POLL: Is now the time for the Government to end austerity?

Mr Hammond said he does not believe in "the money tree" as he ridiculed Mr McDonnell and told MPs he has no plans to reverse George Osborne's spending commitments.

Mr McDonnell asked Mr Hammond to "put an end to what is becoming a lost decade of austerity" and to scrap the "anachronistic fiscal rule" which requires the Government to achieve a budget surplus by 2020.

But Mr Hammond said: "Since this is our first outing together, let me take the opportunity of making clear to you that I do not believe in the money tree.

"I am clear that we have to pay our way in the world.

"We have a very large fiscal deficit that we have to address but while doing it we also have to ensure that we maximise the productive capability of the UK economy.

"That means targeting our investment into skills, and that does largely mean young people, into infrastructure and into encouraging capital formation in private businesses."

Speaking during Treasury questions in the House of Commons, Mr Hammond also said he intended to follow the spending plans set out by Mr Osborne - at least until the Autumn Statement.

Mr Hammond faced criticism from the SNP benches that the Government had been slow to react to turbulence in the economy in the wake of the nation's Brexit vote on June 23.

The newly appointed Chancellor said the Treasury is waiting for the release of data at the end of the summer to inform its next moves.

But Mr Hammond also admitted that the Government may not meet its surplus target.

Before becoming Prime Minister, Theresa May said she was ready to ditch the surplus target if it was necessary to avoid tax rises.

And in one of his last acts as Chancellor, George Osborne abandoned the goal, admitting it was no longer realistic in the face of the economic downturn expected after last month's Brexit vote.

Now shadow chancellor Mr McDonnell is calling on the Government to tear up the Charter for Budget Responsibility, passed by Parliament in October, which requires it to hit surplus by 2019/20 and maintain it every year after that "in normal times".

Labour is using an Opposition Day debate in the House of Commons to call on new Chancellor Philip Hammond to drop the "discredited" Charter, which Mr McDonnell warned would mean cuts in public investment if it stays in place.

Mr McDonnell said: "The Tories want to pretend to the British people that just because they had a change of Chancellor that they have had a change of policy, but the truth is that George Osborne's failed economic plan is carrying on under Philip Hammond.

"If this is not the case, then he can join with Labour in voting against the planned cuts to investment spending and in-work benefits that his predecessor announced in the Budget built on failure back in March.

"Phillip Hammond cannot keep saying he is waiting till the end of the year because the Government he was part of didn't plan for the fallout of Brexit from a referendum that they called.

"Britain is being placed on hold by the Tories, as there are families and businesses around our country who are planning ahead now, who cannot wait for the Chancellor to finally make up his mind."

Labour's motion calls on Mr Hammond to ditch October's Charter and bring forward an alternative "which provides the basis for stabilising our economy and provide long-term investment for growth".