After a tax scandal, Britain’s government gets a shake-up

The departure of Sir Keir Starmer’s deputy prime minister makes an already weak government even weaker

The unsackable has just resigned. Angela Rayner, Britain’s deputy prime minister, the deputy leader of the Labour Party and a standard-bearer of the trade-union movement, quit the government on September 5th. She had failed to pay the correct tax on a new property; to critics that is an act of particular hypocrisy given her career of denouncing the tax records of her rivals. The small upside for Sir Keir Starmer, the prime minister, is that he can say that he is keeping his promise to enforce government ethics, unlike the sleaze-ridden administration of his Tory predecessors. The rather greater downside is that it weakens his struggling administration and opens the door to a potentially messy battle to succeed her as deputy leader. It is unlikely that the ongoing cabinet reshuffle, including the appointment of her successor as deputy prime minister (a largely honorific position) will be enough to revive Labour’s fortunes.

Photo: REUTERS

It was a very British scandal. In May 2025 Ms Rayner bought a flat in Hove, a trendy town on Britain’s south coast, for £800,000 ($1.1m). She paid the standard rate of stamp duty, a tax on homebuyers, which added up to a bill of around £30,000, on the grounds that this was her main home. In fact, she later conceded she should have paid the higher fee that is levied on second homes, meaning she owed a total of £70,000.

The cause of that error was painfully personal: Ms Rayner had sold her stake in her former family home in Ashton-under-Lyme, north-west England, to a trust for the benefit of her disabled teenage son. Yet, for the purposes of tax law, she was deemed to retain an interest in it. “The interpretation of these rules is complex,” particularly where a child is involved, said Sir Laurie Magnus, the government’s ethics adviser, in a report written at lightning speed on September 5th. Sir Laurie found that her lawyers had told her that the lower rate of tax was owed, but also that they twice urged her to seek expert tax advice.

She did not. Sir Laurie said that Ms Rayner had been open with him and felt deep regret. He had no doubt, he said, that Ms Rayner had not set out to avoid tax (others may question that). Nonetheless, failing to get the right advice was a breach of the Ministerial Code, which requires the “highest possible standards of proper conduct”.

The odd couple parted

Ms Rayner and Sir Keir were an odd match. He is a persnickety former barrister who struggles to emote; she left school pregnant at 16 without qualifications, worked as a carer before rising through the union movement, and refers to her political opponents as “scum”. She angled, rather indiscreetly, to replace him. Yet in a letter released by his office (unusual for being hand-written) he expressed “real sadness” for the exit of his “trusted colleague and true friend for many years”.

He has much to be sad about. Ms Rayner’s exit comes as Sir Keir’s government flails. He seized the moment to reset the government with a big reshuffle. Ms Rayner was replaced as deputy prime minister by David Lammy, who had served as foreign secretary and will also take the job of justice secretary. Mr Lammy had been discounted by internal critics as a lightweight, but he earned credit by building ties with Donald Trump’s administration, and has been a political ally of the prime minister for a decade. Perhaps the government’s toughest problem is controlling immigration and dealing with hotels that house asylum-seekers; Shabana Mahmood, another political ally of the prime minister—and a tough nut—replaces Yvette Cooper as home secretary. Ms Cooper takes Mr Lammy’s old job as foreign secretary.

Yet it is unlikely to be enough. Support for the Labour Party has fallen to 21% of the electorate, according to The Economist’s poll tracker, and Sir Keir is under fire from the Labour left, a faction Ms Rayner represents, much of which thinks he is squandering his moment in power with a timid agenda. Those grievances will now burst into the open with a ballot of Labour’s members for the next deputy leader. The post has long been seen as acting on behalf of the rank and file to keep the leadership honest; the contest could become a trial of Sir Keir as candidates compete by offering theories as to where he’s gone wrong.

Out but not down

All of this is of course a gift to Labour’s opponents. Nigel Farage, the leader of Reform UK, the hard-right insurgency leading in the polls, rejoiced. He started his address to his party’s conference in Birmingham several hours ahead of schedule to declare that Labour’s ballot to elect Ms Rayner’s replacement as Labour’s deputy leader would be reminiscent of the bitter ideological struggles that defined the party in the 1980s. There would, he predicted, be a crisis in the government and an election in 2027.

And while Ms Rayner said in her resignation letter that she had found the exposure of her complex family life “unbearable”, her critics doubtless feel a little Schadenfreude. This Labour government has a streak of class politics, disapproving of the sorts of wealthier Britons who too might buy a seaside flat in Hove. And disapproving even more if it looks like they tried to be clever about minimising their tax bill. For years she has been Labour’s attack dog, sent out to castigate senior Tories accused of missteps. For years, too, she has railed against those who fail to pay the tax they owe. Those who complain that Britain’s tax code has become too onerous might take satisfaction from the fact that even the deputy prime minister struggled to understand it. British politics regards no sin as graver than hypocrisy.

Still, in her resignation letter she reminded Sir Keir of the biography that endeared her so much to Labour’s members—and had, until now, made her unsackable. “The challenges of government are nothing compared to the challenge of putting food on the table and getting a roof over our head when I brought up kids working as a home help,” she wrote. In all likelihood, this is not the end of a career, but merely an intermission in the remarkable rise of Angela Rayner.