Barely six months ago, Rachel Reeves was in such a strong position that she boasted about her reputation for being tough.
“I’m happy to be the ‘Iron Chancellor’ if that’s what you want to call me,” she declared in a typically robust interview.
How things have changed.
After Keir Starmer’s reshuffle, in which he audaciously poached Reeves’s second-in-command, Darren Jones, and appointed a new economics team of his own in Downing Street, the authority of the “Iron Chancellor” appears to be melting away.
She risks suffering the same fate as another recent occupant of her job, who found the prime minister had pulled the rug from under their feet.
Conservative Sajid Javid became cruelly known as the “Chino Chancellor” – chancellor in name only – when he famously fell out with prime minister Boris Johnson in 2020. Relations between them collapsed after Johnson lost confidence in Javid and ordered him to fire his closest advisers.
Javid was so outraged that he resigned. Johnson’s government never fully recovered.
Amid similar rumours of a faltering faith in No 10 in Reeves’s grip on her department, Starmer has taken a different approach. Instead of attempting to sack her advisers, he has taken the extraordinary step of hiring the one closest to her, Reeves’s deputy, Jones.
Starmer has not even tried to mask the scale of the No 10 power grab, giving Jones exactly the same title he had in the Treasury, chief secretary. He has simply moved Jones from No 11, where he worked alongside Reeves, to next door, where he now works alongside the prime minister. It is the first time such a job has existed in Downing Street.
On top of that, Starmer has hired Minouche Shafik, former deputy governor of the Bank of England, as his chief economic adviser, and Treasury mandarin Dan York-Smith as his principal private secretary.
The collective financial and intellectual clout of this trio, combined – crucially – with their close access to Starmer, means they, and not Reeves, are now in the driving seat when the big decisions on economic and tax policy are made.
Claims by government sources that the changes do not signal any loss of confidence in Reeves from No 10 can be discounted.
Such is the diminution in the authority of “Iron Chancellor” Reeves after Starmer’s shake-up that she is in danger of being seen as Labour’s own “Chino”.
The good news for Starmer is that he is now in total control of the decisions about the economy, which, in the end, determine the fate of all governments.
The bad news is that, by taking personal command of such decisions in such a striking manner, he can no longer blame his Downing Street neighbour if things go wrong.
When Reeves was encouraging people to call her the “Iron Chancellor”, it was seen as a nod to Gordon Brown, Labour’s best-known and most powerful ever chancellor.
He earned the sobriquet the hard way, showing relentless discipline and dedication in running the Treasury for a decade, reinforced by leading the world’s response to the 2008 global financial crash as prime minister.
In Brown’s years as Tony Blair’s chancellor, such was his untrammelled authority over the Treasury that frustrated No 10 aides used to complain that No 11 did not tell them what was in the Budget until the last minute.
Now it could be the other way round.
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