‘No 10 is dysfunctional’: Labour heads for a summer of discontent

As negotiations intensify in advance of the spending review next month, tensions around the cabinet table are blowing up. Both Angela Rayner, the deputy prime minister, and Ed Miliband, the energy secretary, stormed out of recent meetings with Darren Jones, the chief secretary to the Treasury, in protest at the demands being put on their departments. “It’s pretty brutal,” one cabinet minister says. “There will have to be tax rises in the budget. We can’t squeeze spending any more.”

If Keir Starmer thought last week was tough, as he was berated by dozens of Labour MPs in a Commons committee room then announced his first major U-turn, on the winter fuel allowance, things are about to get a lot harder. At the start of what is turning into a Labour summer of discontent, cabinet unity is fraying and a growing number of backbenchers are growing rebellious. “There’s a major wobble,” one frontbencher says. “The thing people crave more than anything is leadership.”

The prime minister may have achieved three trade deals in the past two weeks but the political battle in the run-up to the 11 June spending review, which sets departmental budgets for the rest of the parliament, is becoming increasingly bitter. As talks enter their final stages, many ministers are in despair about what they see as the “unreasonable” and “impossible” cuts they are being asked to make.

There is a frustration that some spending commitments have already been announced before other departments have had their settlements agreed. Starmer insisted that the Ministry of Justice should have its allocation confirmed early so that money for new prisons could be set out ahead of last week’s politically sensitive sentencing review.

Other ministers complain about the “bean counter” short-termism of the Treasury’s thinking. They are arguing for money to invest in reforms that they say will generate savings in the longer term, but the chancellor’s officials are wary of promises they fear may never materialise.

The leaked memo detailing Rayner’s alternative tax-raising measures was seen by her colleagues as a power play that should be viewed in the context of the spending review. “Angela tends to put her head above the parapet when she senses weakness in Keir,” one minister says. “By all accounts she put in a huge spending review bid.”

Rayner and her allies deny that they had anything to do with her proposals being put into the public domain but one Whitehall source claims the document was an early draft that never reached the Treasury. “It looked like a memo written to be leaked,” a Labour insider suggests.

Meanwhile, the winter fuel allowance reversal has failed to quell a wider Labour rebellion on welfare reform and another about-turn on the two-child benefit cap is now looking increasingly likely. Backbenchers are still grumpy about the “island of strangers” immigration speech and complain about the lack of clear direction from No 10.

With Labour being squeezed by both Reform UK on the right and the Liberal Democrats and Greens on the left, one senior source says: “The overall parliamentary majority may be big but lots of MPs have very small individual majorities so they panic. Downing Street is reaping the harvest of a very clever campaign strategy but a clever campaign strategy is not a way to run a country.”

Among the new intake of Labour MPs, who experienced their first mauling from the electorate at the recent local elections, there is an impatience with the pace of change and the restraints imposed by the chancellor’s fiscal rules. “Voters are fed up with politicians saying we have no choice,” says one. “There’s always a choice. If you are in government you can shape the world but we too often act as if we are at the mercy of events.”

There is a growing frustration with the Downing Street operation. “With Tony Blair and Gordon Brown there was a clear theory of change,” one minister says. “Everyone understood the political project and it was backed up by policies, arguments and strategies. There isn’t that with this No 10. Everything has been accelerated. They spent so long seeing off Corbyn and taking back the party they had less time to think about how they want to change the country.”