Reeves could take Starmer down with her

The received wisdom in Westminster is that the fates of Sir Keir Starmerand Rachel Reeves are intertwined.

Little wonder, then, that Downing Street was continuing to offer the Chancellor its wholehearted backing on Saturday night.

But No 10 and No 11 alike will be aware that this is the first time Ms Reeves’s position has looked in genuine peril – and her collapse could well take the Prime Minister down with her.

Ms Reeves was fighting for her job on Saturday after the Office for Budget Responsibility (OBR) published a blow-by-blow account of its discussions with the Treasury in the run-up to last week’s Budget. It revealed that a series of statements from the Chancellor and her officials had exaggerated the fiscal shortfall she faced, laying the ground for tax rises and higher welfare spending.

It has now emerged that Sir Keir knew the truth about the OBR’s figures and was happy with the pre-Budget speech given by Ms Reeves, directly implicating the Prime Minister in her apparent betrayal of voters’ trust.

Having endured a difficult 72 hours, the next three days are likely to prove even more critical in determining the fate of Sir Keir’s right-hand woman.

Ms Reeves will tour broadcast studios as she takes part in the traditional post-Budget morning media round on the Sunday political shows.

Questions about the extent to which Ms Reeves has broken Labour’s manifesto promises will persist. There are now also even more serious charges to answer about whether voters and the markets were deliberately misled – an extraordinary, unprecedented charge.

Even in the event that Ms Reeves emerges from the Sunday shows relatively unscathed, Sir Lindsay Hoyle, the Commons Speaker, is almost certain to grant an urgent question on Monday about what has happened. That would force the Government to provide answers.

One Labour MP insisted Ms Reeves must appear before the Commons on Monday – rather than sending a junior minister – “so we can have clarity on the issue”.

A second backbencher told The Telegraph that it was hard to see how both Ms Reeves and Sir Keir could continue in their posts.

They said: “It really does feel at the moment that Starmer could run across a road and rescue a dog from a lorry and still get the blame for something.

“They’re at that stage, and it’s how to see how they come back from it. We’re managing decline where people are crying out for real change. This is the worst Labour Government in recorded history.”

A third MP added: “The Chancellor is in deep trouble. It’s important to be straight with the public.”

Whether Ms Reeves shows up to the Commons in person or forces a Treasury minister to act as a fall guy, the questions will not stop there.

It is a remarkable deterioration from Wednesday night when Rachel Reeves sat back on to the green benches after her Budget statement, surrounded by MPs waving their order papers in jubilation.

Gone already is the goodwill from even Ms Reeves’s staunchest backbench critics, who rejoiced as she finally yielded to their demands to abolish the two-child benefit cap.

Instead, Ms Reeves now faces the wrath of her own MPs, as well as scrutiny on the Commons floor and an investigation into whether she misled the markets.

Through pre-Budget briefings to newspapers and an extraordinary early-morning press conference, Ms Reeves had prepared both voters and the markets for manifesto-busting tax rises, which she suggested would be necessary in light of the OBR’s revised productivity forecasts.

In the end, a dreaded income tax increase never came to pass, although billions in stealth taxes on workers broke the spirit of Labour’s general election manifesto all the same.

But while Treasury insiders and sources close to Ms Reeves briefed journalists about a £20bn to £30bn black hole in the public finances, Richard Hughes, the OBR chairman, said that at “no point” had the Chancellor ever faced a shortfall of more than £2.5bn.

Just days before Ms Reeves’s breakfast television address to the nation, Mr Hughes even assured her that she had a surplus of £4.2bn.

So much for the supposed deficit in the public finances that had long been trailed by Ms Reeves’s advisers in the media, and the Chancellor herself at her Nov 4 press conference.

The extraordinary disclosures confirmed that the tax rises were driven not by necessity but ideology, casting grave doubt on any remnants of the Government’s integrity.

Mr Hughes will appear before the Treasury select committee on Tuesday.

While much of the questioning will no doubt focus on the OBR’s embarrassing early publication of the Budget before Ms Reeves delivered her speech, he may also use the occasion to settle some scores and double down on the watchdog’s version of events.

And the Government’s political woes for the week may not start and end with the fallout from the Budget debacle.

On Monday, Angela Rayner is expected to meet parliamentary colleagues to discuss her next moves after Sir Keir watered down his former deputy’s workers’ rights laws.

Ms Rayner’s flagship legislation included a commitment to protecting employees from unfair dismissal from day one, which is now to become six months – down from the current two years.

Only this month, the MP for Ashton-under-Lyne – who quit the Cabinet in September after a Telegraph investigation exposed her tax affairs – urged the Prime Minister and Peter Kyle, the Business Secretary, to introduce the Employment Rights Bill “in full”.

While she is likely to focus on ensuring the rest of the Bill remains unchanged, Ms Rayner’s manoeuvrings will nonetheless provide further cause for concern in Downing Street.

One of the most frequent criticisms of Sir Keir during his first year and a half in Downing Street has been that his premiership all too often exhibits a bunker mentality.

Even his and Ms Reeves’s lifting of the two-child benefit cap represented a significant about-turn that followed sustained political pressure and went against much of what the Prime Minister had said before.

Sir Keir’s decision to stand four-square behind Ms Reeves, insisting that he was fine with her marching voters and the markets up the hill only to march them back down, is yet another sign of that bunker mentality in action.

There are now many contenders for the embattled Prime Minister and Chancellor’s worst weeks to date. The week just gone is one of them. The week to come, however, could be worse still, and may well set in motion the terminal decline of this government.

[Source: Daily Telegraph]