Philip Hammond is at the centre of a fresh controversy after reportedly saying public sector workers were "overpaid".

The comments were made by the Chancellor in a Cabinet meeting this week, according to The Sunday Times.

It is the second row in less than a week Mr Hammond has become embroiled in, after he was said to have quipped that driving trains has become so easy that "even a woman" can do it.

His latest remarks caused "astonishment" in Tuesday's Cabinet meeting, a source told the newspaper.

They said: "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."

The report added five sources had attested to the Chancellor using the word.

But the Treasury denied the claims. A spokesman said: "The Chancellor was describing the public sector pension premium. He did not say that public sector workers were overpaid."

The reported remarks were described as "insulting" by one public sector organisation.

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% cap."

The Chancellor has previously said the government must "hold its nerve" over public sector pay, despite other cabinet colleagues indicating their support for lifting the one per cent cap on it.

Following terror attacks in London and Manchester, and the Grenfell Tower fire, there was widespread public support for ending the limit on public sector workers, particularly in the emergency services.

But the government voted to retain it.

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Following the fury over those earlier comments – which have received significant coverage in recent days – political observers suggested the uproar was caused by leaks from pro-Brexit politicians who are moving against him.

The Chancellor, who campaigned for the UK to remain in the European Union, has previously argued for softer approaches to Brexit, such as advocating staying within the customs union.

He later confirmed the UK will leave both the customs union and single market but warned earlier this month that free trade deals would have limited benefits for the UK.