Britain is being torn apart by a wave of poverty that can only be beaten back through a huge injection of government spending, Gordon Brown has claimed.
Rising unemployment and a spike in the number of small businesses facing collapse will make many thousands of people destitute and leave Britain scarred and poorer, the former Labour prime minister said as he called for Chancellor Rishi Sunak to make a temporary £20-a-week rise in universal credit permanent.
Mr Brown warned of a "revolt" by Northern workers that will trash the Tories' red wall agenda unless funds are shifted from affluent areas, particularly in the south.
At a time of record borrowing, this is likely to add to expectations of serious tax hikes in the near future.
Speaking at an event organised by the Resolution Foundation think tank, he said: “I say to the Chancellor – we supported you when you did the right thing when the crisis began. Now, unfortunately, you are behind the curve.
"You must get ahead of it immediately by promising that £20 per week support will continue, and by raising child benefits.
“We have got to do something about child poverty, otherwise in the new year we will see a far more divided, fragmented, polarised, angry and really desolate Britain.”
If the Government does not crank up spending even further, Britain will suffer "a Northern revolt from the poorest communities of the UK who do not see any levelling up, but have seen levelling down", Mr Brown said.
He warned that youth unemployment is rising, and said the Black Lives Matter protests earlier in the year reflect higher unemployment among ethnic minorities.
Mr Brown, who served as chancellor between 1997 and 2007 and was then prime minister until 2010, said: "If [the Conservatives] do not announce there will be a new anti-poverty programme, they will face a rebellion across the country. Britain will become a two-nation Britain, more divided between rich and poor than at any time in this generation."
This means a series of "huge" spending commitments, he said, despite the already extraordinary level of government spending that is set to push the budget deficit to a new record of £400bn this financial year.
In a nod to tax rises, Mr Brown said: "The scale of resources needed for this are pretty massive.
"They have got to recognise unemployment is a huge problem costing money, poverty is a huge problem costing money, the reform of social care is going to be a huge problem. They are going to have to find far greater resources than they think they are looking for at the moment."
The Chancellor is likely to have "to tell the south, or the richest parts of the south, he is going to divert resources to the north", he said.
Mr Brown said the problem is urgent, and called on Mr Sunak to offer more cash in his spending review next week. He said: "I just don't want to see children going hungry at Christmas."
Meanwhile Robert Chote, former head of the Office for Budget Responsibility spending watchdog, said that the combination of a smaller economy and higher spending risks leaving the UK with a permanently larger state sector after Covid is beaten.
This is particularly likely if temporary benefits to help families through the pandemic become permanent, he said, and if at some point in future interest rates on the Government’s debt of more than £2 trillion start to increase.
Speaking at the Bristol Festival of Ideas, Mr Chote said: “Although the economy will recover and grow again, it never gets back to the path that it would have been on beforehand [pre-recession], which is the lesson that we had to learn coming out of the financial crisis, and it was that which required, with much debate, the fiscal consolidation that emerged.
“With the public finances in mind, the size of the hole you need to fill in at some point reflects importantly that degree of [economic] scarring, and if we come out of this crisis essentially accepting that we need to spend, year in, year out, a higher proportion of our national income on health and social care than we did before.”