Former chancellor Philip Hammond has urged Boris Johnson to tell the public “some difficult home truths” ahead of next week’s Budget.
The ex-occupant of Number 11, who was a close ally of Theresa May, also said the government should ditch “very extravagant” promises from its manifesto.
Lord Hammond of Runnymede told the BBC he broadly supported financial assistance measures during the pandemic, but remains concerned about Downing Street’s priorities in the future.
“My fear is that, as a populist government, giving money away is always easier than collecting it in,” the 64-year-old said.
“And the government will be tempted not to move quickly back to normalising the relationship between government and citizen, the balance between taxing and spending, as we move out of the crisis and into the next phase, which is dealing over the longer term with the legacy of this Covid crisis – what the economists called the scarring effect on the British economy.”
Lord Hammond was appointed to the Lords by Boris Johnson despite being stripped of the Tory whip as an MP in 2019 for joining with those attempting to block a no-deal Brexit.
His warning came two days after Labour claimed chancellor Rishi Sunak’s “economically illiterate” plans risk “crushing” Britain’s pandemic recovery under a “mountain of debt”.
Shadow Treasury minister Bridget Phillipson warned that some firms face having to start paying back Covid loans before lockdown restrictions are fully lifted, putting them at risk of going bust.
The government, meanwhile, has flagged that Sunak may not need to raise taxes to reduce the budget deficit built up by the pandemic.
Financial secretary to the Treasury Jesse Norman told MPs last month that any post-Covid recovery could be strong enough to avoid tax rises.
Lord Hammond, in his maiden speech last month, called on Whitehall to give “greater focus” to the financial services industry in its post-Brexit talks with the EU.