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Labour descended into crisis on Friday after Angela Rayner resigned as Deputy Prime Minister, a move that triggered an emergency reshuffle by Sir Keir Starmer.
Rayner, long considered one of the government’s most prominent figures, was forced to step down following the conclusion of a sleaze inquiry. Investigators found she had failed to pay as much as £40,000 in tax linked to the purchase of a luxury seaside apartment, despite repeated denials that her affairs were in order. The scandal proved impossible to contain, with mounting pressure leaving her position untenable.
Her exit came at a particularly damaging moment for Starmer. Just days earlier he had attempted to reset his leadership, announcing the start of “phase two” of his government after a lacklustre first year in power. Instead, he was left scrambling to reshuffle his top team in the face of plunging poll numbers and growing unrest inside Labour.
The reshuffle saw significant movement at the top of government. Yvette Cooper was removed from the Home Office after failing to get a grip on the small boats crisis and was shifted to the Foreign Office. Shabana Mahmood, known for her combative style as Justice Secretary, was handed the Home Office brief. Meanwhile, David Lammy was stripped of the Foreign Office role but given the Deputy Prime Minister title in compensation as he moved to Justice.
Critics quickly pounced on Starmer’s decisions. Observers noted that instead of bold sackings or the promotion of fresh talent, most changes were sideways moves designed to keep senior figures onside. Conservatives claimed the Prime Minister was too weak to risk alienating heavyweights on the Labour backbenches. Tory leader Kemi Badenoch described Labour as “in civil war,” adding that Starmer was “shuffling deckchairs on his sinking government.” Former Cabinet minister James Cleverly dismissed the reshuffle as evidence Starmer had “put people in the wrong jobs last year,” while Nigel Farage declared Labour “deep in crisis” and “not fit to govern.”
The fallout was not confined to Westminster’s opposition benches. Within Labour, left-wing MPs immediately began organising to use the forthcoming deputy leadership contest as a chance to push the party leftward on tax and immigration. Former frontbencher Richard Burgon demanded a fully democratic contest, warning against a “stitch-up” by party bosses. Speculation also mounted that Greater Manchester mayor Andy Burnham, a longtime rival and ally of Rayner, could attempt a return to Parliament now her seat at the top of the party has been vacated.
The controversy surrounding Rayner stemmed from her ownership of an £800,000 flat in Hove while she simultaneously benefited from a grace-and-favour Whitehall residence and claimed her Manchester family home remained her primary address. Initially, she insisted she had fully complied with tax rules and even revealed she had sold her share of her Manchester property to a trust for her disabled son. But pressure grew after revelations she had ignored advice to seek specialist legal guidance.
Sir Laurie Magnus, the Prime Minister’s adviser on ministerial standards, concluded on Friday that her failure to follow advice and her reluctance to disclose the full picture until pressed by the media amounted to a breach of the ministerial code. She now faces an additional tax bill of up to £40,000, possible fines of £12,000 for “careless” behaviour, and a significant drop in her income, with her salary reduced from £161,409 to £93,904.
In her resignation letter, Rayner said her failure was inadvertent and that stepping down was painful but necessary. She described her journey from “teenage mum on a Stockport council estate” to Deputy Prime Minister as “the honour of my life.” In a personal response, Starmer praised her as the “living embodiment of social mobility,” hinting she could one day return to senior office despite breaking the ministerial code.
Her departure was described by Labour MPs as a huge blow. Former frontbencher Thangam Debbonaire told Times Radio that Rayner had once been seriously discussed as a future Prime Minister, particularly when Starmer’s own position looked shaky. Veteran MP Graham Stringer, while denying speculation he might step aside to facilitate Burnham’s return, praised the mayor as another rare figure capable of connecting with voters beyond Labour’s traditional base.
Meanwhile, the reshuffle claimed other casualties. Lucy Powell, the former Commons leader, and Ian Murray, the Scottish secretary, were both dismissed. Investment minister Poppy Gustafsson resigned after less than a year in government. Pat McFadden was appointed to oversee benefit reforms after Labour’s earlier revolt on welfare policy. No. 10 was also forced to reassure markets that Chancellor Rachel Reeves would remain in post amid rumours of discontent.
As Labour now braces for a divisive deputy leadership battle, many fear the infighting will overshadow the party’s annual conference later this month. The internal drama also risks distracting from mounting national problems, including surging borrowing costs, the highest in decades, alongside worsening inflation and unemployment.
Rayner’s fall has left Labour facing a bruising period of introspection. Once hailed as a symbol of the party’s renewal, her resignation has reignited doubts over Starmer’s strength and strategy, leaving his “phase two” project in jeopardy before it had even begun.
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