Sir Keir Starmer has moved to toughen up his government by bringing Rachel Reeves’s former deputy from the Treasury to strengthen his Downing Street operation.
With Labour languishing eight points behind Reform in the polls and a sense that Sir Keir is not in control of the political agenda, Darren Jones has been moved to a new role of chief secretary to the prime minister.
Sir Keir has also brought in world-leading economist Minouche Shafik as his new chief economic adviser in a move that will allow him to take more control of economic policy.
The shake-up follows growing criticism of Ms Reeves, who faces a difficult few months ahead amid growing speculation that she is likely to have to announce major tax rises in the Budget. While she is expected to remain in post, her authority – and the power of the Treasury, which has been vehemently criticised by Labour backbenchers – will be much diluted.
Mr Jones is replaced as chief Treasury secretary by loyalist James Murray, while Daniel Tomlinson, who only became an MP last year, is promoted to a junior Treasury ministerial role.
Mr Jones, who will report directly to the prime minister, has been seen as a rising star in the government and giving him a key role in Sir Keir’s Downing Street team is seen as a major power move by the prime minister. It is hoped his arrival will bring new political leadership to the central operation, as well as giving the prime minister more of an insight into the workings of the Treasury.
There had been concerns that Sir Keir had allowed Ms Reeves to decide both economic and domestic policy while he travelled the world stage and concentrated on international politics. The situation was blamed for the calamities over winter fuel payment and disability benefit cuts which led to a full-scale revolt just before the summer.
Ms Reeves is thought to have survived a summer reshuffle mainly because the markets were spooked during her tearful appearance at PMQs when Sir Keir refused to guarantee her future.
Meanwhile, the biggest casualty of Sir Keir’s mini-reshuffle is James Lyons, brought in just a year ago to run strategic communications, who has been shown the door. He is the second major Downing Street departure announced in just a week with Nin Pandit, Sir Keir’s principal private secretary, also set to leave.
Both Pandit and Lyons were brought in as part of an earlier reset following the resignation of Sue Gray as chief of staff last year.
Mr Lyons told colleagues: “It was an honour to be asked to come in. I’m proud to have helped to get a grip on Whitehall comms after what was a difficult few first months for the government.
“But I gave up a lot to come in and this was never intended as a long haul. When I came back from the summer break I told colleagues I was looking to leave by the end of the year. I’ve brought this forward to be part of the other changes.”
It comes as Sir Keir admitted that “most people feel that their living standards haven’t gone up and their public services aren’t what they deserve”, saying he wants to “deliver that change as quickly as possible”.
Speaking to BBC 5 Live, hours after the government changes were announced, the prime minister admitted that he too was frustrated by the pace of change.
“I do want to go further and faster and yes I am frustrated. I get the frustration and anger of voters, because they want change,” he said.
Sir Keir has also directly appointed Baroness Shafik as his chief economic adviser to support the prime minister on economic affairs in another sign that he wants a more hands-on approach to economic policy rather than leaving it to his chancellor.
It is hoped this role and the additional expertise will support the government to go further and faster in driving economic growth and raising living standards for all.
Baroness Shafik is a world-leading economist whose career has straddled public policy and academia. She served as the permanent secretary of the UK’s Department for International Development and deputy governor of the Bank of England, where she sat on the monetary, financial and prudential policy committees.
However, former director of the Institute of Fiscal Studies (IFS), Paul Johnson, gave a scathing assessment about what the reshuffle said about the government.
Speaking to Hugo Rifkind on Times Radio, he said: “It's extraordinary, more than a year into this government, they’re only just working out that they might need some senior economic expertise within Number 10, both at a political level and at the adviser level.
“It’s yet another example, I think, of how staggeringly unprepared this government was for government, despite the fact that they essentially knew they were going to win the election some considerable time out.
“I think it is important for the prime minister to be able to have conversations at an equal level with the chancellor but what they really mustn't end up doing is having rows between the two of them, having different focuses and different senses of direction. That way real chaos lies.”
