‘Where’s Rachel?’: As Starmer sinks, Reeves is planning for the next PM

Ever since Sir Keir Starmer’s premiership was thrown into peril by a stalled coup last month, critical Labour MPs have been increasingly angered by the conspicuous absence of his Chancellor.

“Where has Rachel been?” fumed one Cabinet source. “There seems to be an accepted view in the Treasury that if Rachel went out to bat for the PM it would be a sign of weakness – that the Government was about to collapse. But what they seem to fail to notice is that the fire is already at the gates and she is nowhere to be seen.”

Her low profile has not gone unnoticed beyond Westminster. Attendees at the Confederation of British Industry’s annual business dinner in central London on Thursday night were “extremely miffed” that Reeves cancelled at the last minute.

“It was a really sweaty room. We all had to be there by 5pm on a Tube strike day to hear a lecture about business productivity, when we’d had to leave work early. So that went down badly,” said one source.

“Then she didn’t even turn up. They told us she’d been delayed by overrunning business in Brussels. Instead, we had to listen to Darren Jones give a really boring speech about AI.”

So where has she been? Critics accuse Reeves of spending the last few weeks holed up in the Treasury exploring what one called “mad” soft-left policies – rent and food caps among them – in an apparent attempt to woo Labour leadership hopeful Andy Burnham and his supporters.

It comes as the battle to become his Chancellor is intensifying, with Reeves, Ed Miliband, Shabana Mahmood and even Wes Streeting all thought to be vying for the position.

It may be working. The Mayor of Greater Manchester is understood to be weighing up whether to retain Reeves, having been lobbied by MPs who fear she is the only candidate capable of safeguarding the public finances.

One minister, who said they would back Burnham in a leadership election, was adamant he must stick with her. “The reason interest rates have been held – and not gone up off the back of Iran – is because of her handling of the economy. It wasn’t guaranteed they’d be held. It’s because of her stewardship that they have.

“I, along with others, will be making it clear that if Andy becomes leader he has to keep her in post if he wants to avoid unnecessary instability.”

Another like-minded MP put it more bluntly, insisting Burnham had already made up his mind. “It’s a done deal,” he said. “The last thing Andy will want to do is spook the markets.”

‘She’s looking what comes next’

Reeves, for her part, is understood to have launched a rearguard action to save her job, telling friends she would like to stay on even under a new Prime Minister.

Back in 2015, when Burnham last stood for the Labour leadership, Reeves was among the first MPs to endorse him, and allies say the pair were close enough that he would have made her shadow chancellor had he won.

“She is clearly already looking beyond Starmer for what comes next,” one Cabinet source said.

Her supporters compare the situation with former Conservative Prime Minister Liz Truss turning to Jeremy Hunt, known as a “safe pair of hands,” to steady the economy after her disastrous mini-Budget.

A senior Labour MP questioned the extent to which a new leader would be able to break with current government policy. “You’ve still got the same manifesto, the same amount of money,” they said. “What, you’re going to grow the economy magically in the next six months or a year? You’ve still got broadly the same people. Let’s not overblow the radical differences.”

Others have warned leadership contenders against making pledges which would be impossible to deliver.

“There’s a few of us around saying, ‘just be careful about how far you push it’,” said one Labour MP, noting that Burnham’s team had already had to row back on some “loosely phrased” comments.

In recent weeks, Burnham has been forced to clarify that he will not try to return the UK to the EU and that he supported Reeves’s strict fiscal rules, having previously said Britain was too “in hock” to the bond markets.

“Look at what’s going on well in government, take time to take stock,” the MP added.

MP anger over Reeves’s ‘mistakes’

However, not everyone is convinced Reeves will survive. Some Labour MPs believe she is “toast”, and that “every single big decision has been her fault”.

“Maybe it was the right thing to do to cut the winter fuel allowance. But you can’t do it in the way that she did. So she has to go,” one source said.

Others point to comments made by Burnham and his allies that suggest they may attempt to depart from her economic programme.

In an interview in April, Burnham argued there was “certainly a case” for treating higher defence spending as exceptional – sitting outside the fiscal rules – given the security situation in Europe and the pressure to rearm. He has since distanced himself from the remarks.

His allies are urging a more radical approach to taxing wealth, including a so-called land value tax to replace council tax.

Burnham himself has said little about his plans, insisting he wants to keep the Makerfield by-election focused on local issues.

But on Thursday night’s edition of BBC Question Time – where he confirmed he would join the race to succeed Starmer if there is a contest – he hinted at raising the income tax personal allowance. “I’ve heard it on so many doorsteps, and I’ve said to my team: let’s have a proper look at this and let’s develop a policy,” he told the audience.

Reeves, who has seen polling earn her the title of the UK’s most unpopular chancellor in modern history, has previously come under fire for freezing income tax and National Insurance thresholds, which have dragged many more people into paying higher bands.

There has been widespread speculation that Streeting, who resigned as Health Secretary last month, could strike a deal with Burnham – backing his leadership in return for a senior Cabinet job. Streeting as Chancellor, one MP said, would be “a really good idea for trying to reassure the markets”.

But some MPs are furious with him over recent comments calling for tax cuts for businesses. Last weekend he suggested cutting employers’ National Insurance to encourage firms to hire young people, telling The Sunday Times: “I think we should be thinking actively about how to incentivise, whether that’s through targeted reduction in employers’ National Insurance (NIC) or other kinds of recruitment and retention incentives.”

A minister fumed: “Wes did himself a disservice with his criticism of raising NICs on employers – when it was that which handed him the record investment for the NHS.”

Burnham path to No 10 ‘not straightforward’

For all the jockeying, some of Burnham’s allies worry he has not done enough thinking about government – one of the key criticisms levelled at Starmer before he reached Downing Street.

“I think they’re more worried about winning than about having a plan for what comes next, which some people around him are worrying about,” one insider said. “There’s also concern that those around him have already been offering jobs to too many people – some of whom are going to be left disappointed.”

Sources on the ground insist the Makerfield race remains “incredibly tight” between Labour and Reform, though Burnham remains the bookies’ favourite.

Should he win the by-election on 18 June, some allies say his path to Number 10 is still far from straightforward.

One minister raised concerns about the Greater Manchester mayoral by-election that a Commons victory would immediately trigger.

“If he wins, there’s automatically a by-election. But if Labour loses that, one of his first acts in Parliament will be to inflict a hugely damaging loss on the party. Greater Manchester is arguably a bigger prize for Reform than Makerfield, and at the moment, they’re odds-on to win it.”

The manner of any victory, the same source added, will also be crucial to a leadership challenge. “If the results show he’s won, but only because of the Reform vote share, that’ll put question marks over whether it was down to him. But if he wins with a share well above and beyond that, it strengthens his argument.”