Rachel Reeves is “going nowhere” and will remain as Chancellor, Downing Street said, despite Sir Keir Starmer declining to give her a public show of support.
The Chancellor was visibly tearful in the Commons, as her position came under intense scrutiny after the welfare U-turn which put an almost £5 billion black hole in her plans.
But allies said she was dealing with a “personal matter” and No 10 said she had Sir Keir’s “full backing”.
Sir Keir, who stumbled on his way out of Downing Street for Prime Minister’s Questions, faced questions over his handling of a welfare reform package which has been stripped of key elements to limit the scale of a Labour revolt.
Tory leader Kemi Badenoch said Ms Reeves looked “absolutely miserable” and challenged the Prime Minister to say whether she would keep her job until the next election.
Sir Keir dodged the question about whether Ms Reeves would be in place for the remainder of the Parliament, saying Mrs Badenoch “certainly won’t”.
Changes to restrict eligibility for the personal independence payment (Pip) were abandoned on Tuesday just 90 minutes before MPs voted on them, wiping out the savings that Ms Reeves had counted on to help meet her goal of funding day-to-day spending through tax receipts rather than borrowing.
Mrs Badenoch said: “Today the Prime Minister refused to back his Chancellor, leaving her humiliated.
“She is the human shield for his expensive U-turns. How can anyone be a chancellor for a man who doesn’t know what he believes and who changes his mind every other minute?”
As the Chancellor left the Commons after Prime Minister’s Questions her sister, Ellie Reeves, took her hand in an apparent show of support.
Asked about her tears, a spokesman for the Chancellor said: “It’s a personal matter which, as you would expect, we are not going to get into.
“The Chancellor will be working out of Downing Street this afternoon.”
Reports suggested Ms Reeves had been involved in an altercation with Commons Speaker Sir Lindsay Hoyle shortly before Prime Minister’s Questions.
A spokeswoman for the Speaker said: “No comment.”
Asked why Sir Keir did not confirm in the Commons that he still had faith in Ms Reeves, the Prime Minister’s press secretary told reporters: “He has done so repeatedly.
Govt was planning to save ~£5bn in 2029-30 through welfare cuts – would have risen to ~£11bn in long run
— Helen Miller (@HelenMiller_IFS) July 2, 2025
Now, govt will save nothing this parliament
(2029-30 savings from cutting health element of UC (£1.7bn) roughly offsets cost of raising basic UC (£1.8bn))
“The Chancellor is going nowhere. She has the Prime Minister’s full backing.
“He has said it plenty of times, he doesn’t need to repeat it every time the Leader of the Opposition speculates about Labour politicians.”
Asked whether the Prime Minister still had confidence in Work and Pensions Secretary Liz Kendall, the press secretary said: “Yes.”
Labour has promised that income tax, employee national insurance contributions and VAT will not be increased, restricting Ms Reeves’ options for raising money if she does look to hike taxes.
The Institute for Fiscal Studies’ incoming director, Helen Miller, said: “Since departmental spending plans are now effectively locked in, and the Government has already had to row back on planned cuts to pensioner benefits and working-age benefits, tax rises would look increasingly likely.
“This will doubtless intensify the speculation over the summer about which taxes may rise and by how much.”
Sir Keir declined to rule out tax rises later this year, telling MPs: “No prime minister or chancellor ever stands at the despatch box and writes budgets in the future.”
