Britain’s Starmer backs his Treasury chief after U-turns dent the government’s fiscal plans

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This article was published 02/07/2025 (270 days ago), so information in it may no longer be current.

LONDON (AP) — British Prime Minister Keir Starmer said Wednesday that Treasury chief Rachel Reeves is secure in her job after a series of government U-turns dented her revenue-raising plans and sparked speculation about her future.

Rumours swirled after Reeves appeared to be in tears in the House of Commons, the day after an embarrassing reversal for the government over its plans to cut welfare spending. Many viewers observed that Reeves looked exhausted and upset as she sat behind Starmer during the weekly Prime Minister’s Questions session.

The Treasury said Reeves was dealing with a “personal matter.” It would not elaborate.

Starmer initially declined to say, when asked by opposition leader Kemi Badenoch, that Reeves would still have her job when the next election is called, likely in 2029.

The pound fell against the U.S. dollar during the session and the cost of government borrowing rose on uncertainty about Reeves’ future and the administration’s fiscal plans.

Starmer’s press secretary later stressed that Reeves “is going nowhere. She has the prime minister’s full backing.” And the prime minister said Reeves would remain Chancellor of the Exchequer “for a very long time to come.”

“She’s done an excellent job as chancellor and we have delivered inward investment to this country in record numbers,” Starmer told the BBC.

He said Reeves’ tears had “nothing to do with politics.”

The government is trying to steady the ship after a wobby few days in which it was forced to water down plans to curb welfare spending in order to quell a rebellion by lawmakers from his own party.

In something of a hollow victory, the bill passed its first big House of Commons hurdle on Tuesday after the government appeased Labour Party rebels by softening and delaying cuts to welfare benefits for disabled people. Even so, 49 Labour lawmakers voted against the bill.

The result was a major blow to Starmer’s authority as he approaches the one-year anniversary of his election on Friday, reckoning with a sluggish economy and rock-bottom approval ratings.

It also leaves the Treasury short of money it had counted on to invest in public services, making tax increases more likely. The government has promised not to raise key levies including income tax and sales tax.

The government estimated that its welfare reforms would save 5 billion pounds ($7 billion) a year, but after the changes it’s unclear whether they will save any money at all.

The reversal follows a decision in May to drop a plan to end winter home heating subsidies for millions of retirees, which Reeves had also counted on to raise money.

Starmer has endured a turbulent 12 months since the election on July 4, 2024, when his center-left party took 412 of the 650 seats in the House of Commons to end 14 years of Conservative government.

Since then, Starmer has navigated the rapids of a turbulent world, winning praise for rallying international support for Ukraine and persuading U.S. President Donald Trump to sign a trade deal easing tariffs on U.K. goods. But at home his agenda is on the rocks, as inflation remains stubbornly high and economic growth low, frustrating efforts to ease the cost of living.