Reeves in tears as Starmer declines to confirm she will remain chancellor

The Guardian

02-07-2025

Rachel Reeves was in tears at prime minister's questions on Wednesday as the Tory leader, Kemi Badenoch, attacked the government over its U-turn on welfare cuts.
The chancellor wiped away a tear after a series of questions from Badenoch, who said Labour MPs had said she was 'toast', and suggested the prime minister had failed to confirm that Reeves would stay in post until the election.
Downing Street weighed in immediately behind Reeves, with aides saying she was 'going nowhere' and that there would be no reshuffle.
A spokesperson for Reeves said: 'It's a personal matter, which – as you would expect – we are not going to get into. The chancellor will be working out of Downing Street this afternoon.'
Reeves had appeared to be upset before prime minister's questions had started. During the 30-minute session, Badenoch said the chancellor looked 'absolutely miserable', before pressing Starmer on whether she would be in post at the next election.
After Starmer did not directly reply, the Tory leader replied: 'How awful for the chancellor that he did not confirm she would be in post.'
As the prime minister continued to speak, Reeves wiped away a tear. Angela Rayner, the deputy leader, appeared to mouth some words of comfort to her colleague.
The dramatic moment in the House of Commons comes after Starmer withdrew the welfare cuts following a rebellion by Labour MPs.
It leaves Reeves with some extremely hard choices to come in the autumn budget on tax rises and spending priorities – including on the two-child benefit cap – after the government's welfare U-turn.
Earlier on Wednesday, sources close to the chancellor said she would have to underline to MPs that there was now £5bn less to spend on other priorities, which would have consequences for other measures – including the £3.5bn cost of scrapping the unpopular cap on child benefit payments.
The Treasury and No 10 have not definitively ruled out a change to the two-child rule but said the chaotic U-turn on welfare cuts on Tuesday night would have a major impact.
The second reading of the government's flagship welfare bill passed its first Commons test only after a central element was removed – changes to personal independence payments. The bill passed with a rebellion of 49 Labour MPs, more than three times more than the previous biggest rebellion.
Pat McFadden, the Cabinet Office minister, said explicitly on Wednesday morning that there were now tough choices to be made. 'In any budgetary decision, there's definitely a cost to what was announced yesterday, and you can't spend the same money twice, so more money spent on that means less for some other purpose,' he told the BBC.
While economists including the Institute for Fiscal Studies have focused on the need for the chancellor to raise taxes at the budget, Treasury sources said there would also be implications for spending priorities – including ones popular with Labour MPs.
'We're not going to bluff this, we're not going to hide it. We're going to be clear there is a financial cost to this,' said one ally. 'Labour MPs need to understand that. Of course, tax is one of the levers we could have to pull. We're not going to duck that.
'Those Labour MPs and charities and others who want the two-child limit lifted, how are you going to pay for it now? Labour MPs made a choice last night, and the government accepted that choice, but we are going to be honest that that choice comes at cost, because it does.'
They said they would not countenance further changes to the fiscal rules. 'That means more debt interest, taxpayers' money going to hedge funds. Is that a progressive thing?'
No definitive plans are yet in motion for how to fill the hole left by the welfare U-turn. A Treasury source said it would depend on future economic growth, as well as oil prices and receipts the Treasury receives from its clampdown on tax evasion.