Sir Keir Starmer is reshuffling his cabinet following Angela Rayner’s resignation after admitting she had not paid enough stamp duty on the purchase of a new home.
She paid standard stamp duty on a flat she bought in Hove, East Sussex, in May after taking advice that it counted as her only home due to her disabled son’s trust owning the family home in Ashton-under-Lyne – but it was established she should have paid more.
Her resignation has left a hole around the cabinet table, which Sir Keir is now filling.
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2:59
The rise and fall of Angela Rayner
It was stressed early on Chancellor Rachel Reeves would remain as chancellor, in an attempt to stop the markets moving.
David Lammy – foreign secretary to justice secretary and deputy PM
After flexing his diplomatic muscles with Donald Trump and his deputy JD Vance over the past year, Mr Lammywill now move to the justice brief.
The move is likely to be a blow as the PM had promised, most recently in November, he would be foreign secretary for the whole parliament until 2029.
Although he is no longer holding one of the four great offices of state, he has also been made deputy prime minister, presumably to soften the blow.
Mr Lammy is close to Sir Keir, both as a friend and in his next door constituency, and was seen grinning as he went into Number 10 after being appointed.
Image: David Lammy is now justice secretary and deputy PM. Pic: Reuters
Yvette Cooper – home secretary to foreign secretary
The Labour stalwart had made tackling illegal migration a priority, so the move could be seen as a disappointment for her.
However, she remains in one of the four great offices of state – PM, chancellor, foreign and home.
Image: Yvette Cooper is now foreign secretary
Shabana Mahmood – justice secretary to home secretary
A big promotion, the straight-talking Labour MP will be tasked with tackling the small boats crisis and asylum seeker hotel protests.
She is no stranger to making difficult decisions, deciding to free criminals early to reduce prison overcrowding as justice secretary.
Her move makes it the first time all three great offices of state, after the prime minister, are held by women.
Image: Shabana Mahmood is now home secretary. Pic: PA
Pat McFadden – chancellor of the Duchy of Lancaster and intergovernmental minister to work and pensions secretary and head of “super ministry”
Often seen as Sir Keir’s “number two”, Mr McFadden will take over a newly formed “super ministry”.
It will include the department for work and pensions and the skills remit of the department for education – taking a large part of Education Secretary Bridget Phillipson’s brief and taking over from Liz Kendall as work and pensions secretary.
While it is not a promotion at first glance, it is a much wider role than he has had as chancellor of the Duchy of Lancaster – the highest-ranking Cabinet Office minister after the PM.
Image: Pat McFadden is work and pensions secretary and head of the ‘super ministry’. Pic: PA
Darren Jones – chancellor of the Duchy of Lancaster
It is the second new job in the space of one week for the new chancellor of the Duchy of Lancaster. The close ally of the prime minister was promoted from chief secretary to the Treasury on Monday to chief secretary to the prime minister. And now he gets another new job.
Image: Darren Jones is the new chancellor of the Duchy of Lancaster
Steve Reed – environment secretary to housing secretary
A promotion for the man who has consistently defended the government lifting inheritance tax relief on farmers.
He takes over one of the two major vacancies left by Ms Rayner and will have the massive task of building 1.5 million new homes during this parliament, as promised by the government.
Image: Steve Reed is now housing secretary
Jonathan Reynolds – business and trade secretary to chief whip
A slightly odd move for the MP seen as a steady pair of hands in his business secretary role.
He takes over from Sir Alan Campbell and will now have to hustle Labour MPs to vote with the government – something that has sometimes proved difficult with the current cohort.
Mr Reynolds will also attend cabinet, as is necessary so he can liaise between the party and No 10.
Image: Jonathan Reynolds is the new chief whip
Peter Kyle – science secretary to business and trade secretary
A promotion for Mr Kyle, who is taking over from Jonathan Reynolds.
He is seen as a rising star and impressed Labour MPs when he refused to stand down after suggesting Nigel Farage was on the side of people like Jimmy Savile by opposing the government’s online safety law.
Mr Kyle will be in charge of getting trade deals with other countries over the line.
Image: Peter Kyle is now business and trade secretary
Emma Reynolds – economic secretary to the Treasury to environment secretary
Probably the biggest promotion of the reshuffle, Ms Reynolds is taking on Mr Reed’s role after serving as a junior minister in the Treasury.
She will have to take on farmers and deal with the water companies – a big undertaking.
Image: Emma Reynolds is now environment secretary
Liz Kendall – work and pensions secretary to science, innovation and technology secretary
Pat McFadden has taken her role as work and pensions secretary, while Ms Kendall takes over Peter Kyle’s brief.
He has made AI a major facet of his role so we will wait to see which direction Ms Kendall takes the job in.
Image: Liz Kendall is the new science secretary. Pic: PA
Douglas Alexander – trade policy minister to Scotland secretary
A promotion for the Blair/Brown minister who returned to politics last year after being ousted in 2015 by then 20-year-old SNP MP Mhairi Black.
He takes over from Ian Murray, who has been removed from the cabinet.
Image: Douglas Alexander is the new Scotland secretary
Sir Alan Campbell – Chief whip to Lord President of the Council and leader of the House of Commons
An MP since 1997 and part of Tony Blair and Gordon Brown’s frontbench, Sir Alan is taking over Lucy Powell’s role.
He will be in charge of organising government business in the Commons – a sizeable job.
Who is out?
Lucy Powell has been sacked as leader of the House of Commons.
Ian Murray has been sacked as Scotland secretary.
Bridget Phillipson remains as education secretary but her brief has narrowed as Mr McFadden has taken over the skills part of her job.
The UK has floated a new tax framework that eases the burden on decentralized finance (DeFi) users, with deferred capital gains taxes on crypto lending and liquidity pool users until the underlying token is sold, which the local industry has welcomed.
HM Revenue and Customs (HMRC) proposed on Wednesday a “no gain, no loss” approach to DeFi that would cover lending out a token and receiving the same type back, borrowing arrangements and moving tokens into a liquidity pool.
Taxable gains or losses would be calculated when liquidity tokens are redeemed, based on the number of tokens a user receives back compared to the number they originally contributed, according to the proposal.
Currently, when a user deposits funds into a protocol, regardless of the reason, the move may be subject to capital gains tax. In the UK, capital gains tax rates can vary between 18% and 32%, depending on the action.
Tax framework a ‘positive signal’ for UK crypto regulation
Sian Morton, marketing lead at the crosschain payments system Relay protocol, said HMRC’s no gain, no loss approach is a “meaningful step forward for UK DeFi users who borrow stablecoins against their crypto collateral, and moves tax treatment closer to the actual economic reality of these interactions.”
“A positive signal for the UK’s evolving stance on crypto regulation,” she added.
Maria Riivari, a lawyer at the DeFi platform Aave, said the change “would bring clarity that DeFi transactions do not trigger tax until you truly sell your tokens.”
“Other countries facing similar questions may want to take note of HMRC’s approach and the depth of research and consideration behind it,” she added.
However, the proposal is not a done deal yet. HMRC said it’s continuing to engage with relevant stakeholders “to assess the merits of this potential approach, and the case for making legislative change to the rules governing the taxation of crypto asset loans and liquidity pools.”
“In particular, to ensure that it would cover the range of transactions that can take place under these arrangements and would be viable for individuals to comply with,” the agency added.
In the initial consultation, 32 formal written responses were submitted by individuals, businesses, tax professionals and representative bodies, which included crypto exchange Binance, venture capital firm a16z Capital Management and self-regulatory trade association Crypto UK.
Rachel Reeves needs to “make the case” to voters that extending the freeze on personal income thresholds was the “fairest” way to increase taxes, Baroness Harriet Harman has said.
Speaking to Sky News political editor Beth Rigby on the Electoral Dysfunction podcast, the Labour peer said the chancellor needed to explain that her decision would “protect people’s cost of living if they’re on low incomes”.
In her budget on Wednesday, Ms Reeves extended the freeze on income tax thresholds – introduced by the Conservatives in 2021 and due to expire in 2028 – by three years.
The move – described by critics as a “stealth tax” – is estimated to raise £8bn for the exchequer in 2029-2030 by dragging some 1.7 million people into a higher tax band as their pay goes up.
Image: Rachel Reeves, pictured the day after delivering the budget. Pic: PA
The chancellor previously said she would not freeze thresholds as it would “hurt working people” – prompting accusations she has broken the trust of voters.
During the general election campaign, Labour promised not to increase VAT, national insurance or income tax rates.
He has also launched a staunch defence of the government’s decision to scrap the two-child benefit cap, with its estimated cost of around £3bn by the end of this parliament.
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4:30
Prime minister defends budget
‘A moral failure’
The prime minister condemned the Conservative policy as a “failed social experiment” and said those who defend it stand for “a moral failure and an economic disaster”.
“The record highs of child poverty in this country aren’t just numbers on a spreadsheet – they mean millions of children are going to bed hungry, falling behind at school, and growing up believing that a better future is out of reach despite their parents doing everything right,” he said.
The two-child limit restricts child tax credit and universal credit to the first two children in most households.
The government believes lifting the limit will pull 450,000 children out of poverty, which it argues will ultimately help reduce costs by preventing knock-on issues like dependency on welfare – and help people find jobs.
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8:46
Budget winners and losers
Speaking to Rigby, Baroness Harman said Ms Reeves now needed to convince “the woman on the doorstep” of why she’s raised taxes in the way that she has.
“I think Rachel really answered it very, very clearly when she said, ‘well, actually, we haven’t broken the manifesto because the manifesto was about rates’.
“And you remember there was a big kerfuffle before the budget about whether they would increase the rate of income tax or the rate of national insurance, and they backed off that because that would have been a breach of the manifesto.
“But she has had to increase the tax take, and she’s done it by increasing by freezing the thresholds, which she says she didn’t want to do. But she’s tried to do it with the fairest possible way, with counterbalancing support for people on low incomes.”
She added: “And that is the argument that’s now got to be had with the public. The Labour members of parliament are happy about it. The markets essentially are happy about it. But she needs to make the case, and everybody in the government is going to need to make the case about it.
“This was a difficult thing to do, but it’s been done in the fairest possible way, and it’s for the good, because it will protect people’s cost of living if they’re on low incomes.”
With all the speculation, it was always going to be a big one, but Rachel Reeves’s second budget turned into a political earthquake before she even stood up at the despatch box.
In this bumper budget special, Beth, Ruth, and Harriet unpick what happened on one of the most dramatic days in the fiscal calendar.
With the unprecedented leak of the Office for Budget Responsibility’s assessment giving the opposition a sneak preview, Kemi Badenoch delivered a fiery attack. Listeners weigh in on their thoughts of her comebacks.
Send us your messages and Christmas-themed questions on WhatsApp at 07934 200 444 or email electoraldysfunction@sky.uk.
And if you didn’t know, you can also watch Beth, Harriet, and Ruth on YouTube.
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