Labour grandee John McDonnell has said former Chancellor George Osborne should be put on trial for “social crimes”. The former shadow chancellor issued the startling demand at a fringe panel at Labour conference, just two days after regaining the party’s whip in parliament.

Mr McDonnell told the fringe event that he “wouldn’t mind trying George Osborne for the social crimes he committed” as he launched into a furious critique of the Tories’ welfare cuts in the 2010s. He added: “I know it sounds exaggerated, but these people need to be held to account.” The left-wing firebrand recounted a number of suicides by those who had their benefits cut during the austerity era, which Mr McDonnell alleged Mr Osborne knew about.

Mr McDonnell warned that Ms Reeves’ next budget “has to be absolutely huge”, as he said both Labour and Britain are in a “dangerous place politically” because of the threat of Reform and Nigel Farage.

He was speaking just two days after being given the Labour whip back, having lost it last July for voting against the government’s plan to abolish the two-child benefit cap. He added that he is hopeful the decision to readmit him as a Labour MP signals that Ms Reeves will scrap the cap in the Budget this November.

Fellow left-wing MP Paula Barker said it was “amazing” to have Mr McDonnell back in the party, adding “he should never have been out of the party”. He said: “This is no place for factionalism in our party.”

The pair also criticised the recent reshuffle, with Ms Barker some of the moves as “mindboggling”. They both singled out the attempts to remove Ed Miliband from the Energy department as particularly odd, given his record of delivery over the past year.

Mr McDonnell said were he to meet the Prime Minister he would accuse him and his advisors of being “petty” for trying to defenestration Mr Miliband. He said Ms Reeves’ second Budget must make life better for voters immediately, and not just focus on the long term.

He pointed to policies such as rent controls, price controls on basic foodstuffs and a windfall tax on the finance sector. Mr McDonnell openly called for a change of leadership, something that didn’t stop Sir Keir from readmitting him to the party.

He warned: “Unless the party members, our affiliated unions and members of the parliamentary Labour Party stand up and assert themselves to take back control of our party, in the next period, in the Labour Party’s history we may not just lose a government, we could lose a party.”

He also sparked fury by comparing Nigel Farage to Adolf Hitler at the recent Trade Unions Congress conference, adding that Reform is a “fascist organisation”.