Why was Rachel Reeves crying at PMQs?

0:01This is a Global Player Original Podcast.

0:30In January, he said that she would be imposed till the next election. Will she really? She certainly won't. Mr Speaker, I have to say I'm always cheered up when she asks me questions or responds to a statement because she always makes a complete mess of it and shows just how unserious and irrelevant they are. But she talks about the black hole. They left a£22 billion black hole in our economy and we're clearing it up. And I'm really proud. I'm really proud, Mr Speaker. that in the first year of a Labour government, we got free school meals, breakfast clubs... Is this the moment the Prime Minister sealed his Chancellor's fate?

1:08Rachel Reeves looks as if she thinks she's just been fired. She is literally in tears through Prime Minister's questions. The most surreal Prime Minister's questions I think I have ever seen. What is happening to this government? Is it in freefall? Has all command and control gone? What on earth happens next? Welcome to The News Agents.

1:41It's John. It's Emily. And there is a chance that what you're going to hear in the next few minutes might sound a bit mad. Because, to be honest, we're sitting here in a state of shock. Disbelief. Yeah, and we're trying to piece together exactly what we've just seen. And we don't want to over-hype it. And we are very conscious that there could be a plethora of reasons why the Chancellor was upset today. And certainly we've heard from her team that there were personal things going on as well. But it does seem to have come at a time when no one in number 10 can really explain quite what's going on.

2:23So here is the take on what we think might be happening. So it's now 2.30 and we have delayed recording this episode for two hours because, honestly, after PMQs, we thought it could be the case that instantly we were going to get a statement from the Treasury or from Number 10 saying that Rachel Reeves has resigned slash been fired or whatever it happens to be. And we still don't know whether that is potentially possible. The word we're getting from inside Downing Street is that it's frigging chaos and you won't believe the scenes that are unfolding in there right now. Rachel Reeves, will she be Chancellor tomorrow?

2:58Will she be Chancellor next week? Who knows? And this is in a government where they said that Rachel Reeves would be the Chancellor for the whole of this parliamentary term. So let's just take you through what we saw today. We were all in the office, sort of gathered around Prime Minister's questions. It's a sort of Wednesday lunchtime tradition. And we knew that Kemi Badenok had essentially an open goal. there was a disaster of a vote last night. We'll come on to that. But what happened today was Kemme Baden-Ock had a free hit and she took it and she made Keir Starmer, the Prime Minister, feel pretty stupid for what his party had been through in the last 24 hours or maybe 72 hours.

3:44And at one point she asks Starmer directly if he's going to keep his Chancellor. and you would expect a prime minister who knew that answer was coming, who was going to keep his chancellor, to be able to say straight off, of course I have complete faith in my chancellor and she's going to be with me right the way through the parliament. He doesn't. He attacks Kemi and says, well, she's not going to get the job. We all heard that. The backbenchers laugh along with him. But then he sort of turns a corner and he doesn't take on the question directly. He says, oh, I love your questions, but not because, you know, they're so easy and they always kind of, you know, allow for misunderstandings.

4:29But at the point where he doesn't endorse his chancellor, her face seems to crumple. And I have to say it was a really, really uncomfortable watch. And she is sitting beside him and you can see her face when he is talking. and she's clearly aware the cameras are on her and she doesn't want to put her hand anywhere near her face. She doesn't want to signal that she's upset. And so you see this really quite upsetting picture of a woman who looks like she's about to, yeah, lose it. So to the explanations that have been given, and look, again, this all might sound bad in two hours' time or whatever it is when we know something different.

5:12But a spokesman has said that this was not political, It was something personal that she was upset about. And then you kind of go the ghastliness of politics, which is, well, had she not been sitting next to Keir Starmer the day after a defeat, then people would have been leaping to conclusions about that. So she felt she had to go and sit down, but couldn't hold it together. And therefore, the pain and agony that she was going through was there for public display and has led to a million questions about what on earth is going on. And I should add that on the financial markets, the pound has gone down.

5:53Big fall against the dollar on the kind of rumours that Rachel Reeves is about to go. And guilt yields have gone up. And that's really important because that means if government want to sell government bonds, they're having to pay more to investors to make them take them. And that means that the cost of government borrowing is going to go up as a result of this. This is all from someone who hasn't said a word for half an hour between 12 o 'clock and 12.30 in Prime Minister's questions. Yeah, UK borrowing costs, this is just coming through now, are having their worst day since 2022 amid speculation about the Chancellor's job.

6:31Now, we know markets do not like instability. They don't like political instability. This might be because they love Rachel Reeves, or this might be just because they don't know what's coming next and they don't like the sort of vacuum that this is creating, or that they fear somebody who is less of a fiscal hawk is coming in. In other words, that somebody might be coming in who doesn't adhere to her fiscal rules. We should just say that there is a totally different theory doing the rounds, and we don't know whether we're being fed this to try and sort of redirect our attention. But one of the stories that's now come out from her team is that Rachel Reeves had a brief altercation with Sir Lindsay Hoyle, in other words, the Speaker, on entering the Commons.

7:14And he is apparently said to have pulled her over on her conduct during Treasury questions on Tuesday. He asked her to give shorter answers. She rolled her eyes and said, uh, and he sort of told her off. Now, yes, it's possible that you kind of have a slight altercation with a colleague and it leaves you feeling a bit jittery. I'm not sure that gets you to tears on the front bench. I mean, look, I'm looking at your face and you're saying, I don't believe a word of it. And also the idea that Lindsay Hoyle is the reason that Rachel Reeves is in pieces. The Speaker, of course, has got to uphold the rules of Parliament, but the Speaker is not in charge of the Chancellor of the Exchequer.

7:53But we should say that Number 10 has denied that she's been fired, denied that she's handed her resignation and said she is going nowhere. So maybe it is at face value. Maybe we are making a mountain of speculation out of a molehill of fact. Maybe there was something very personal happened. We don't know what. And that's why she was in tears through it. But just coming off the back of this cataclysmic defeat that the government faced last night and the fingers being pointed by backbenchers at the Treasury saying, you've bloody done this by your unreasonable demands on having five billion out of the welfare budget.

8:29It's all your bloody fault, Rachel Reeves. And how weird that you called it a defeat because technically the vote was won by the government. Right. And we should just explain if you're sort of catching up to what happened last night. While Liz Kendall, who is the welfare secretary, was on her feet trying to explain why it was so important that all those who had said they were going to rebel against the bill had to support it. there were meetings going on behind her back with Starmer, with Reeves, with backbenchers who said, I'm sorry, we still need more concessions. We don't like what you've decided.

9:04We don't like this sort of new look bill whereby people on disabilities can keep their disabilities, but anyone who comes to disability allowances for the first time won't get that same amount. They called it a two tier structure. There was so much unhappiness amongst the backbenchers and presumably there was the taste of blood and power that they'd seen one concession and could get more, that while Liz Kendall was actually on her feet and before Stephen Timms had finished his pension welfare review, which is, you know, obviously what you would expect to happen first before you then put the vote to the Commons, they ended up doing another concession, another U-turn, to the absolute shock of the MPs in the chamber who couldn't really believe that two things were going on in real time, that the welfare secretary was standing and speaking and making the case for the bill that she was presenting, and the bill was being changed at the same time.

10:01And in the end, they did get it through by 49 votes, but it felt like a defeat because politically it has weakened Starmer enormously. It has basically shown he's lost his authority. It's weakened the chancellor who didn't manage to get her savings. It's economically wiped out completely the£5 billion that she said the welfare reforms would save. And by some estimates, it's even going to cost them money up to£100 million. In other words, it has been economically and politically an utter shambles. And more than that, it speaks, I think, to the recognition by the backbenchers that they now control the prime minister.

10:46that is all wrong it's topsy-turvy it is political malpractice on an epic scale what unfolded last night and let's start with the whip's office how did the whip's office ever go to number 10 and say this first set of concessions that you announced last week we've got it we're fine go ahead with the vote because you've got a majority and then find that they haven't done the counting properly and that they have not got the votes and have to make another concession that shreds what's left of Keir Starmer's authority. That's the Whip's office. How did DWP come up with a policy? The Department for Work and Pensions.

11:24That Liz Kendall's in charge of that didn't take account of the concerns that so many of these backbenchers had. How is it possible that Downing Street hadn't done the outreach to the various different bodies to get them on board, to get them on side, to cajole them, to persuade them that this is a good thing in the end and that, of course, the ballooning number of people signing on for sickness benefit just cannot be justified and has to be dealt with. Therefore, please get behind us. There was none of that. How is it possible that the backbenchers hadn't been brought in and told to put their arm around them and say, your vote is vital, we support you, we understand your concerns, we're going to deal with it.

12:00Just everywhere you look, there is political ineptitude on the grandest scale and we are one year in to this government. They're celebrating the anniversary on Friday. And I have never seen a government with such a huge majority look so utterly enfeebled. I do feel honestly like I'm sort of slightly reeling from the whole exchange today and trying to work out what this means for the place that the government goes next. Now, I think it's fair to say that if it's not a personal reason and if it's not a Lindsay Hall altercation, then there are many people around Keir Starmer and the wider Labour Party who are suggesting that the Chancellor doesn't have long in her job.

12:44And there are other people saying, I don't think Starmer realises how closely their fortunes are being tied. In other words, could Starmer replace his Chancellor without weakening himself even more? And I also think just to this whole question of authority, there is a danger that Labour looks like a party that can't govern. It can't be in government. Because if you have a whole bunch of rugged individualists, very well-meaning, many of whom been fighting for the most marginalised in society all their lives, If they are coming into government and saying, I didn't come into government to do this, to make cuts to disability, which is a totally valid ideological place to be, then all the vibes that they eventually give out, that they're not actually going to get stuff done.

13:42They are not going to change the country. And that word that Starmer had on the lectern was change. They were voted into change. And he now cannot change anything. He cannot be the radical party that he promised the country a year ago. I can't believe I'm about to use this analogy. But won't there be echoes if Starmer gets rid of Rachel Reeves? Of the quasi-quarteng? Of quasi-quarteng being got rid of by Liz Truss and Quarteng saying to her, you do this and they're coming after you next and you'll be gone very soon too. And two weeks later she was. I'm not saying the same will happen. But I do think that their fates are intertwined and I think it will take something remarkable for Keir Starmer to extricate himself from this and just make her the lightning rod for everything that has gone wrong.

14:35OK, so I'm going to just for the sake of balance, I'm going to switch this whole thing on its head and say after what happened last night, a reset was clearly really important. And this is like the thunderstorm. This is the release of tension, the release of chaos, the release of sort of, you know, the downpour. And it allows Starmer to then pick up and start again. And if I was Starmer looking at the next four years, I'd say, you must be kidding if you think you're going to get rid of me. You must be kidding if you think I'm going anywhere. You know, I have not even begun. That first year showed me the lessons, showed me the parameters, showed me the limitations of what I could do with the party.

15:16And I just need to have a firmer sense of purpose if I'm going to get stuff done. But he needs to have a story of what he's going to do because nobody knows. And people don't think that Keir Starmer knows. And that is why the backbenchers feel emboldened to say, no, Keir, don't want this. We're going to do that instead. And it's exactly right. The backbenchers are in charge of Keir Starmer, not Keir Starmer in charge of the backbenchers, as you said a moment ago. Do you remember when we were talking, I think on the night or the morning of the election, about the size of the majority? And even then, I think it was one of our early Q &As where, you know, people say, what could you get done with a 165 majority?

15:58And actually, we were always really aware that the larger the majority, the more people feel they have their freedom to go off piste. Exactly. Right. And if you have a tiny majority, then every single MP knows the importance of their vote. You cannot free will. You cannot go for your own ideology or your own constituency or your own community. You just think if I get this wrong, then the entire government could fall. I don't think anyone has that sense of collective responsibility at the moment because it's so big. You know, I can do what I want because there's 164 others that will go with the government.

16:35And the trouble at the moment is Keir Starmer is literally suffering from an over-large majority. I mean, ridiculous as it sounds, because they are people who feel that they do not have to coalesce and sort of cohere around the centre at the moment. You know, Francis Pym, back in the day of Margaret Thatcher, warned against the idea of a Tory landslide back in the 83 election. And he got roundly rubbish, roundly rubbish by Thatcher for it. He was absolutely right. If you've got a huge majority, discipline becomes much, much more difficult. And when you've got a political leader like Starmer, who is a pragmatist, who doesn't have seem to have a clear sense of direction on a whole variety of things, then it's very, very hard.

17:16And the political managers in Westminster, in number 10, honestly should be hanging their heads in shame over what's unfolded in the past week. Yeah, I mean, I'll tell you why I think Starmer can't go. And obviously, if he goes, and this will be completely out of date, and I'll hold my hands up in shame. But why I would say he can't go, he can't even think of going, is because the narrative that then gets written is that Labour can't govern. And they wouldn't be back in power for another decade, for another two decades. You know, if if that's what happens, if you basically allow people to write the story now on July the 2nd of 2025, after a year of Labour government, you're allowing people to say, oh, well, that didn't work.

17:57We won't try that again. You know, there's the old kind of was it Norman Lamont who said of John Major that he's in office, but not in power. And that was a sort of kind of really hit home during the major premiership. but I mean the difference is that John Major then had kind of next to nothing as a majority I mean he had a handful majority he didn't have 165 like Labour have and the idea that Keir Starmer looks powerless is ridiculous is ridiculous and yet this is where we are in a moment we're going to talk to Keir Starmer's former Chief of Staff Sam White about what he thinks is going on right now in the Prime Minister's head

18:41This is The News Agents.

19:09about a decade you get that kind of pressure the intensity of that pressure of being on the front bench with the cameras on you and feeling like you've got the weight of the world looking at you yeah it's not easy when you're under a lot of pressure through what's happening in you know politics and and sometimes the financial markets or whatever it is and I think of occasions where I don't know how Alistair put up with some of the pressure he was do you remember the election that never was um he was the first big outing after that was called off to deliver a pre-budget report that had been written as if we were about to go into a short campaign so it was totally unfit to be delivered to the house but it had gone to print so he had to stand up in the house you know with sort of george osborne tearing strips off him ridiculing the fact that gordon brown had basically pulled the plug and changed his mind yeah and i saw him go through a lot of high pressure moments in the Commons, so I do have every sympathy with every one of them when they're in there and the camera's on and the room is barracking.

20:12I mean, as an official, I got to sit in the official's box sometimes and you don't have the same experience in the Commons until you're actually at ground level, you know, and you can sort of taste the blood and smell the sweat. Sam, try and unpick for us what has happened over the past few days because it looks to me that anyone who has done politics, been a political practitioner it's bewildering how many mistakes how the thing has been misjudged misread and you end up in the shambles that was last night and rachel reeves in tears today can you make sense of it yeah and i think there's there's the the immediate short term the sort of what's happened in the last week or so and then there's the the kind of context the government is in i think both are sort of relevant to this i think what's happened in the last few days is this has not been handled in a way that the government would have liked to have handled it.

21:04And I think they've made concessions at short notice, clearly, that have stripped the bill of a great deal of what was in it. I think, you know, Keir will be asking himself questions about what he needs to do differently in terms of his relationship with backbench MPs and the Parliamentary Labour Party. I think in the context, the more challenging thing is the handover of power in last year, we treat it like it was a sort of fairly normal handover of power like it was 97 or 2010 but it really wasn't i remember 97 i worked for the blare government not not as early as 97 but the economy was going along with a nice clip you know sort of two and a half three percent um debt was under 40 percent uh taxes relatively low public services were a little bit tricky but not anything like they are now 2010 when when labor lost we had a deficit of 10 that is real you've got to deal with that but public services were never better lowest waiting list etc and i know that's the financial question.

21:58Sam, I know that's the big picture. It's a really important question, though. John, if I just finish that one point. And in 2010, it had all gone at the same time. Public service is terrible, public finance is stretched, and no real growth in the economy, no living standard rise, no productivity increase, people feeling really battered. And then you're going in and you're playing government on hard mode. If it was a computer game, deity settings on the computer game, there's very little scope for anything to go wrong. But he knew all that, Sam. He knew all that when he got into government. And so the question is having factored in what a difficult situation it was going to be why didn't he have the tools or the people at his disposal to make that work but i don't think people have fully grasped quite how bad it is because this isn't this isn't one where it's a sort of once and done where we can say oh he's had 11 months why hasn't he turned the country around this is the decade of renewal when i talk in those languages i think they're capturing the right framing for what we've got to get through because what i really worry is we're in an age where everything gets delivered overnight an amazon parcel whatever it is and people think there are easy and quick answers to difficult and intractable problems you know building infrastructure it's hard it takes time but that's what builds productivity and we've got you know noises off from uh it's not an appropriate word to use i guess but you've got you know the populist right saying you can snap your fingers in prison and spring from the ground and waiting lists vanish in thin air and the public to really turn this around is going to take time and keeping the public's patience is the challenge sam i accept all of that about the state of doing politics in today's febrile environment, impatient environment, incident solutions, populism, all the rest of it.

23:31But it is malpractice, is it not? That you've got a whips office that doesn't know what the backbenchers are thinking. You've got a political office inside number 10, which is advising the prime minister on what needs to be done. You've got a prime minister, a chief of staff, all these people whose job is to plug into the mood to work out what is possible what people will buy what they will accept what they won't they singularly failed to do that i don't think anyone would dispute that they didn't judge that right and if they had there wouldn't be the several sets of concessions made last night and the bill being very different to where it started so you know there's a misjudgment that's been made here i think they were caught off guard by the scale of the rebellion i think the thing in the Labour Party is you've always got some good old reliable left-wingers who will resist everything and will vote against the government at every opportunity.

24:20And they may have seen it as something more in that space, when actually it brought in a lot more reasonable moderate MPs who had strong values-based views on it. I mean 120, right? The first rule of government is knowing how to count, blah, blah, blah. But what you've said, Sam, is okay, Keir Starmer's worked out what he needs to do differently. I guess the worry if you're in government is it may be too late. It's like having a teacher who's let the kids in the classroom control the discipline and whatever he tries to do now, he's compromised, isn't he? I mean the parties won, the backbenchers have won, they've found out how to get concessions or how to not let him make the cuts that he thinks he needs to make.

25:07It's done now, isn't it? That authority's done. I don't think it is. I don't dispute that that is bruising and you do not want to be making U-turns on policy. But we're too quick sometimes to say, well, you know, that's all over then. I've lost count on the number of times, you know, Keir's been written off and I've told he's, you know, a busted flush. And yet we still kind of clawed our way back from, you know, defeats at Hartlepool or the worst election defeat in 2019. You know, or any number of things along the way where people said, you know, that's it. That's the end of Keir. and I think the parallels with the Blair first term well not identical Blair did suffer a number of big rebellions over things like incapacity benefit low pension rises and even political geeks like me and I am a geek I had to go and remind myself of what had happened because it completely slipped from my memory because it happened it was a big deal for whatever number of days it was and then they won the next election and then they won the next election and they made lots of changes to the country so I think it's premature to say you know there's been a big rebellion that's it for the government what are the challenges then that kia starmer faces because one of the things that you keep hearing is that and we heard this you know from someone very senior say look no one knows what he thinks and the reason we don't think we know what he thinks is because we don't think kia starmer knows what he thinks and he doesn't give a clear sense of direction and you know yeah there were faults in the blair first term but you had a clear sense of direction of where Blair wanted to go I've heard that you know many times the take I've always come away with from working with Kieran reflecting on it was I know his driver was it was public service he's really driven by it I don't know whether that comes from his mum who's a nurse he speaks about her often but there is something in him that is compelled to do something like this and the second thing you've got to remember is he's ruthlessly pragmatic about how you get there so people say i don't know what he wants to do but i know what is driving him and i know he'll be pragmatic about getting there so i remember any number of discussions where we'd say right this is what we need to do to improve the country and you know there's this idea and this idea and we talk it through and he said well that's clearly not going to work let's go with the one where there's more evidence interested in that phrase ruthlessly pragmatic if he felt that it was ruthlessly pragmatic the right thing to do to get rid of Rachel Reeves is that what he'll do?

27:30I don't think he'll get rid of Rachel Reeves. Why not? I think Rachel's judgment is very good. I think she has a very difficult job on her hands. I know from working with the Chancellor that even in you know less terrible public finance times than Rachel's facing you spend your whole time saying no to colleagues because you know the bigger threat is if you don't say no enough times and the market don't think you've got a grip of this you have a different sort of problem and i'll say this about rachel she's never going to do a liz truss where she lets the market completely lose faith in the british economy again you know that message is ringing loud and clear in her ears and i think you know you saw even in the last few hours when there was that wobble about what's happened with rachel rumors started to fly and the markets didn't like it the markets got nervous when those rumors that rachel why didn't keir starmer just end that then when he was asked the question directly will you back your chancellor to stay for the full five years he could have just said yes it's a really difficult one now because you get asked it all the time then do you back this minister do you back that minister it's like ruling out taxes it's really hard because when do you where do you stop um so but on a day like today you know if he knew that she was feeling vulnerable if people were talking about her vulnerability if you're placing her at your side wasn't today a day when if you have complete confidence in your chancellor you say i have complete confidence in my chancellor it's a funny one that because sometimes people say, as soon as the Prime Minister says I've complete confidence in the Minister, everyone writes it off as, whoa, there for the chopping block.

28:58The football manager. Yeah, exactly. It's a sort of cursed phrase, sort of damned if you do, damned if you don't. So I kind of get it, you know, he has no good option there. But you'd be surprised if she went? I would be surprised if she went. I think that would be a mistake. I think, for the reasons I said a moment ago, clearly the markets recognise that she is right about the difficult choices needed to control the public finances. is the Labour Party don't like the markets quite often. Bits of the Labour Party say, ah, the markets, damn the markets. But while you're sitting on a trillion pounds worth of debt and you're borrowing money to invest in, you know, refreshing infrastructure, you have to care what they think because you're borrowing money from them.

29:35And you have to ensure they think that this person understands, has a grip. So the fiscal rules that get a lot of, you know, attacks on them, can't Rachel just ditch them? They're not sacrosanct in and of themselves. They're there as sort of buffer to prevent you getting into a sort of market crisis of the Liz Trust variety. So are the backbenchers frivolous? No, I don't think they're frivolous. I think what they have done is raised legitimate concerns when you're seeing it from the perspective of your constituent who may have a disability and is struggling with cost of living challenges like everyone has been and don't want to see them reduced in money.

30:06I think the lesson from this, and I started to say this before, John, but I didn't probably finish it well enough, is I think number 10 may have to do a better job of listening to the backbenchers. But I think the backbenchers may need to do a better job of understanding quite how bad the situation is for the government in terms of growth, productivity, public finances, public services, and the pressures on them. And the backbenchers are going to need to work more with Number 10 and the government to make sure we thread this needle and we do this difficult turnaround project for Britain without losing control.

30:34Is that saying grow up a bit? I didn't use those words. I think you have to take people with you. I'm not always very good at taking people with me. That's one of my faults. I think I've got to the right answer. And I'm damned if you can't agree with me. but there is a job to be done about taking people Has Keir got that problem? Nah, I don't think so I think that's my problem I mean, since you raise it you've been on the inside you lost your job I did I mean, you got, you know, thrown out I guess I'm trying to understand whether does it feel like I mean, you were at one stage on the end of briefings and probably something that felt pretty toxic and pretty, like, people are out to get me out of here and hand me out I mean, you know, there is a pattern of behaviour now, isn't there?