There are few worse ways for a government to begin a new parliamentary term than losing a senior figure. Now, with the resignation of Deputy Prime Minister and Housing Secretary Angela Rayner, Keir Starmer’s premiership looks even more under threat. It opens him up to further attacks from opposition parties, but also from his own side, as the departure reshuffles the balance of power within the Labour Party.

Independent ethics adviser Sir Laurie Magnus’s letter to the PM today said that Rayner did not seek expert tax advice on the amount of tax that should have been paid on her properties and “cannot be considered to have met the highest possible standards of proper conduct”. Her punishment will likely include a fine, according to the BBC.

Rayner’s stamp duty mistake may have been a small one, but the headache it creates for the PM is huge. The role of deputy leader of the Labour Party is elected by the party members. Starmer can fill it temporarily, but either a new contest must be held eventually, or the rules must be changed. Neither will be welcome for the Labour leader.

A new contest for deputy leader will bring Labour infighting into the open. The Left — already disappointed with Starmer’s trajectory on economics, immigration and social issues — will be looking to install someone who can challenge the PM. The whole thing could become a proxy leadership challenge, and a chance for the Labour Left to reassert itself. Any attempt to stymie this from Starmer, like appointing an interim to give them the edge, could look like a stitch-up and provoke further anger and rebellion.

Rayner’s ministerial positions, of course, remain within the PM’s gift, but this hardly makes things any easier. Her role at Housing, Communities and Local Government was a crucial one for the success or failure of this government. Changes to planning rules are a key plank of the government’s growth agenda, while the parlous finances and functions of local government are crucial to delivering a state that looks like it is working once again. Starmer will have to find someone highly effective at driving these, without upsetting the political balance in his government.

There’s a chance this may necessitate a wider reshuffle. That is rarely a good thing. One of the things that dragged down the previous government was frequent ministerial changes. This denies ministers a chance to settle into their roles and really get policy moving, while also creating the usual bad blood around who gets moved up or down. A year into the job, Labour ministers should be getting the hang of their Whitehall briefs. Moving them around could further undermine the Prime Minister’s delivery agenda.

As for Rayner herself, a return to the backbenches could also see her become a focal point for opposition to the PM. Though damaged by this scandal, it is likely not career-ending. She remains popular with the party’s base and is no longer tied as closely to the government line. She could well become a nexus for criticism of Starmer’s direction on issues like benefit cuts and public spending. This would lay her foundations for a future leadership challenge, while bolstering the Left of the party.

For so long as Rayner was deputy, she played the role of a useful counterweight. For both the way the Labour constitution worked and the political balance, she could be to the Left of Starmer’s Right and both could co-exist. Now, that balance has to be reset. With the government’s popularity waning, and challengers in both the Greens and the Corbyn-Sultana outfit, the Labour Left will be looking to strike a blow against technocratic Starmer. This episode gives them the opportunity and marks a truly awful start to “Phase Two”.

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John Oxley is a corporate strategist and political commentator. His Substack is Joxley Writes.

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