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Philip Hammond was challenged over whether he could live on a hospital cleaner's wage today as he faced a backlash over claims he said public sector workers were 'overpaid'.

The Chancellor refused to say whether he had made the incendiary comment at a Cabinet meeting last week. 

But he defiantly stuck to his guns by pointing to the comparatively generous pensions and benefits enjoyed by state employees. He also insisted the government would stick to its task of tackling the deficit, warning that splurging on big salary rises would risk jobs.

However, he was confronted with a £297-a-week pay slip from a hospital cleaner during the appearance on the BBC's Andrew Marr show.

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The Chancellor (pictured on the BBC's Andrew Marr show today) is said to have made the incendiary comment at the gathering of the Cabinet last week

Mr Hammond said a spending splurge on increasing pay for the public sector would fuel the deficit and put jobs at risk

John McDonnell brandished a payslip he had been given by a hospital cleaner when he appeared before Mr Hammond on the programme 

Mr McDonnell challenged Mr Hammond on whether he could live on £297 a week. But the shadow chancellor struggled to explain how Labour could afford a big pay rise for all public sector workers

It also underlines tensions within the Cabinet, with off-the-record briefing escalating as ministers jockey for position in case Theresa May is ousted from Downing Street.

Mr Hammond today refused to be drawn on whether he said 'overpaid' at the Cabinet meeting on Tuesday - although the Treasury had denied the report in the Sunday Times.

But he made clear he was not backing away from the central point on public sector pay.

'Public sector pay raced ahead of private sector pay after the crash in 2008-09. Taking public sector pay before pensions contributions - that gap has now closed,' he said.

'But when you take into account the very generous contributions public sector employers have to pay in for their workers' pensions - their very generous pensions - they are still about 10 per cent ahead.'

Mr Hammond said the pay cap was being looked at - with widespread speculation that it will be eased to some extent at the Budget after inflation spiked to 2.9 per cent.

'We do keep this under constant review and I think the fact that is apparently now well known the Cabinet has been discussing this issue sends a clear signal that we do understand the concern both of public sector workers and of the wider public,' he said. 

Appearing on the programme before Mr Hammond, Labour's John McDonnell brandished a wage slip he had been given by a hospital cleaner. 

'I was at Bart's Hospital yesterday with the cleaners, who are on strike. Why are they on strike? Because they asked for 30p an hour extra and were refused it,' the shadow chancellor said.

'One of the cleaners gave me a payslip', he said, brandishing the document from an inside jacket pocket.

'This woman, full time worker, earns £297 a week. At the moment, median rent in London is nearly £1,500 (a month). To buy a house in London is half a million pounds. Ask Philip Hammond if he can live on that.'

Asked about the payslip later and whether the cleaner was overpaid, Mr Hammond said; 'No, of course she's not over paid. 

'But look, John McDonnell needs to remember that it was a Conservative Government who introduced the National Living Wage.' 

Mr Hammond blamed briefings on colleagues who were opposed to the agenda he had been setting out for a softer Brexit.

'If you want may opinion, some of the noise is generated by people who are not happy with the agenda which I, over the last few weeks, have tried to advance of ensuring that we achieve a Brexit which is focused on protecting our economy, protecting our jobs, and making sure that we have continued rising living standards in the future,' he said. 

Mr Hammond said he did not know who had been briefing against him although the Chancellor is widely believed to be at odds with Foreign Secretary Boris Johnson.

'They shouldn't have done it frankly because Cabinet meetings are supposed to be a private space in which we have a serious discussion,' he said.

'I think on many fronts it would be helpful if my colleagues - all of us - focused on the job in hand. This Government is facing a ticking clock over the Brexit negotiations.'

Off-the-record briefing is escalating as ministers jockey for position in case Theresa May (pictured in the Commons last week) is ousted from Downing Street.

David Davis (left) and Boris Johnson are among the favourites to take over if Mrs May is forced out as PM

Asked if there was now a fight under way within the Cabinet to succeed Theresa May as Conservative leader, he said: 'I certainly hope not. If there is I am no part of it.'  

International Trade Secretary Liam Fox and Tory grandee Iain Duncan Smith demanded an end to the damaging infighting today. 

Dr Fox  told the BBC's Daily Politics: 'I absolutely deplore leaks from the Cabinet, I think my colleagues should be very quiet and stick to their own departmental duties. I think the public expect us to be disciplined and effective and the only people smiling at this are in Brussels and Paris.' 

He threw his support behind the Prime Minister, dismissing speculation that there were plots being hatched against her.

'We don't need an interim leader, we don't need an alternative leader. We've got a very good leader in Theresa May,' Dr Fox said.

Mr Duncan Smith said he would 'lay money' that there would not be a leadership election, and he urged other Conservatives to stop speculating.

He told the Marr programme: 'The honest truth about all this...there's a big divide in the Conservative party at the moment on another level and it's between some of them in the Cabinet, it appears and the rest of the backbenchers because it's quite interesting that a lot of the new gen and everything else come in are absolutely seethingly furious about what this is rep at the moment.

According to The Sunday Times, Mr Hammond told a Cabinet meeting on Tuesday that public sector workers were 'overpaid' when their pensions were taken into account.

He also allegedly sad train drivers were 'ludicrously overpaid'.

He was pointing out that public sector earnings are still higher than those in the private sector, despite years of pay restraint after the credit crunch sent the economy into a tailspin.  

A cabinet source saying: 'Philip used a fairly inflammatory phrase. He said they were 'overpaid'.

'That caused some general astonishment. His overall tone was that we shouldn't give them more cash because they are overpaid.

'Later in the meeting both Boris Johnson and the PM said we should not say public sector workers are overpaid.'

John McDonnell said Labour would remove the 1 per cent pay cap but struggled to explain why his party had only budgeted for around half the £9billion cost of doing so

Tory grandee Iain Duncan Smith demanded that Cabinet ministers briefing against Mr Hammond 'shut up'  

Liam Fox, pictured left with fellow Brexiteer Chris Grayling in Downing Street last week, was among the senior Tories calling for an end to infighting today

The newspaper said five sources had attested to the Chancellor using the word.

It came just 24 hours after reports claimed the Chancellor told the same meeting that driving a train was now so easy 'even' a woman could do it.

But a Treasury source said: 'The Chancellor was describing the public sector pension premium. He did not say that public sector workers were overpaid.'

Mr Hammond has angered hardline Brexiteers in the Cabinet - including Foreign Secretary Boris Johnson - by arguing for a deal which prioritises jobs and economic growth over controlling immigration.

He has also warned of the need for a lengthy transitional period after Britain leaves the EU to prevent business falling off a 'cliff edge' - seen by some hardliners as an attempt to reverse last year's referendum vote by stealth.

The latest claims came amid signs that allies of Brexit Secretary David Davis are trying to enlist Mr Hammond's backing to help see off Mr Johnson in the event of a leadership contest.  

Unions leapt on the report to step up demands for an easing of the cap. 

A spokesman for the Royal College of Nursing said: 'Nurses across the UK are being forced to take second jobs, rely on family handouts or even turn to food banks.

'It would be insulting of the Government to claim these people earn too much.

'The Government holds pay awards below inflation and forces year-on-year pay cuts on public sector workers.

'Nursing staff earn £3,000 less per year in real terms compared to 2010. Our protests will continue until the Government scraps the 1 per cent cap.'