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Home Politics

How No 10 plunged itself into crisis ahead of a perilous budget

Sarah Taylor by Sarah Taylor
November 12, 2025
in Politics, US News, World
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How No 10 plunged itself into crisis ahead of a perilous budget
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Double-dealing, plotting, declarations of loyalty and treachery – in recent weeks the nation has feasted on Celebrity Traitors.

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But these sorts of antics emanating from Downing Street, a couple of weeks out from a critical budget, feels far less entertaining and only serves to further hurt a struggling prime minister.

It wasn’t the intention. Allies of Keir Starmer have been alive to growing talk of a possible post-budget challenge, which has building amid growing concerns from MPs about the upcoming manifesto-breaking budget, the continued dire polling, and a Downing Street forever on the back foot.

There was a decision, as I understand it, from the PM’s team, in light of questions being asked about a possible challenge, to put it out there that he would stay and fight a leadership challenge should it come.

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I was briefed about this on Tuesday by allies that wanted to make the case to the parliamentary party about the perils of trying to oust a sitting prime minister 18 months into the parliamentary term.

My contacts made it very clear to me that the PM would fight any challenge, in turn triggering a three-month leadership battle that would spook the markets, create more chaos and further damage the Labour brand.

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They also stressed the PM has no intention of giving way just 18 months in. The intention was to try to see off any plot and scare the parliamentary party into line at the prospect of a full-on meltdown should the challenge come.

But the decision by some of the PM’s allies to anonymously also drop the name of prime traitor suspect – Wes Streeting – into briefings has badly backfired and plunged No 10 into crisis.

‘Frustration’ after PM’s allies went ‘too far’

As for the clean-up job, Mr Streeting – already carded for the morning round ahead of a speech on the NHS on Wednesday – has come out to declare his loyalty (tick), but also take aim at the No 10 briefers, and called on the PM to take them to task.

On the part of No 10, I was told by sources on Wednesday morning that there wasn’t an attempt to brief against the health secretary – there is a view that some of Sir Keir’s allies might have gone too far, rather to make it clear the PM was prepared to fight a challenge if it came.

I am told by one No 10 source there is “frustration” over how his played out and it had “got out of control”.

“Wes is doing a good job, is an asset and doing a big speech today making the broader case of not cutting spending ahead of the budget,” said a source.

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But putting the genie back in the bottle is no easy feat. MPs are furious at the briefings and exasperated that No 10 have made a mountain out of a molehill, with some suggesting that there wasn’t an active plot post-budget, and they have created a crisis when there wasn’t one.

“They’ve done this before,” observed on senior party figure. “They pick a fight of their own making and imply everything is a calamity ahead of a big possible negative, be it the budget or the Batley and Spen by-election [in an effort to get MPs to rally around the PM].

“It’s worked in the past; I think they have misplayed it this time. They have started a fire they cannot put out.”

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The prime minister has been left badly burnt in all of this. He was forced at PMQs to defend his health secretary and his chief of staff as Kemi Badenoch goaded him over No 10’s “toxic culture”, and called for him to sack Morgan McSweeney, his chief of staff.

The PM told his party that he “never authorised” briefings against his cabinet and that it was “completely unacceptable”. But when his team were later asked about what the PM was going to do about it, they didn’t appear to have an answer.

If he takes no action, it will only feed into the sense among many in his party that Sir Keir doesn’t have a grip of his operation and is not leading from the front. That’s difficult when his health secretary, having professed his loyalty, has called on the PM to deal with those briefing against him. It’s a mess.

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Budget measures to calm febrile party

And this mess comes at a time that is already so difficult for this government. Number 10 and No 11 knows exactly how difficult the coming weeks are going to be.

The chancellor has been out pitch rolling her budget, trying to explain the reasons behind potential manifesto-breaking pledges and arguing that the alternatives – cutting spending and a return to austerity or breaking fiscal rules, and the knock on effect in the markets – are far worse.

The prime minister is also going to be out making the case as Downing Street and the Treasury work out how they can possibly try to sell a manifesto-breaking budget to voters already completely disillusioned with this Labour administration.

I’m told that the current working plan is to do a combination of tax rises and action on the two-child benefit cap in order for the prime minister to be able to argue that in breaking his manifesto pledges, he is trying his hardest to protect the poorest in society and those working people he has spoken of being endlessly in his mind’s eye when he takes decisions in No 10.

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The final decisions are yet to be taken, but the current thinking is to lift the basic rate of income tax – perhaps by 2p – and then simultaneously cut national insurance contributions for those on the basic rate of income tax (those who earn up to £50,000 a year). That way, the chancellor can raise several billion in tax from those with the ‘broadest shoulders’ – higher-rate taxpayers and pensioners or landlords.

At the same time, the chancellor intends to move on the two-child benefit cap – although it’s unclear if that will be a full or partial lifting of that cap – in order to argue that Labour is trying to still protect those on lower incomes from tax hikes.

Those two measures will be designed to try to calm a febrile party and prevent panic after the budget. As one informed MP put it to me, the combination of tax rises for wealthier workers and more support for parents with more than two children are arguments that many MPs could get behind.

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More bad news at moment of peril

This is also why No 10 getting ahead of a possible post-budget coup has surprised me a little, given that pretty much all the conversations about a possible challenge to the PM have been linked to the ballot box test next May.

One party figure told me on Wednesday it would be “insane and catastrophic” to for the party to try and bring down a Labour PM over a Labour budget, given, for a start, how the markets would react, and thinks the No 10 briefing is a reflection of how “paranoid and out of touch” the Starmer operation is with the parliamentary party.

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But it is also true that there is a settled view among some very senior figures in the party that Sir Keir lacks the charisma, leadership and communication skills to take on Nigel Farage, while broken manifesto promises will kill his hopes of standing for a second term. As one figure put it to me: “Breaking those promises will destroy him. The public won’t give him a hearing again. We need a clean skin.”

The whispered plots around Westminster are now front page news – not something the Sir Keir would have wanted as he prepares to front up what is shaping up to be his biggest test as prime minister yet, should he break the most sacred of his manifesto pledges on not raising VAT, income tax and national insurance on working people.

There is no doubt the budget will be a moment of peril – and those who wanted to be faithful to the PM this week have somehow only managed to make his situation even worse.

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Sarah Taylor

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