The external material used on the 24-storey building has been widely blamed for helping to fuel the fire which engulfed the tower shortly after 1am on Wednesday.
Speculation is mounting over how such “flammable cladding” could have been used on the Lancaster West Estate building.
The Chancellor revealed on the BBC’s Andrew Marr Show: “My understanding is that the cladding in question, this flammable cladding which is banned in Europe and the US, is also banned here. That’s my understanding.”
When asked why it was used, Hammond continued: “Well there are two separate questions.
“One: is are our regulations correct, do they permit the right kind of materials and ban the wrong kind of materials?
“The second question is: were they correctly complied with? And obviously that will be a subject the inquiry will look at. It will also be a subject that the separate criminal investigation will look at.”
The Tory minister also defended the Government’s actions on fire safety, claiming ministers “responded correctly” to calls for new regulations.
An inquest in 2013 into deaths in a tower block fire urged a review of building regulations because of worries over the safety of cladding.
Another inquest in the same year called for sprinklers to be retro-fitted into all high-rise structures.
Neither recommendation was adopted by the Government, with the review of regulations kicked into the long grass by former Housing Minister Gavin Barwell – now the Prime Minister’s top advisor – just 8 months before the Grenfell tragedy.
Hammond insisted the public inquiry called by Theresa May would ultimately rule if the Government had done enough to prevent the blaze.
But he did offer a defence of his colleagues, and said: “We’ve looked, obviously, at those recommendations and what’s happened to them.
“My assessment is we have responded correctly and appropriately to those recommendations.
“It’s no good getting a Government minister on here and asking me to mark our own homework.
“The point of having a public inquiry is precisely that the judge will look at those recommendations, will look at how the Government has responded how landlords have responded, how local authorities have responded and it will be for the public inquiry to decide definitively whether that has been correctly done or not.”
An exasperated Marr hit back: “You’d have done it within five minutes if it was Buckingham Palace, with these tower blocks you have sat on this for four years.”
“I don’t think that’s true and it’s not fair,” replied Hammond.
When pressed by Marr if there would be an “urgent campaign” to get sprinklers fitted in tower blocks and other buildings such as schools. Hammond responded: “If the conclusion of proper technical evaluation is that that is the best way to deal with the problem, then of course.
“My understanding, and again, I’m not an expert, my understanding is that the best expert advice is that retro fitting sprinklers may not always be the best technical way of ensuring fire safety in a building. If it is, then it should be done.”
The inquest into the 2009 fire at a tower block in Camberwell, south-east London, which killed six people and injured 20 in 2009, ruled the regulations covering such buildings were not up to scratch.
The coroner recommended the Government review the regulations, but as recently as October 24 2016, then-Housing Minister Gavin Barwell refused to give a date on when that would take place.
He told the Commons: “We have not set out any formal plans to review the building regulations as a whole, but we have publicly committed ourselves to reviewing part B following the Lakanal House fire.”
Experts warned about the need to review the regulations again in March this year, but according to the Fire Risk Management Journal: “The Department for Communities and Local Government declined to give a date for the building regulations review, adding that it will place ‘in due course’.”
Another coroner ruled in 2013 that all high-rise buildings should be retro-fitted with sprinklers - but Barwell’s predecessor as Housing Minister Brandon Lewis said it was not the “responsibility” of the Government to pass such a law.
In the Commons on February 6, 2014, Lewis said: “We believe that it is the responsibility of the fire industry, rather than the Government, to market fire sprinkler systems effectively and to encourage their wider installation.”