Who wields power inside Labour? One government aide recently suggested to me that the answer is three people: Keir Starmer, Morgan McSweeney and Rachel Reeves. But this week was a reminder that there is a fourth force: Angela Rayner.
The Deputy Prime Minister’s leaked memo to Reeves, in which she proposed eight tax rises, has exposed the cabinet’s private divisions and intensified the debate over Labour’s future. Rayner’s allies deny that they were the source of the leak, maintaining that she does not engage in such tactics (the Telegraph, they suggest, is hardly the natural place to win a fair hearing for higher taxes).
But to others inside government this stretches credulity. “When you write a letter like that and you share it on a copy list that wide, you basically write it to get leaked,” one Labour aide says (the memo’s placement in the Telegraph is, by this logic, a cunning ruse).
To the classic question “cui bono?” most believe the answer is Rayner. “It’s obviously organised,” a left-wing MP comments. The Deputy Prime Minister – who enjoys her own mandate from Labour members – has long held concerns over the government’s direction. She fears that real-terms spending cuts to her Housing, Communities and Local Government department could render targets such as building 1.5 million homes by the end of this parliament impossible to achieve.
By proposing (and costing) tax rises that would raise billions, such as removing inheritance tax relief for AIM shares and closing the commercial property stamp duty loophole, Rayner has made it harder for Reeves to argue that there is no alternative. Should the Chancellor follow her lead at the next Budget, the Deputy Prime Minister will be able to claim credit. Should she decline, Rayner has ensured her opposition was put on record – and can one day be recalled. Heads, Rayner wins. Tails, Rayner wins.
(Reeves’s aides point out that she has already raised taxes by £41.5bn, with numerous measures targeting the wealthy: the abolition of non-dom status, VAT on private school fees and higher capital gains tax among them. While emphasising that her fiscal rules are “non-negotiable”, they notably do not rule out further tax rises.)
Some regard Rayner’s memo as a warning not only to Reeves but to Keir Starmer (who Rayner came close to challenging when removed as party chair in 2021). The Deputy Prime Minister has roamed far beyond her brief, proposing not only tax rises but also curbs on migrant benefits: restricting access to the state pension and Universal Credit and increasing the NHS surcharge on foreign patients.
We already knew that Rayner was a serious political player. She is regarded by MPs as the frontrunner to succeed Starmer with an approval rating of +46 among Labour members (putting her second only to Ed Miliband). But now “Raynerism” is becoming clearer: a programme of progressive tax rises and tougher migrant rules offers something to both the soft left and Blue Labour. No rival candidate enjoys greater reach across Labour’s quarrelsome factions (Rayner is also close to both Tony Blair and this week’s NS guest editor Gordon Brown).
In the view of one former Treasury aide – who said the memo went far beyond customary ministerial exchanges – Rayner has fired a “warning shot” at Starmer by offering “an alternative vision from across the water”.
Showing her feel for politics, the Deputy Prime Minister declared in the first line of her memo that her policies “would be popular, prudent, and would not raise taxes on working people”. Popular is one thing Labour certainly isn’t at present. Should that remain the case, Rayner has ensured that eyes will turn to her as the natural alternative.
[See also: Arise, Lord Michael Gove]
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