A tearful Rachel Reeves bore the brunt of Labour anger over the handling of the latest welfare vote as MPs called for a reshuffle, suggesting the Chancellor could be in the firing line.
A visibly emotional Reeves struggled to contain her tears in the Commons chamber during Prime Minister’s Questions as she and Sir Keir Starmer came under pressure over Tuesday’s messy disability benefits u-turn.
While No10 and Treasury sources denied her upset had followed a row with the PM, they refused to say more beyond stipulating that her tears were related to a “personal matter”.
But Keir Starmer added fuel to the speculation over her future when he failed to make a commitment in the Commons Chamber that the Chancellor’s was secure.
As a result nervous markets reacted with the value of the pound falling and long-term Government bonds rising – increasing the cost of borrowing.
No10 was forced into a hasty clarification with the official spokesman saying Reeves will remain in her post for the full parliament.
No 10 said the Chancellor “is going nowhere, she has the Prime Minister’s full backing”.
They added that Starmer also has full confidence in Work and Pensions Secretary Liz Kendall following the debacle which saw a last-minute U-turn on reforming Personal Independence Payments for disabled people in order to stave off a damaging rebellion and save wider welfare reforms.
Kendall had opened the debate on welfare reforms vowing to press ahead with the changes to PIP – which would have made it more difficult to claim – but it is understood the decision was taken to resort to an emergency concession when it became clear MPs were not happy about the timeline.
Multiple MPs said they could not support restricting eligibility for PIP until they had seen the outcome of the review into how the assessment process might change.
Government sources said, when it became clear the position of the Bill was untenable, the decision was taken to announce a large chunk of it would be removed and reviewed at a later date.
But the concession will cost the Government billions of pounds in savings that had already been factored into the budget, leaving an estimated £5bn hole in Reeves’s calculations.
A source said the Treasury team was furious at Starmer for signing off on the policy change, which leaves the Chancellor with a large hole in the public finances.
The original welfare reform package had been due to save £5bn for the Treasury.
Kendall herself is understood to be relaxed about the final shape of the bill – which still includes employment support reforms but relaxes the timetable for accompanying benefit cuts.
A source pointed out her team had been warning No10 for months about the need to get Labour MPs on-side and were dismissed.
Blame falls on Rachel Reeves
Labour MPs are, however, blaming the Chancellor for the debacle.
Insider said it was Reeves who had set the stringent timetable to achieve the welfare savings, which created the need to rush through the PIP reforms in the first place.
One MP told The i Paper: “I think we need a reshuffle to reset things”. They suggested the Chancellor may quit if she is not moved after being undermined.
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“There have been so many U-turns put on her you wonder if she might just go,” they said, referring to the backdown on cutting winter fuel payments for millions of pensioners.
Another Labour insider said there must be a “reshuffle imminent, surely – it’s the only way to break with the past”.
They said MPs’ staffers believe a change is now needed and when asked if Reeves should go simply replied: “No comment.”
On Labour sources said the inflexible timeline set by the Chancellor had derailed the welfare reforms to the point that ministers would be fearful to attempt any further cuts.
“This comes back to Rachel’s [spending] rules and on this specifically she set the timeline. There is no way the government will touch welfare again.”
No10 said no reshuffle was imminent.
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