One minister called it the “one of the weirdest briefing decisions I have ever seen” and on Wednesday recriminations were flying in Downing Street after Sir Keir Starmer’s team conjured up a leadership crisis out of nowhere, just two weeks ahead of the Budget.
Tuesday’s briefing from inside Number 10 that Starmer would fight any leadership challenge propelled low-level Westminster gossip into a political crisis, as the prime minister advertised the weakness of his own position.
Another minister simply called the briefings “mad” and inside Number 10 the blame game had already started on Wednesday.
One ally of Starmer said: “I think some people were angry on Keir’s behalf and were trying to help. They didn’t really help.”
Downing Street is now braced for market turbulence as doubts grow about whether Starmer and chancellor Rachel Reeves have the political authority to deliver and sell a tough tax-raising Budget on November 26 and then survive long enough to see it through.
Kitty Ussher, a former Labour Treasury minister now at Barclays, has been brought in to brief Starmer’s officials in recent weeks on how markets crave political stability.
“She told us investors were looking closely at the PLP,” said one attendee at the briefing, referring to the restive Parliamentary Labour party.
Ussher noted how the bond markets wobbled when Reeves cried in the House of Commons in July, prompting speculation she was about to be sacked. Now Starmer’s aides have raised the idea that the prime minister himself might be removed by his own party.
UK government bond prices edged lower in early trading on Wednesday, with the yield on the 10-year gilt rising 0.03 percentage points to 4.42 per cent. Yields move inversely to prices.
While the initial reaction from investors was muted, Matthias Scheiber, head of multi-asset solutions at Allspring Global Investments, said a challenge to Starmer’s leadership would alarm investors.
Starmer’s team insists the briefing about the prime minister being ready to fight any leadership challenge was only “responsive” to questions being raised by journalists about a possible post-Budget coup, not an attempt to flush out a conspiracy.
“This is all hypothetical speculation,” one Number 10 official said on Tuesday night. “The PM won a massive majority and is focused on governing. Would he fight a challenge? Of course. Would any challenge be irresponsible? Yes.”
But where did this challenge come from? Andy Burnham, Labour’s mayor of Greater Manchester, appeared to put paid to talk about an imminent challenge to Starmer in September. Burnham’s attempt to talk up his own leadership credentials drew fierce criticism from Labour MPs.
Starmer’s critics, including those fancying their chances of succeeding him, believe that the moment of maximum danger for the prime minister is next May’s crucial elections to the Scottish parliament, Welsh Senedd and English councils.
One minister said: “Why would anyone want to replace Keir now and own that disaster next May?”
The general assumption among Labour MPs is that Reeves should be allowed to deliver her Budget and Starmer should be given six months to turn things around.
But Number 10 was spooked by suggestions that ministerial supporters of Wes Streeting, health secretary, might stage a mass resignation after the Budget to try to force Starmer out early, a claim that has been rejected by Streeting.
“I don’t understand how anyone thinks it is helpful to the PM to suggest he is fighting for his job,” Streeting said on Wednesday morning.
One Labour MP said Starmer’s team was convinced a coup was credible and had begun talking about it last week. People inside Number 10 confirmed they had heard “rumours” but were sceptical about them.
Morgan McSweeney, Starmer’s chief of staff, is suspected by some Labour MPs of briefing against cabinet members, although he has told colleagues that it is “categorically not true” and that while he had said that Starmer would fight any challenge, he thought such a move was very unlikely.
Starmer’s allies insist that Number 10 aides did not brief that Streeting or any other Labour MP was involved in plotting and issued a statement on Tuesday night saying that Streeting was a “brilliant health secretary”. They claim Labour MPs were behind those briefings, not Downing Street.
Streeting was blindsided by the reports and was dismayed, according to colleagues. “Wes wondered why he was getting up at 5am on Wednesday to do the broadcast media round and he had to defend this complete shambles,” said one.
“They went after Angela [Rayner], Lisa [Nandy], Lucy [Powell] and now they’re going after Wes,” the colleague added, referring to previous negative briefings against cabinet members. “At least they are doing their bit for gender equality now.”
Other names being linked to a potential leadership bid in future include Shabana Mahmood, home secretary, deputy Labour leader Powell, former deputy prime minister Rayner, and Ed Miliband, energy secretary and a former Labour leader who led the party to defeat in 2015.
But few, apart apparently from some people in Number 10, expected an imminent coup. “Nothing will happen,” said one Labour MP. “We’ll be talking about something else by Friday. But Starmer is weak.”
The backdrop to this self-inflicted crisis is the Budget on November 26, a grim political moment for a government that claimed to have fixed the public finances last year but now has to fill in a new fiscal hole largely with tax rises.
A manifesto-breaking income tax rise is expected by ministers and Labour MPs to feature in the package. Such a move would leave Starmer’s party, already languishing at under 20 points in the polls, facing allegations of incompetence and lying to the electorate.
Starmer and Reeves, reluctantly, have also accepted that Labour MPs will not be satisfied unless the chancellor uses the Budget to scrap the two-child benefit cap, a move that could cost up to £3.5bn.
Even supporters of that move can see the political risks of the chancellor putting up taxes while at the same time increasing welfare payments to people with multiple children, having failed to cut welfare by £5bn earlier in the year. “The politics are terrible,” said one cabinet minister.
But after Tuesday night’s briefings that Starmer may face a coup even before the Budget ink has dried, the politics of the November Budget has suddenly become far more dangerous.
Additional reporting by Ian Smith
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