He issued an “unreserved” apology for the “deeply offensive, ignorant and false” remarks and Labour initially stood by him, saying he had “fallen for a conspiracy theory”.
A report in the Daily Mail on Monday evening claimed Mr Ali blamed “people in the media from certain Jewish quarters” for fuelling criticism of a pro-Palestinian Labour MP, as well as claiming Israel planned to “get rid of [Palestinians] from Gaza” and “grab” some of the land.
A party spokesperson said: “Following new information about further comments made by Azhar Ali coming to light today, the Labour Party has withdrawn its support for Azhar Ali as our candidate in the Rochdale by-election.”
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Labour acknowledged the circumstances were “highly unusual”.
The spokesperson added: “Given that nominations have now closed, Azhar Ali cannot be replaced as the candidate.”
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8:59
‘Tremendous task to rebuild trust’
Why can’t Labour replace Ali?
According to Electoral Commission rules, a candidate can only pull out of a race if they submit a withdrawal notice by the deadline for withdrawals (which is by 4pm, 19 working days before the poll).
The deadline for the Rochdale by-election passed on 2 February.
That means Mr Ali will appear on the ballot paper as the Labour candidate when voters go to the polls.
What happens if Ali wins?
However, if Mr Ali wins the by-election, he will not become a Labour MP. Instead, he will sit as an independent.
That’s because by withdrawing support, Labour has effectively removed the whip were he to be selected as the constituency’s next MP.
Having the whip withdrawn is a severe punishment which means you are kicked out of the parliamentary party.
Both of those cases were to do with rows over antisemitism, which Sir Keir Starmer has promised to tear out of his party following the controversies that dogged the Corbyn era.
Image: Azhar Ali at his campaign launch event. Pic: PA
Why is there a by-election and who else is standing?
The decision to withdraw backing for Mr Ali will come as a blow to Labour, which had hoped to retain the seat following the death last month of veteran sitting MP Sir Tony Lloyd.
It also means Labour will need to find a new candidate to contest the seat at the upcoming general election.
Also running in Rochdale are former Labour MP Simon Danczuk, now the Reform Party candidate, and George Galloway, of the Workers Party of Britain, who is campaigning against Labour’s stance on Gaza.
What questions remain for Sir Keir Starmer?
The party leadership is being pressed on why Mr Ali was not immediately suspended after the initial comments emerged.
Labour recently suspended MP Kate Osamor after she appeared to say the Gaza war should be remembered as genocide on Holocaust Memorial Day.
And Sir Keir has repeatedly promised to tear antisemitism out “by its roots” in Labour.
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7:09
‘I ‘will rip antisemitism out’
A spokesperson for the Campaign Against Antisemitism said that rather than appearing as a principled decision, Labour’s withdrawal of support “looks as expedient as the failed attempt to defend him”.
Meanwhile, Martin Forde KC, who led a review into the party’s cultureunder Mr Corbyn, said Labour MPs feel there has been a “disparity in treatment” of allegations of antisemitism within the party.
He told BBC Radio 4’s Today programme: “One does have to question how such individuals are selected in the first place, and also the disparity in treatment, because one of the things that concerned us when we talked about weaponisation was certainly the perception that antisemitism was along factional lines.”
How are candidates selected?
Mr Ali, the leader of Lancashire County Council’s Labour group, was chosen by local party members last month after making it on to the candidate shortlist with two other people – political journalist Paul Waugh and Wigan councillor Nazia Rehman.
Lord Mann, the government’s antisemitism adviser and a former Labour MP, told Sky News the filters in place during Labour’s selection process were “clearly not good enough” and Sir Keir will likely be “fuming”.
He added that “heads may roll” over the decision to shortlist Mr Ali, and the move to withdraw support was “bold and brave”.
He said this has “never happened before” in a by-election, adding: “I think the Jewish community, as it reflects on this, will take great comfort in the fact that Keir Starmer has been prepared to do it. It’s certainly a bold move.”
Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces.
“Of course, we’re looking at tax and spending as well,” the chancellor said when asked how she would deal with the country’s economic challenges in her 26 November statement.
Ms Reeves was shown the first draft of the Office for Budget Responsibility’s (OBR) report, revealing the size of the black hole she must fill next month, on Friday 3 October.
She has never previously publicly confirmed tax rises are on the cards in the budget, going out of her way to avoid mentioning tax in interviews two weeks ago.
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12:04
Chancellor pledges not to raise VAT
Cabinet ministers had previously indicated they did not expect future spending cuts would be used to ensure the chancellor met her fiscal rules.
Ms Reeves also responded to questions about whether the economy was in a “doom loop” of annual tax rises to fill annual black holes. She appeared to concede she is trapped in such a loop.
Asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Ms Reeves replied: “Nobody wants that cycle to end more than I do.”
Ms Reeves is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted.
Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%.
The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US.
Last night, the chancellor arrived in Washington for the annual IMF and World Bank conference.
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9:43
The big issues facing the UK economy
‘I won’t duck challenges’
In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.
“I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up,” she said.
“Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.”
She was clear that relaxing the fiscal rules (the main one being that from 2029-30, the government’s day-to-day spending needs to rely on taxation alone, not borrowing) was not an option, making tax rises all but inevitable.
“I won’t duck those challenges,” she said.
“Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”
Image: Pic: PA
Blame it on the B word?
Ms Reeves also lay responsibility for the scale of the black hole she’s facing at Brexit, along with austerity and the mini-budget.
This could risk a confrontation with the party’s own voters – one in five (19%) Leave voters backed Labour at the last election, playing a big role in assuring the party’s landslide victory.
The chancellor said: “Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy.
“Already, people thought that the UK economy would be 4% smaller because of Brexit.
“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long-lasting.”