Starmer overhauls his government after his deputy prime minister resigns over a tax error

Treasury chief Rachel Reeves was kept in post, meaning that the three major offices of state below the prime minister will be occupied by women for the first time in history.

Rayner breached ministers' ethical standards

The changes came after Rayner handed in her resignation to Starmer because an independent inquiry concluded that she hadn't met the ethical standards required of government ministers over her recent purchase of an apartment in Hove, on England’s south coast. The report concluded that she should have sought more specific advice, even though she acted in good faith.

“I take full responsibility for this error," Rayner said in her resignation letter to Starmer. “I would like to take this opportunity to repeat that it was never my intention to do anything other than pay the right amount.”

In response, Starmer expressed regret but said Rayner had made the right decision.

“I have nothing but admiration for you and huge respect for your achievements in politics,” Starmer wrote. The handwritten letter signed off “with very best wishes and with real sadness.”

Rayner is a hugely popular member of the Labour Party and was widely tipped to be a potential successor to Starmer. In addition to resigning as deputy prime minister and housing secretary, Rayner quit as deputy leader of the party, meaning that members will have to select someone new.

Multiple moves further down the chain

Steve Reed was moved from rural affairs to the housing role.

The changes also saw an enhanced role for Darren Jones, the recently appointed chief secretary to the prime minister — charged with getting a grip on government communications — and a return to government as Scotland Secretary for Douglas Alexander, a veteran of the Tony Blair government two decades ago.

Starmer will be hoping that the bold changes allow him to seize back the political agenda following days of speculation surrounding Rayner’s future, and months of turmoil for his administration.

His government has seen its support fall sharply since its landslide victory in last year’s election, following a string of missteps over welfare reform and mounting public concern about immigration.

Rayner will remain a U.K. lawmaker on the back benches. She referred herself to the independent adviser on ministerial standards, Laurie Magnus, on Wednesday, who delivered his report to Starmer on Friday.

Though Magnus concluded that Rayner had “acted with integrity and with a dedicated and exemplary commitment to public service,“ he said that “with deep regret” she had breached the ministers’ code of conduct.

In the U.K., levies are charged on property purchases, with higher charges due on more expensive homes and secondary residences. Reports have suggested that Rayner saved 40,000 pounds (nearly $54,000) by not paying the appropriate levy, known as a stamp duty, on her 800,000-pound ($1 million) purchase.

Rayner, 45, had sought to explain that her “complex living arrangements” related to her divorce in 2023 and the fact that her son has “lifelong disabilities” underlay her failure to pay the appropriate tax.

In her resignation letter, Rayner said she also had to “consider the significant toll that the ongoing pressure of the media is taking on my family.”

Rayner will be missed in the Labour Party top ranks

Rayner’s journey from teenage single mother to trade union official to lawmaker and deputy prime minister is a rarity in British politics.

Her no-nonsense attitude and plain-speaking manner have been a distinct — and politically useful — contrast to the more pragmatic, lawyerly Starmer and she will be hard to replace. She had the ability to connect with sections of the public that Starmer had struggled with since he became prime minister.

Rayner, who also held the housing brief, had often railed against those who deliberately underpay tax, particularly those in the preceding Conservative administration, which Labour replaced in July 2024.

Her previous comments had opened her up to charges of hypocrisy. Conservative leader Kemi Badenoch said Rayner's position had been “untenable for days.”

“The truth is simple, she dodged tax," Badenoch said in a video posted on social media. “She lied about it.”