Income tax U-turn will only hasten Starmer’s departure, MPs warn
Labor MPs have claimed the decision to tear up Budget plans has left Keir Starmer even more “weakened” and more likely to face an imminent bid to oust him.
Ministers and supporters reacted with despair to the news that plans to raise income tax had been abandoned, claiming it showed “no one is to blame” in the government.
Independent Supporters of Health Secretary Wes Streeting are said to still want him to replace Sir Keir at the coronation in a bid to get the Labor government back on track. One MP said the U-turn increased the possibility of a coup, while a minister described the Prime Minister’s position as “weakened”.
Downing Street is alleged to have rejected the Treasury’s planned income tax increase in a bid to buy Sir Keir time and stave off a coup attempt.
But the move may have backfired again, with one senior minister complaining: “This has further increased the sense of directionlessness.” Another minister said: “It feels like no one is responsible anymore.”
Meanwhile, one minister despairingly claimed that “the gilded markets are now under government control”.
The decision regarding income tax was leaked Financial Times It follows a terrible week for Downing Street, where sources say Sir Keir is prepared to oppose an attempt to replace him with Mr Streeting.
Economists warned that what appeared to be a political decision would leave the government unable to create enough buffers to protect Britain from further economic shocks, leaving the country even more vulnerable.
Instead the government looks set to use a basket of smaller taxes, such as those on gambling firms, banks and properties worth £2m or more, to plug an estimated £20bn spending black hole.
The Chancellor will also reportedly freeze thresholds for another two years and is considering introducing a new tax on high-value properties as part of measures to be announced on 26 November.
Mr Streeting has denied plans to replace the prime minister, but sources said the briefing, which attributed the blame to controversial chief of staff Morgan McSweeney, “brought to the fore” the decision on whether Sir Keir should be sacked.
A senior Labor figure said: “There are now MPs ready to act immediately after the Budget.”
Another source added: “Wes doesn’t want to be seen as the one wielding the knife, but he does want a coronation.”
The calculation by some MPs is that if Sir Keir waits until May’s devolved elections in Scotland and Wales and council elections in England, other rivals could enter the leadership race.
This could include Manchester mayor Andy Burnham taking a seat in Parliament and former deputy chancellor Angela Rayner having enough time to recover from the tax scandal that forced her to resign.
A senior Labor MP said Sir Keir’s leadership “was dead long before this U-turn, but they didn’t realize it”. They added: “They are doing it now, I am really afraid of what they will do to hold on, I am afraid it will cause irreparable damage.
“This is what the crisis of democracy looks like. To be honest, whoever is in power would face this. But it is clear that some political projects will weather the turbulence better than others. This crisis is sinking without a trace, everyone included.”
“Obviously Wes is busy pushing his colleagues out of the way and heading towards the lifeboat. Unfortunately, he too will find it burned and riddled with holes.”
Meanwhile, allies of new deputy leader Lucy Powell, who was elected to replace Ms Rayner on an anti-Starmer ticket, are proving “a real handful of people” for Downing Street.
Allies point out that the income tax decision comes just days after the party broke its manifesto promise and warned of intervention to increase VAT or workers’ national insurance contributions.
But the move was also seen as a sign that beleaguered chief of staff Morgan McSweeney was still in power despite many MPs demanding his resignation.
Mr McSweeney and welfare minister Pat McFadden are said to have led domestic opposition to the income tax rise warning of a potential breach of trust among voters – even despite a drop in national insurance in a “two up, two down” policy to raise £6bn.
Sir Keir claimed he was “assured” no one at Downing Street was responsible for the briefing against Mr Streeting. But it led to claims from MPs that he was “too weak” to remove Mr McSweeney.
One MP said: “If he can’t sack McSweeney he has clearly lost control.”
