he warned that the UK must continue paying off its debts.

He said borrowing would be £16.4 billion lower than expected - but it would be wrong to spend the money.

Instead, he made it clear in his first Budget statement since becoming Chancellor that austerity would continue.

But he faced a potential rebellion from Tory MPs after putting up National Insurance (NI) for the self-employed. This not only hits the type of working people the Tories claim to represent, but appears to break a promise in the 2015 Conservative manifesto not to put up NI.

And Labour Deputy Leader Tom Watson, MP for West Bromwich East, said on Twitter: “The Tories put a promise not to raise National Insurance in their manifesto four times.

“Today they’re breaking that promise."

There was £2 billion over three years to help struggling councils provide social care - a figure slammed as nowhere near enough by Labour.

Schools received a boost with cash to open 110 new free schools, which could include new grammar schools, and £216 million over three years to repair and improve existing school buildings.

Chancellor Philip Hammond departs 11 Downing Street, London, as he heads to the Palace of Westminster for the delivery of the Budget statement.

Mr Hammond also announced councils will be invited to bid for a share of £690 million “to tackle urban congestion and get local transport networks moving again”, in a move that could see London-style road pricing extended to other parts of the country.

But despite delivering an upbeat message with the claim that “our greatest achievements lie ahead of us”, Mr Hammond also painted a gloomy picture of the nation’s finances as he explained why there can be spending spree.

He said: “Britain has a debt of nearly £1.7 trillion, almost £62,000 for every household in the country.

“Each year, we are spending £50 billion on debt interest – more than we spend on Defence and Policing combined.

“And borrowing over the forecast period is still set to be £100 billion higher than predicted at Budget 2016.

“So the only responsible course of action is to continue with our plan, undeterred by any short-term fluctuations.”

Borrowing in 2016-17 is set to be £51.7 billion, which is £16.4 billion lower than previously forecast, but Mr Hammond said he would not spend the money, telling MPs: “We will not saddle our children with ever-increasing debts.”

Labour had been urging the Government to spend this cash on bailing out local councils who have been forced to cut social care services, such as home help for frail elderly people.

While Mr Hammond said little about Brexit, the Budget comes as the UK prepares to trigger Article 50, the beginning of the process of quitting the EU, which Prime Minister Theresa May has promised to do by the end of March.

Limiting spending now provides some leeway for the Chancellor to spend money and stimulate growth later, if the Brexit process hits confidence in the economy.

There was also a tax increase for self-employed people, with changes to National Insurance raising an additional £145m a year for the Treasury.

It seemed to contradict a pledge in the Conservative 2015 general election manifesto not to increase National Insurance.

Unlike in previous Budgets, there was little talk of new infrastructure projects such as transport schemes, although Mr Hammond announced £23 million to improve “pinch points” on Midlands roads such as busy junctions.

However, Mr Hammond said he would announce plans on Thursday for the "Midlands Engine", a Government initiative to support the economy of the West Midlands and East Midlands.

He said: "I will follow the launch of the Northern Powerhouse Strategy at Autumn Statement, by publishing tomorrow our Midlands Engine Strategy, addressing productivity barriers across the Midlands."

He is also to hold a second Budget in the Autumn, potentially giving him a second chance to make a splash once it is clearer how the process of Brexit is affecting the economy.

Birmingham Chamber of Commerce Chief executive Paul Faulkner said the Chancellor should have done more to help firms facing higher bills because of changes to business rates.

He said:”Far more still needs to be done. The Chancellor has brought forward nothing to address concerns about the ability of businesses to challenge inaccurate rates bills under the reformed system and missed the opportunity to lift plant and machinery out of the business rates system, a barrier to encouraging businesses to invest and increase their productivity.”

Budget measures at a glance

Economy

The Office for Budget Responsibility has upgraded its growth forecasts for the UK economy this year from 1.4% to 2%, while public sector borrowing estimates have been slashed by billions of pounds and real wages will rise through to 2020. But Mr Hammond signalled there will be no end to austerity.

Business rates

A package of relief totalling £435 million was announced for small businesses. Firms losing small business rate relief will have their monthly increase capped at £50 for a year, some 90% of pubs will be given a £1,000 discount on business rates in 2017, and councils will be given a £300 million fund to deliver relief to small businesses.

Transport

Transport spending of £90 million for the North and £23 million for the Midlands was announced to address pinch points on roads, and a new £690 million competition for English councils to tackle urban congestion.

NHS

Hospitals will get £325 million to implement their sustainability and transformation plans and another £100 million will be put into a new triaging projects in England to help free up hospital beds.

Social care

The crisis-hit social care system will have another £2 billion pumped into it over the next three years, with £1 billion of this available in 2017/18. Mr Hammond ruled out a new “death tax” to fund social care.

Education

Another 110 new free schools will be opened, including a new generation of grammars. Free school transport will be given to children on free school meals who attend a grammar, and £216 million will go into repairing existing schools. New T-levels will be created to improve vocational education, the hours for technical training will be increased and new university-style maintenance loans will be available.

Cigarettes and alcohol

There was no change to previously planned upratings of duties on alcohol and tobacco, but a new minimum excise duty will be introduced on cigarettes based on a packet price of £7.35.

Taxes

Higher paid self-employed workers are to pay an average of 60p a week more in National Insurance contributions as part of changes to raise an extra £145 million by 2021-22.