Michael Gove has declared war on “crony capitalists” who have “rigged the system” in their favour, as he warns that failure to reform will only fuel the rise of far-left and populist movements.

The Environment Secretary said that the Government must address the failure of capitalism in its “current form” by stripping power from a small group who assert undue influence over politicians in order to further enrich themselves.

Mr Gove, who is seen as a potential successor to Theresa May, has called for new forms of taxation and regulation which encourage big business to shift more of their capital into research, innovation for the long-term, rather than short-term profiteering.

He added that the economic outlook had grown “darker” in the wake of the financial crash of 2008, with the majority of people failing to benefit from the opportunities that capitalism once created for previous generations.

In a wide-ranging speech to the Policy Exchange think tank, Mr Gove said: "It is imperative we address that failure honestly and unsparingly, determined to identify where, and how, we have gone wrong, because, unless we rescue and re-invigorate capitalism, then we will find the engine which has generated so much of mankind's progress either stalls or moves into reverse.