The chancellor is prioritising jobs in the gambling industry over the lives of addicts by delaying a cut in maximum stakes on fixed-odds betting terminals, the chair of an influential committee of MPs has said.

Nicky Morgan, who chairs the Treasury committee, criticised the decision to put off the stake reduction until October next year, citing a warning from the former sports minister Tracey Crouch – who resigned over the delay last week – that two people take their lives every day due to gambling addiction. “It is the case that the government has prioritised the preservation of jobs in the gambling industry over the addiction of those who suffer from these machines,” she said.

Morgan quoted from the government’s own assessment of the policy’s impact, published in May, which indicated that bookmakers needed up to 12 months to prepare, which would allow for implementation in May 2019. In an appearance before the committee on Tuesday, Hammond said he had not read the document.

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Crouch’s resignation is understood to have been triggered by a belief that party colleagues, including pro-gambling MP Philip Davies, went over her head to secure a longer transition period.

Hammond said: “I have no love for these machines; I think they are terrible things.” But he said the gambling industry had told him that between 15,000 and 21,000 jobs would be lost due to curbs on FOBTs, from which bookmakers derive more than half of their annual revenues, around £1.8bn a year. The October 2019 implementation date amounted to a “sensible compromise” that would allow for an orderly transition, Hammond said.

“The trouble with that very rational analysis […] is that it doesn’t really help the expected 300 people who may end up taking their lives, suffering mental health problems from gambling addiction,” said Morgan.

Asked by Labour MP Alison McGovern about a Guardian report that an early draft of the budget envisaged an April 2019 implementation date, before being removed at the last minute, Hammond said he was unaware of whether this was the case. “I’m not involved in the drafting of documents by officials within the Treasury,” he said, adding that he was not aware of any earlier draft.

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The circumstances surrounding the timing of the stake reduction have been hotly disputed since the resignation of Crouch, who launched the government review of gambling regulation that led to the decision.

The furore over FOBTs has left the government facing the prospect of a cross-party amendment to the finance bill, which Crouch has said she would support now that she was no longer a junior minister.

Morgan said the FOBT decision had caused an “unnecessary row with the House at the time when the government needs all the friends in the House it can have”.

The chancellor also downgraded the importance of eliminating the budget deficit, arguing that there was a need to balance growing the economy with generating a surplus for the public finances.

Hammond said that the deficit, which is the gap between tax receipts and government spending, would shrink to about 0.8% of GDP by 2023-24 compared with 10% in the aftermath of the financial crisis a decade ago.

While that would put the Conservatives on course to miss their manifesto promise to balance the books by the mid-2020s, he said the government would be in “touching distance”, and added that it would be for future fiscal events to balance the need between cutting the deficit, reducing taxes, increasing spending on public services and investing in infrastructure.

In a statement that is likely to be seen as justification of Labour’s approach to fixing the public finances during the last recession, when George Osborne stuck to the policy of imposing cuts to balance the books rather than investing in the economy, Hammond said that growing the economy was the “smart way” to reduce Britain’s national debt, rather than focusing too much on cutting the deficit.