His comments came at a sensitive time for the Government which is under pressure to end the one per cent pay cap for public sector workers after seven years of austerity.
Shadow chancellor John McDonnell said Labour would spend £4bn on ending the cap, insisting this would be enough to give a real-terms pay increase for public sector workers. He wanted to ensure a "Brexit focused on protecting our economy, jobs and rising prosperity in future".
It makes clear that the knives are out for the chancellor, as pro-leave cabinet ministers seek to undermine, if not oust, the man they see as the biggest obstacle in the path of a hard Brexit.
The splits have been fueled by jockeying for position amid speculation that Theresa May could be forced out of Downing Street after the disastrous election campaign.
There are a number of different reasons for the open warfare we have seen over the past week.it is not as simple as Philip Hammond tried to suggest on Marr yesterday.
The Prime Minister's spokesperson said the PM would use a meeting on Tuesday to remind her deputies that they should be "having all discussions of government policy in private".
"I think on many fronts it would be helpful if my colleagues - all of us - focused on the job in hand".
Global trade secretary Dr Liam Fox yesterday accused those of leaking as having "too much self-indulgence".
He added: "I don't know where the briefing is coming from but I know it should stop because our colleagues on the backbenches do not like it".
He said there was "great divide" in the Conservative Party on whether there should be a leadership contest, with many backbenchers and new MPs "seethingly furious" about the antics of those in the Cabinet.
The Chancellor, who is widely thought to have led the opposition in Government to any relaxation of the cap, hinted it was an issue they were prepared to look at. We've got a very good leader in Theresa May, ' Dr Fox said.
In the meeting, Cabinet sources reportedly accused him of being "inflammatory" and said his remarks were challenged by both prime minister Mrs May and foreign secretary Boris Johnson. At some point maybe somebody else will step through'.
The report claimed Mr Hammond said public sector workers were "overpaid" when their pensions were taken into account and train drivers were "ludicrously overpaid".
The Government is now under pressure to increase public sector pay and lift the current 1% cap.
He told the BBC's Sunday Politics there should be a time limit with strict conditions, but steered away from his own previous comments that it should be in the months, indicating the rifts running through May's Cabinet. He said they had been taken "out of context".
'That caused some general astonishment.