Sir Keir Starmer must “go further” to get people off sickness benefits to kick-start the economy and save millions from “a life on the margins”, Jonathan Ashworth, the former Labour MP and shadow secretary of state for work and pensions, has said.

Around 9.5 million people of working age are economically inactive, which means they are neither in work nor looking for work, according to the Office for National Statistics. Since the pandemic struck, the number of economically inactive people has ballooned by more than a million.

Mr Ashworth, who is now the chief executive of the highly influential Starmerite think tank Labour Together, is warning the Government that this is not a topic it can shirk if it wants to remove a key roadblock to improving productivity.

“Sometimes this sounds like forcing people who can’t work into unsuitable jobs,” said Mr Ashworth. “Obviously, there are people with permanent disabilities and illness who should not be forced into work.

“However, there are people on sickness benefits who want to work. Currently, there is no incentive in the system to support them. The OBR is warning this is costing billions and billions. I’ve been pushing the Government to really look at it.”

Mr Ashworth, who was intimately involved with Labour’s preparations for government as well as its attack operation against the Conservatives, places the blame for the current crisis firmly at the feet of the Tories.

He said the removal of employment and support allowance in 2017 as well as a sharp drop off in assessments resulted in a huge rise in the number of people being placed on sickness benefits. Once categorised in this way, it is hard for those who would like to work to even look for employment.

Mr Ashworth wants the Government to consider linking up welfare and mental health services, devolving more services to local authorities, offering better occupational health support and using the relatively new Universal Credit IT system to pilot different approaches around the country.

He sees welfare reform as a long-term project, although he understands the Government is looking at bringing forward a White Paper exploring these themes in the coming weeks. “The Blair/Brown government had a driving preoccupation on welfare reform,” said Mr Ashworth. “I’m urging the Government to recapture that reforming spirit.”

He believes that Rachel Reeves’s first Budget as Chancellor at the end of this month will be “the most significant moment of this parliament” and the point at which the Government “really starts to deliver on its mandate for change”.

The administration experienced one of the shortest post-election honeymoons in British political history following a landslide election victory. Within weeks, it was embroiled in the freebies row, criticised for its negativity over the nation’s finances and rocked by political infighting.

Mr Ashworth concedes the Government has not got off to the best of starts but refuses to characterise the Budget as a “reboot”.

“It’s no surprise that the first 100 days have been challenging given what we inherited,” said Mr Ashworth.

He is joining the growing chorus of voices urging the Chancellor, who he has known for 25 years, to make changes to the fiscal rules that are supposed to constrain government borrowing. Many economists believe the Chancellor needs to give herself enough leeway to invest in national infrastructure.

“This is not some arid technical debate,” said Mr Ashworth. “This is about how you get cranes in the sky, how you get houses built, how you fix crumbling hospitals.”

But, as Rishi Sunak pointed out at last week’s Prime Minister’s Questions, didn’t Reeves say last November that she was “not going to fiddle the figures”? And weren’t Jeremy Hunt’s fiscal rules already the loosest any Chancellor has subjected themselves to?

“Well, I’m saying what I would do. And Mark Carney [the former governor of the Bank of England], Gus O’Donnell [the former cabinet secretary] and Jim O’Neill [the former chairman of Goldman Sachs Asset Management] are making similar arguments.”

Mr Ashworth’s enforced move to the world of wonkery certainly does not appear to have diminished his reflexive desire to give the Tories a kicking. He describes Robert Jenrick as “weird” and Kemi Badenoch as “Liz Truss on steroids”. He said he would not be surprised if neither candidate is the leader of the Tory party at the next general election.

“Throughout this leadership campaign, the Tories have refused to confront the reasons why they lost the general election,” he said. “Until the Tory party fundamentally understands why it lost and embarks on the hard yards to change, like Labour did, I don’t think the British public will trust them again on the economy.”

He is far from complacent about Labour retaining power: “The Tories are never buried. They’re the most successful election-winning machine in the Western world. Even if I think the current two candidates for Tory leader are making huge mistakes, I would never write them off.

“My 10-year-old has got into watching WWE clips on YouTube. There’s a character in it called The Undertaker. His opponents always think he’s finished and then he suddenly sits up. The Tories could suddenly sit up at any moment.”

As a key Labour Party insider now observing developments from the outside, Mr Ashworth has a unique perspective on the power battle within No 10, which has resulted in Sue Gray being axed as Sir Keir’s chief of staff and, in the eyes of many, made the scapegoat for the disastrous start to Labour’s tenure.

Mr Ashworth said he “always enjoyed working with Sue”, which sounds suspiciously like faint praise when he goes on to describe her replacement Morgan McSweeney as “the most exceptional political talent I’ve ever worked with at staff level”.

But if he is that good, why wasn’t Mr McSweeney appointed to the position on day one? “Because he had been preoccupied with the general election planning. Look, it’s the prerogative of prime ministers to decide who they put on the pitch, who they leave on the bench and who they put on the transfer market. They’re the main gaffers; it’s up to them.”

But if a football manager pulled a player off after 10 minutes, there are going to be questions asked of both the player and the manager, right? “Look, there was all this stuff in the newspapers week in week out. And it’s no surprise that the Prime Minister wanted to deal with that. I think Sue recognised that as well.”

He described recent rumours he might join the No 10 operation as “gossip and tittle-tattle” and said he’s enjoying his new role. Labour Together was set up by Mr McSweeney and senior Labour politicians to work out how to prevent the party splitting during Jeremy Corbyn’s time as leader.

It helped the Labour front bench develop policy in the run-up to the general election. Now, in its third iteration, the think tank is helping the party prepare for the next general election in roughly 1,800 days time. “Labour governments, other than under Tony Blair, generally don’t really win full second terms, so that’s an important project,” said Mr Ashworth.

Would he like to be fighting for a seat in the next election? The career politician started working for the Labour Party 20 years ago, then became a special adviser to Gordon Brown before winning the 2011 Leicester South by-election. But then, after 13 years in opposition, just as Labour was on the cusp of power, he lost his seat.

“Yeah, how about that for a kick in the knackers? I was on the Jeremy Vine show this morning and he introduced me by reading out my Wikipedia page. Apparently, it now describes me as a TV personality rather than a politician.

“I can’t pretend I don’t miss politics. But you never know what’s around the corner.”