LABOUR could be lost to the labour movement for good without action by unions and activists, leading left MP John McDonnell has warned.

The suspended Labour MP spoke up as Keir Starmer tried to stabilise his floundering government by turning fire on Reform leader Nigel Farage.

The Prime Minister claimed, in a speech on Merseyside, that Reform’s unfunded economic pledges would risk a repetition of the disastrous budget of former Tory premier Liz Truss, whose tax cuts sparked a market crisis.

Sir Keir’s speech reflects his attempt to present Reform as Labour’s main electoral challenger rather than the Tories, in the hope that many voters will be reluctant to risk Farage in Downing Street.

“I do think that the Conservative Party has run out of road,” Sir Keir said. “Their project is faltering; they are in decline. They’re sliding into the abyss.”

But Mr McDonnell, suspended from the Labour whip for opposing the continuation of the two-child benefit cap, accused Sir Keir of opening the door to Mr Farage by policies which “drove a knife into the heart of what I believed Labour stood for when I joined the party” 50 years ago.

Writing in the Guardian, the former shadow chancellor said: “The government didn’t just fail to address the major cause of child poverty in Britain at the moment — the Conservatives’ two-child benefit cap — but demanded that Labour MPs vote against its abolition.”

Accusing Number 10 of “political incompetence and callousness,” he added that “to then remove the whip from me and six colleagues for voting to scrap the cap showed a remarkable combination of arrogance and lack of judgement.

“At the same time, the public got view of the distasteful sight of Labour ministers accepting gifts, tickets and donations from the rich and corporate carpetbaggers.

“For that scandal to be followed by the government cutting the benefits of the poorest in our society was nauseating for many Labour supporters,” McDonnell wrote in his most powerful critique of the government to date.

“Following this up with the debacle of the changes to the winter fuel allowance and the brutal attack on disabled people’s benefits has disillusioned Labour voters on a scale not seen before in the recent history of the party.

“It has opened the door to the divisive and destructive opportunism of Nigel Farage.”

He warned that clinging to “an anachronistic fiscal rule” was “tin-eared.”

Mr McDonnell added that continuing support for Israel and Sir Keir’s use of “the language of Enoch Powell” were also causes for concern.

“Unless party members, affiliated unions and MPs stand up and assert themselves to take back control of Labour, in the next period of its history we may not only lose a government. We could also lose a party,” he concluded.

Sir Keir acknowledges the threat that Reform poses but his preferred solution is to double down on his austerity strategy.

Labour is attacking Mr Farage — who has pledged to scrap the two-child benefit cap and the cut to pensioners’ winter fuel allowance — for promising to spend too much money.

“The choice at the moment is between a Labour government that thinks stable finances are at the heart of building better lives for working people, or Nigel Farage and Reform, who only this week said they would spend tens of billions of pounds, in an unfunded way, which is an exact repeat of what Liz Truss did,” Sir Keir said.

He also denounced the Reform leader for saying that Jaguar Land Rover deserved to “go bust” where Labour had intervened to save jobs threatened by tariffs.

“We protected those jobs. Would Nigel Farage have done the same? Absolutely not,” he said.

“And that’s the question to have to ask about Nigel Farage. Can you trust him with your future? Can you trust him with your jobs? Can you trust him with your mortgages, your pensions, your bills? And he gave the answer on Tuesday. A resounding no.”

A Labour Party analysis claim that Reform’s spending plans would put £5,500 a year on an average family mortgage.

Reform argues that scrapping net zero policies would save money.