Starmer ‘faces Red revolt led by Rayner on austerity Budget’

Keir Starmer is facing a revolt from ministers over limiting spending ahead of the looming Budget.

Ministers including Angela Rayner are believed to have lobbied the PM after being told by the Treasury that they need curb costs.

Justice Secretary Shabana Mahmood and Transport Secretary Louise Haigh are also said to have protested. 

The backlash – which has reportedly delayed the submission of spending plans – emerged as Chancellor Rachel Reeves scrambles to fill what she has described as a ‘black hole’ in the public finances.

Ms Reeves is poised to unveil an eye-watering £40billion worth of tax hikes and spending cuts on October 30. 

However, tax is likely to make up the overwhelming bulk of the package – including increases to national insurance, capital gains and inheritance tax. 

That could make it the biggest in four decades, exceeding the £31.3billion brought in by Rishi Sunak‘s post-Covid Budget in Spring 2021. 

It might even be bigger than Norman Lamont’s 1993 mega-raid, which was worth around £38.5billion in current prices. That came in the aftermath of the Black Wednesday sterling crisis. 

In a round of interviews this morning, Education Secretary Bridget Phillipson acknowledged ‘difficult choices’ were being made ahead of the Budget and Spending Review – with the latter covering 2024-25 and 2025-26.   

She told Times Radio there will be ‘no return to austerity’ and added: ‘We do, all of us have to make some really tough choices because of the inheritance… given to us by the Conservatives.’

Ms Phillipson told Sky News the Government is ‘having to confront’ problems, aadmitting there have been ‘conversations, meetings, correspondence as part of the usual Budget process’.

‘I’m not going to get into a discussion about meetings or private conversations that we have both within Cabinet and as part of our Cabinet responsibilities, that wouldn’t be a responsible thing to do,’ she said.

Downing Street said this morning that the overall total Whitehall budgets – known as the ‘spending envelope’ – have now been submitted to the Office for Budget Responsibility.

‘The Prime Minister and the Chancellor have agreed what is known as the major measures… which have been submitted to the OBR as per a timetable that is set out on the OBR website,’ a spokesman said.

‘That submission includes the overall spending envelope, which is now closed, and then individual departmental spending review negotiations are now being concluded,.’

Some departments have yet to settle their individual budgets with the Treasury, it is understood, which means any extra cash they press for would have to come from another department’s budget.

Since entering office, the Government has pointed to a ‘£22billion black hole’ in the UK’s finances, and the Treasury is now said to have identified a far larger £40 billion funding gap which Ms Reeves will seek to plug to protect key departments from real-terms cuts and put the economy on a firmer footing.

Earlier this week, the Prime Minister declined to rule out increasing employer’s national insurance contributions, and told the BBC that the party was ‘very clear in the manifesto that we wouldn’t be increasing tax on working people’.

Labour’s general election manifesto pledged that the taxes on working people will be kept ‘as low as possible’.

The party promised to not increase ‘National Insurance, the basic, higher, or additional rates of Income Tax, or VAT’.

Downing Street denied on Wednesday that the Prime Minister gave the public the wrong impression about the scale of the tax rises the party would implement.

Asked whether Sir Keir had misled voters, his press secretary said: ‘No. So we stand by our commitments in the manifesto, which was fully funded.

‘We were honest with the British public, both during the election and since, about the scale of the challenge that we would receive.’