Sir Keir Starmer has said Rachel Reeves will face no further action over her “inadvertent failure” to obtain a rental licence for her south London home.

The chancellor had come under pressure to explain whether she had broken housing law by not getting the licence for the property when she moved into Number 11 Downing Street last year.

Conservative leader Kemi Badenoch called for her to resign or be sacked.

But in a letter published on Thursday night, the prime minister said correspondence shared by Ms Reeves shows her husband had been assured by the couple’s estate agents “that they would apply for a licence on his behalf”.

Sir Keir said it was “regrettable” he had not been made aware of the correspondence sooner, with an initial letter the chancellor sent him on Wednesday having suggested she was “not aware that a licence was necessary”.

A second letter from Ms Reeves on Thursday informed the prime minister that she had found correspondence between the letting agent and her husband about applying for the licence on their behalf.

Sir Keir said in his reply: “I understand that the relevant emails were only unearthed by your husband this morning, and that you have updated me as soon as possible.”

The PM labelled the incident “an inadvertent failure” and said he sees “no need” for further action.

Lettings agency apologises

Number 10 also published advice given to the PM by his independent ethics adviser, Sir Laurie Magnus, saying he’d found “no evidence of bad faith”.

The owner of lettings agency Harvey and Wheeler has released an apology to the chancellor.

Gareth Martin confirmed a member of his staff said they would apply for the licence – but this was never done, as the person “suddenly resigned” prior to the start of the tenancy.

He said: “We deeply regret the issue caused to our clients as they would have been under the impression that a licence had been applied for.”

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Ms Reeves had immediately faced calls to leave her post after a report in the Daily Mail, which saw her admit to mistakenly breaching local council housing rules by failing to secure the licence.

The newspaper reported Ms Reeves had failed to pay for a “selective” licence when renting out her family home in Dulwich, south London, which she has left while living in Downing Street as chancellor.

The Housing Act 2004 gives councils the power to make landlords accredit themselves in certain areas.

Ms Reeves has apologised over the incident, and for the delay in clarifying what advice her husband had received from the estate agent.

“I am sorry about this matter and accept full responsibility for it,” she told the PM.

Number 10 has consistently backed Ms Reeves ahead of her delivering the budget on 26 November.

The government hinting at a rise in income tax at the budget only to not go through with it in a bid to win over voters would be “deplorable”, according to Labour peer Harriet Harman.

Reports are swirling that the chancellor is considering a manifesto-breaking hike when she delivers her crucial fiscal statement next month – and Sir Keir Starmer failed to rule it out at PMQs this week.

The Daily Telegraph says Rachel Reeves is considering a proposal by the Resolution Foundation think tank to cut national insurance by 2p and add it to income tax – protecting workers while hitting pensioners and landlords.

But Baroness Harman warned ministers against “manipulative” briefing to the media ahead of the budget, as the constant speculation “will only make people anxious”.

She told Sky’s political editor Beth Rigby on the Electoral Dysfunction podcast that it would be the “worst sort of briefing and political games playing”.

“I hope they’re not seeding the idea there’s going to be an increase in income tax announced at the budget so they can get credit for not announcing it, because I just think that’s manipulative of public opinion,” she said.

Baroness Harman added: “If they’re thinking about it, that’s one thing – but if they’re putting it out when they actually know they’re not going to do it, I just think that’s deplorable.”

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Baroness Harman said Ms Reeves has three options to deal with the gap in the public finances: cutting spending, increasing borrowing or raising tax revenue.

She said spending cuts are problematic as departments like health, education, transport, and councils need more investment – and will likely be voted down by Labour MPs.

Increasing borrowing would mean paying more interest, she said, and that would risk being seen as breaching a manifesto commitment on the chancellor’s fiscal rules.

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Raising income tax, national insurance or VAT would also breach the manifesto, which Baroness Harman said would raise questions about everything Labour said had promised.

“What does it mean about what you meant at the time?” she said.

“Did you not mean it at the time? Were you just saying it to get people’s votes, or did you say it unwisely because you didn’t realise what your scope was going to be?

“Either is really bad.”

Ms Reeves will deliver the budget on 26 November.

Only a quarter of people think immigration is an important issue locally – and concern about it is “a manufactured panic,” it has been claimed.

A YouGov poll found only 26% of people said immigration and asylum was one of the three most important issues facing their community.

This was half the 52% who said it was one of the biggest problems facing the country as a whole, and put immigration seventh on the list of important local problems behind issues like cost of living, health, crime, and housing.

Saeema Syeda, of the Joint Council for the Welfare of Immigrants (JCWI), said the poll “proves what we’ve been saying all along – there is no immigration crisis”.

She said: “It’s a manufactured panic, pushed by some politicians and parts of the media to distract from what actually matters to people.

“Across our communities, we share the same priorities – making ends meet, accessing healthcare, decent schools and secure homes. We need to end scapegoating and look for solutions.”

The poll, which was commissioned by campaign group Best for Britain, found the cost of living was the top issue for people both nationally and locally.

But while immigration was the second most important issue for people nationally, health was ranked second locally, followed by the economy, crime, housing, and jobs.

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Among those who voted Labour at the last general election, 56% of people mentioned the cost of living as a major national issue and 39% mentioned the economy, compared with 34% who said immigration was a major problem.

Best for Britain said the findings showed that “for most people, including those vital to Labour’s electoral coalition, concerns around immigration are not based on personal experience”.

The YouGov poll surveyed 4,368 British adults between September 5 and 10.