Tory leadership hopeful Tom Tugendhat warned that Sir Keir Starmer’s Government would drag the UK back to the 1970s by caving into unions’ pay demands.

In a speech in central London, Mr Tugendhat warned the Government’s actions could result in rising inflation.

And the former Army Major admitted he wishes the Conservative leadership race was quicker so that the party could take the fight to Labour.

Mr Tugendhat said: “(Sir Keir) is already losing control of pay across the public sector, with other unions now demanding more and threatening more strike action. It feels like we are heading back towards the 1970s and the days of wage-price spirals.

“Just as importantly, it’s a missed opportunity for reform and a chance to make our public services better.”

He claimed Labour was “owned lock, stock and barrel by the unions”.

“The unions gave Labour more than £25 million over the last parliament and in return Labour are giving in to the unions’ demands: scrapping laws that guarantee minimum services during strikes, ending rules that make sure strikes only happen when members actually want them and showering unions with public money, no strings attached.”

He said Sir Keir was right to warn of a “painful” budget to come because “he has splashed the cash on his friends and left you to pick up the bill”.

Tugendhat said his party created “the biggest unaccountable quango in the western world” by making NHS England independent.

He said: “I’ve already said elsewhere that my party needs to acknowledge our own failures. We said migration would come down, it went up. We said taxes would come down, and overall, they went up.

“We also need to accept that our attempts in the coalition period to reform the NHS, made with the best of intentions, failed. By making NHS England independent we created the biggest unaccountable quango in the western world.

“By allowing it to centralise power we stopped trusting frontline professionals and local staff. By creating complex clinical commissioning procedures we created a bureaucracy instead of eliminating it. By putting so much power into the hands of the NHS chief executive, we made her responsible for everything but accountable for nothing.”

He added: “We did not keep our promises on rebuilding hospitals. We did not manage to get waiting lists down.

“Now we can blame inflation, and we can point to Covid. Both of these are important factors, but no matter, we did promise more than we delivered. Now, Labour look like they’re about to make the same mistake. We need a new approach.”

And Mr Tugendhat, who is trying to woo the centrists in the Conservative Party, said he wishes the leadership race was shorter.

Asked how he felt that a new leader would not be in place for the October budget he said: “As you may, remember, I stood for the leadership before, so of course, I’m disappointed that I’m not the leader now.

“But the truth is, the Conservative Party membership is going to be making an incredibly important decision, not just for the leadership of the Conservative Party, that, of course, is important, nor indeed just to have somebody who can oppose Keir Starmer and Rachel Reeves and can take Conservative arguments to oppose them across the country.

“But actually, they’ve got to choose somebody who can offer the kind of leadership that this country needs, that is transformational, that actually sees us set up over four years, so we’re ready for government in 2028/29.”

He added: “It is absolutely right that the person we choose is tested, because the truth is, opposition is difficult. It’s not like being a minister. You don’t get fed things by the civil service and asked to approve or disagree. You’ve got to get out there and make the noise and make the weather, and that is exactly why it’s important the Conservative membership have the chance to see. Of course, I wish it was quicker.”