Prime Minister Sir Keir Starmer has said Reform UK’s policies would “crash the economy”, comparing Nigel Farage to former PM Liz Truss.

In a speech attacking the Reform leader, Sir Keir accused him of “fantasy” economics and promising unfunded tax cuts.

Reform made big gains in the English local elections earlier this month, cementing it as a prime challenger to Britain’s traditional main parties.

A spokesperson for Reform dismissed the prime minister’s comments as a “desperate attack” from a party “behind in the polls”.

Sir Keir’s speech at a business in the north-west of England came after Farage set out a number of policy pledges on Tuesday.

“In opposition we said [Liz Truss] would crash the economy and leave you to pick up the bill,” the PM said.

“We were right. And we were elected to fix that mess.

“Now in government, we are once again fighting the same fantasy – this time from Farage.”

Labelling Farage as “Liz Truss 2.0”, he said the Reform leader was making “the exact same bet” as the Conservative former PM, “that you can spend tens of billions on tax cuts without a proper way of paying for it”.

Sir Keir accused Farage of “using your family finances, your mortgage, your bills as a gambling chip on his mad experiment”, adding: “The result will be the same.”

The prime minister sought to contrast himself personally with Farage, saying he knew “what it’s like when your family can’t pay the bills”, and that was why Labour would “never put working people through a crisis like Liz Truss ever again”.

Truss’s mini-budget in 2022, which included £45bn of tax cuts funded by borrowing, sparked turmoil on the financial markets and contributed to increased mortgage rates.

Sir Keir’s speech is further evidence that the prime minister now sees Farage as his principal political adversary.

Asked why he was focusing so much on Reform, Sir Keir said the Conservative Party had “run out of road” and were “sliding into the abyss”.

He added: “The choice at the moment is between the choice of 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 billions upon billions upon billions, tens of billions of pounds, in an unfunded way, which is an exact repeat of what Liz Truss did.”

In a speech on Tuesday, Farage pledged more generous tax breaks for married couples and to restore winter fuel payments for all pensioners.

He also said Reform would scrap the two-child benefit cap, which some Labour MPs have been calling for.

The policy prevents most families from claiming means-tested benefits for any third or additional children born after April 2017.

Asked whether he would abolish the cap, Sir Keir said he was “determined” to reduce child poverty and a taskforce was looking at “all options”.

“There isn’t a single bullet, but I’m absolutely determined that we will drive [child poverty] down.”

Some economists have questioned how Reform would fund its policies, particularly a commitment to raise the threshold at which someone starts to pay income tax from £12,570 to £20,000.

The Institute for Fiscal Studies think tank said the policy could cost between £50bn and £80bn a year – and that Reform had not spelled out how they would pay for this.

“Of course they don’t have to do that yet – we’re not at a general election,” said IFS economist Stuart Adam. “But at some point, if they’re going to be a party of government, they would have to make those numbers add up.”

Reform has said its policies would be funded by scrapping net-zero climate measures, stopping hotel accommodation for asylum seekers, ending diversity and equality initiatives in the public sector, and cutting the number of quangos – bodies which are funded by taxpayers but not directly controlled by central government.

May’s elections saw Reform make big gains at the expense of both Labour and the Conservatives – winning one by-election and two mayoral races, as well as gaining 677 new councillors.

The party won most votes, most seats and overall control of most councils.

Reform chairman Zia Yusuf said polls suggested that the public saw Reform as a “viable alternative”.

“We’re always being told by the two old parties that there’s no money left,” he said.

“There’s infinite money to give away our sovereign territory and to house illegal migrants at the taxpayers’ expense, but when it comes to British pensioners there’s no money left.

“People can see that’s upside down.”

Responding on social media to Sir Keir’s criticism of her government, Truss said: “Repeating lies is not going to fix the economy…

“Britain is headed for a real economic crisis – not the confected crisis that the establishment used to sabotage my policies.”