The chancellor has rejected claims there are millions of people living in dire poverty in Britain.
“Look around you; that’s not what we see in this country,” Philip Hammond told Newsnight.
Mr Hammond accepted that some people were struggling.
But he said the government had worked to tackle the causes of poverty and rejected a United Nations report that claimed austerity had increased poverty.
Published last month, the rapporteur accused the government of plunging millions into poverty, in some instances with “tragic consequences”.
Mr Hammond said: “I reject the idea that there are vast numbers of people facing dire poverty in this country.
“I don’t accept the UN rapporteur’s report at all. I think that’s a nonsense. Look around you, that’s not what we see in this country.
“Of course there are people struggling with the cost of living. I understand that. But the point being is that we are addressing these things through getting to the root causes.”
System must ‘evolve’
The chancellor said that for many people, the market economy was not working as it was “supposed to”, and the idea the economy is “generating and distributing wealth is at odds with the practice that they are experiencing”.
He said the government should be ensuring the market was “delivering in the way that the textbooks tell us it will work.
“To deliver through competition, the best deal for consumers and to distribute wealth in a way that is fair.
“To the extent that it’s not working, we have got to evolve the system.”
The UN report cites independent experts saying that 14m people in the UK – a fifth of the population – live in poverty, according to a new measure that takes into account costs such as housing and childcare.
According to the Joseph Rowntree Foundation, 1.5m people experienced destitution in 2017 – meaning they had less than £10 a day after housing costs, or had to go without at least two essentials such as shelter, food, heat, light, clothing or toiletries during a one-month period.
Mr Hammond’s comments came during an interview on Monday with Newsnight’s Emily Maitlis, in which he warned MPs vying to be leader of the Conservative Party that they risked becoming “Theresa May mark two” unless they accepted the realities of Brexit.
The chancellor, who has yet to reveal who he will support in his party’s leadership race, laid down a challenge for the candidates.
“Explain to me how you will avoid becoming Theresa May mark two, stuck in a holding pattern,” he said.
He criticised some of the candidates’ Brexit plans.
“An extension of time to try to renegotiate, when the EU have already said they have finished the negotiation and, indeed, have disbanded their negotiating team, strikes me as a not very auspicious policy.”
He added: “The debate we’re having now is here, in the UK, about whether we are going to sign the Withdrawal Agreement or not, and about what kind of future relationship we then want to have – because the European Union is willing to talk to us about the shape of the future relationship.”
Mr Hammond also said he believed that MPs from all sides should “stop pontificating and get off their high horses” in an effort to resolve the Brexit impasse.
Asked whether he would prefer a no-deal outcome or no Brexit, he replied: “Neither is an acceptable outcome, because no deal would be catastrophic for the country and its economy – and no Brexit would be seen as a gross breach of faith with the public.”
He added: “So we as democrats and we as parliamentarians should be absolutely clear that we cannot tolerate either of those outcomes,” and said “we have a solemn obligation to find a solution which avoids” either.
He said that meant a deal was required.
“We will all be grumpy about it, we will all be dissatisfied. But in many ways that is the only way forward for the country,” he said.
“If we end up with a deal that means half the people in this country think they achieved total victory and the other half think they have been totally defeated, that is not the recipe for unity in the future. And countries that are not unified are not successful.”
The full interview with Chancellor Philip Hammond will be broadcast on Newsnight at 10.30pm Monday on BBC2.