Sue Gray has resigned from her position as Sir Keir Starmer’s chief of staff, Number 10 has announced.
Ms Gray has instead been appointed as the prime minister’s envoy for nations and regions.
Morgan McSweeney, the party’s former campaign director who masterminded July’s election landslide, will replace her as the prime minister’s chief of staff.
Ms Gray said that while it had been “an honour to take on the role of chief of staff”, it had become clear that “intense commentary around my position risked becoming a distraction to the government’s vital work of change”.
“It is for that reason I have chosen to stand aside, and I look forward to continuing to support the prime minister in my new role.”
The prime minister thanked Ms Gray – who famously authored the report into parties in Downing Street during the pandemic – for “all the support she has given me, both in opposition and government and her work to prepare us for government and get us started on our programme of change”.
“Sue has played a vital role in strengthening our relations with the regions and nations. I am delighted that she will continue to support that work,” he added.
Tensions over Ms Gray’s role reached a crescendo when her salary of £170,000 – £3,000 more than the prime minister – was leaked to the BBC in an apparent attempt to damage her politically.
The broadcaster also reported more junior staff were disgruntled they were not being paid more than what they received when Labour was in opposition – despite now occupying more senior government roles.
Government ‘thrown into chaos’
A Conservative Party spokesperson described the latest moves in Downing Street as “chaos” and questioned who was running the country.
“In fewer than 100 days Sir Keir Starmer’s Labour government has been thrown into chaos – he has lost his chief of staff who has been at the centre of the scandal the Labour Party has been engulfed by,” they said.
Sir Keir Starmer has now gone full circle. At lunchtime he replaced Sue Gray, the former civil servant whose appointment has caused him endless pain, with Morgan McSweeney.
While the elevation of his campaign chief was widely welcomed, this is nevertheless a curious move.
Mr McSweeney was his very first chief of staff back in opposition in 2020 and for the first 14 months of his leadership, until he was moved after the botched reshuffle of 2021.
Cabinet members and Labour MPs must hope second time around he will be a better fit.
In doing so, the prime minister is in effect admitting very big personnel mistakes, forced to act eventually because of complaints from every side around him that the situation had become untenable.
At its heart, Ms Gray – who was known in Whitehall as the consummate fixer – had to go because nothing felt like it was being fixed.
She was in charge of preparations for government, but when 5 July arrived they appear scant and progress from there was slow.
But blame for this should lie not with her but with Sir Keir.
If there had been enough due diligence on the appointment, some of these problems might have been anticipated.
“Sue Gray was brought in to deliver a programme for government and all we’ve seen in that time is a government of self-service.
“The only question that remains is: who will run the country now?”
One Labour insider told Sky News that the current leadership “spent years saying how it was time to professionalise the party – but this chaos with Keir Starmer seems remarkably similar to the chaos with Jeremy Corbyn”.
They pointed out that Mr McSweeney previously served as Sir Keir’s chief of staff between 2020 and 2021 before being moved on to his campaign role.
In a major announcement on Sunday, Sir Keir also announced a shake-up of his entire Downing Street operation following disquiet at how the party handled rows over freebies and donations, as well as its decision to axe winter fuel payments for most pensioners.
Vidhya Alakeson and Jill Cuthbertson have been promoted to deputy chiefs of staff, while Nin Pandit has been appointed as Sir Keir’s principal private secretary.
Meanwhile, former journalist James Lyons will join from TikTok to lead a new strategic communications team.
The prime minister said he was “really pleased to be able to bring in such talented and experienced individuals into my team”
“This shows my absolute determination to deliver the change the country voted for,” he added.
One source told Sky News that the news of Ms Gray’s departure came on Sunday after plans for the reorganisation announcement on Monday were leaked to the media.
Her advisory role will be to support Sir Keir and the cabinet in delivering on its devolution agenda.
One former senior adviser in Number 10 told Sky News that “without the authority of the prime minister and the proximity to him, this ‘envoy’ role will not be a serious position in government”.
There will also be a rise in maximum maintenance loans to increase in line with inflation, giving an increase of £414 a year to help students with living costs.
However, the education secretary did not say if the rise would continue after that.
“We’re going to look at this and the maintenance support and the sector overall as part of the reform that we intend to set out in the months to come,” she said.
“So no decision, no decision has been taken on what happens beyond this.”
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She said the government will be looking at “what is required… to get our universities on a more sustainable footing… but also to deliver a better deal for students as a part of that”.
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University tuition fees to increase
The minister said she also “intends to look at” uprating the threshold at which students need to start paying tuition fees back in line with inflation.
Jo Grady, general secretary of the University and College Union (UCU), said the tuition fee rise was “economically and morally wrong”.
She said: “Taking more money from debt-ridden students and handing it to overpaid underperforming vice-chancellors is ill conceived and won’t come close to addressing the sector’s core issues.”
The National Union of Students (NUS) said students were being asked to “foot the bill” to keep the lights and heating on in their universities and to prevent their courses from closing down amid the “crisis”.
Alex Stanley, vice president for higher education of the NUS, said: “This is, and can only ever be, a sticking plaster.
“Universities cannot continue to be funded by an ever-increasing burden of debt on students.”
Universities have been making up for fees being frozen since 2017/18 by taking in international students who pay more.
However, student visa numbers have fallen after the previous government made it more difficult for them to come to the UK recently, so universities can no longer rely on the fees.
On Monday afternoon, the two biggest jobs were confirmed, with former home secretary Ms Patel being given the shadow foreign secretary role.
Former shadow work and pensions secretary Mel Stride, who ran in the Tory leadership race and is considered more of a moderate than Ms Badenoch, has been made shadow chancellor.
Robert Jenrick, who lost out to Ms Badenoch, is the new shadow justice secretary, sources told Sky News.
Earlier in the day, Laura Trott, who served as chief secretary to the Treasury under Rishi Sunak, was appointed shadow education secretary.
The new Tory leader made her first appointments on Sunday evening ahead of her new top team meeting for the first time on Tuesday.
Now the Conservatives are in opposition, the shadow cabinet’s role is to scrutinise the policies and actions of the government and to offer alternative policies.
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Nigel Huddleston and Dominic Johnson, junior ministers under Mr Sunak, were appointed joint chairmen of the Conservative Party.
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Badenoch: ‘We let standards slip’
Former foreign secretary James Cleverly, who came third in the leadership race, said on Friday he would not be joining Ms Badenoch’s top team.
Ex-prime minister Mr Sunak, his former deputy Sir Oliver Dowden, ex-chancellor Jeremy Hunt and former Brexit, health, and environment secretary Steve Barclay have all said they will be joining him on the backbenches.