Danny Alexander rebukes Defence Secretary Philip Hammond in Cabinet over opposition to MoD cuts

Philip Hammond denied being in “conflict” with George Osborne (Charlie Forgham-Bailey)

Cabinet divisions over public spending surfaced today when Philip Hammond, the Defence Secretary, was slapped down for opposing more cuts in his department.

Danny Alexander, the Chief Treasury Secretary, rebuked Mr Hammond during the Cabinet's weekly private meeting for airing “dirty laundry” in public after he gave media interviews calling for more welfare cuts rather than another squeeze on his own budget.

The Liberal Democrat Treasury minister said that such statements were “no way to do business.” He is believed to have said: “It is really important that we do work together and that conversations between ministers are private. We should not air our dirty laundry in public.”

David Cameron is understood to have nodded with approval during Mr Alexander's comments and said “I agree”. The Independent revealed this week that the Prime Minister wants an end to “cuts nimbyism” under which ministers defend their own turf and call for savings in other budgets, usually welfare. He wants other departments to find £10bn for 2015-16 because the benefits bill has already been shaved by £3.6bn.

Only a few hours after the Cabinet session, an unrepentant Mr Hammond again spoke out publicly against more Ministry of Defence cuts. “Really, if we go beyond what can be delivered from efficiency, there will have to be a reassessment of the output that is delivered,” he told journalists during a briefing on military bases.

Mr Hammond insisted he was not at odds with George Osborne, the Chancellor, whom he served as his deputy in opposition. The Defence Sercretary added: “But he [Mr Osborne] has a problem: he has to deliver a further fiscal consolidation.”

Some sources suggested Mr Alexander's remarks were also aimed at Vince Cable, the Lib Dem Business Secretary, who has also campaigned in public against further savings in his department, warning that this would undermine measures to boost economic growth. Mr Cable wants a boost to large-scale building projects to stimulate the economy and has called for tax rises to limit the scale of the next round of spending cuts.