Housing Secretary Angela Rayner admitted paying the wrong amount of tax on a house purchase. On Friday she’ll likely find out if it’s a career-ending decision.
That’s when Sir Keir Starmer is expected to receive the results of an ethics probe into her tax arrangements from his adviser Sir Laurie Magnus. He is reserving judgement about whether or not she can keep her job.
Rayner insists she was given three separate pieces of legal advice before buying an £800,000 flat in Hove, saving £40,000 in stamp duty by not paying the higher rate reserved for purchasing additional homes.
She says the “mistake” arose because that legal advice did not “properly take account” of her complex situation, which involved a trust set up for her son who has special educational needs, but she has refused to be specific about who provided the counsel.
Magnus could find she received inaccurate or inadequate legal advice from a small-time solicitor when buying the Hove flat. Another outcome is that she received good advice but ignored it. The third possibility is that she did not provide enough information about her tax affairs.
By Thursday afternoon, Starmer was refusing to say whether or not she would remain in post, telling the BBC he needs to see Magnus’s conclusions first.
Publicly, Cabinet ministers lined up to defend Rayner on Thursday. Starmer and Rachel Reeves gave her their “full confidence” while Education Secretary Bridget Phillipson said she had “sought to be transparent” in the scandal over her tax affairs. Behind the scenes it’s a different story.
Earlier in the day Downing Street refused to say when Starmer was first made aware of key details that led his deputy to refer herself to the ethics watchdog, in a sign No 10 is trying to limit the scope of any fallout.
Starmer had hitherto appeared apparently blasé about the danger to which she had exposed both herself and his Government, and given her his full backing. On Monday the Prime Minister publicly defended his deputy over the scandal, despite knowing she was waiting for legal advice. By Thursday he was much more circumspect.
Despite early personality clashes, Starmer and Rayner enjoy a warm working relationship, insiders said on Thursday. They added Starmer is incredibly keen to keep Rayner and has spent a large amount of political capital backing her this week. He is also said to be “genuinely sympathetic” to the difficulties she has faced bringing up a disabled child.
Yet her Hove flat was defaced by “tax evader” graffiti on Thursday, while AI-generated internet memes depict her as a tax dodger. Now Labour MPs fall into two camps.
All expressed sympathy and revulsion her home had been targeted, but some warned it showed the issue had cut through with the public. Others said the issue has become a problem that outstrips any nuanced exoneration Magnus may provide on Friday.
Asked if she could survive, a No 10 insider simply replied with the shrug emoji.
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“Yesterday I thought she would be fine, today I think things are slipping. I just don’t see how she can stay in charge of housing,” one minister told The i Paper, explaining that their view was based on public opinion and in spite of the fact Labour MPs had spent the day rallying around Rayner.
Other Labour MPs were more sympathetic. “I think she’ll be exonerated, she sought advice,” one suggested.
Meanwhile an ally of Rayner suggested No 10 should not be hasty to distance itself from her, given only this week it had itself been forced into another reset. “I think they need her more than they think they do,” the source said.
Other insiders took a more nuanced view.
“At the moment two points of view can co-exist; you can think she’s still an asset because she’s working class and a victim of the [Daily] Mail and [The Daily] Telegraph snobbishness,” a Government source said.
“On the other hand, you can also think Keir is going to find it hard to keep her at housing whatever the outcome tomorrow. This might change tomorrow but right now there is a distinction. Some people may be privately saying they think she can’t survive, but no one is gathering in corners actively saying she should go,” the source added.
Should Magnus find against her, getting rid of Rayner creates a bigger political headache for Starmer than it cures. Losing a Cabinet minister may prompt a wider reshuffle than the premier had wanted. Some insiders now believe a more limited reshuffle of junior ranks has been pushed back, possibly to after the party’s annual conference.
But it’s as Labour’s deputy leader – directly elected by the grassroots – where matters are more complicated. If Magnus finds against Rayner, party sources speculated she could be given a bespoke senior “party champion” role to avoid her having to serve as deputy leader from the back benches.
Nonetheless, Rayner is a popular figure; she was sent out to defuse the row between backbench rebels and the Government over the chaotic welfare reform vote, for instance. According to multiple sources, there is no appetite in the party for a contest to replace her as deputy leader.
But, as the second most senior member of a government threatening to raise taxes on homeowners – and being herself the minister in charge of housebuilding – she faces accusations not only of ministerial impropriety but of hypocrisy.
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Her brand of working-class everywoman righteousness, so useful in opposition to bash Tories accused of dodging tax, is being thrown back at her. Lucy Powell, Leader of the House of Commons, rather bravely suggested the Conservatives are after Rayner “because she is so bloody good at her job”.
Meanwhile the row has spilled over into Conservative internal politics. Tory party chairman Kevin Hollinrake has received plaudits from colleagues for doggedly pushing the row up the agenda. On Thursday the Tories wrote to HMRC calling for it to launch its own investigation on whether or not she tried to evade tax – Hollinrake saying Rayner’s explanation “cannot withstand scrutiny”.
But the praise he has received is in inverse proportion to the criticism Tory leader Kemi Badenoch has come under for failing to go in harder against Rayner at Prime Minster’s Questions on Wednesday.
“I’d say Kemi has fallen at the first hurdle but that implies she had reached the first hurdle at all. A lot of people are in despair, and she needs to fix this,” a Tory MP told The i Paper. “Right now, she has one job: to get rid of Rayner – or if Starmer keeps her, make it incredibly difficult for them both.”
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