Sir Keir Starmer and his Cabinet have rallied around Angela Rayner but declined to guarantee her political future after she admitted underpaying stamp duty on a property purchase this year.
The Prime Minister and Chancellor Rachel Reeves gave the Deputy Prime Minister their “full confidence” while Education Secretary Bridget Phillipson said she had “sought to be transparent” in the scandal over her tax affairs.
However, Downing Street has refused to say when Sir Keir was first made aware of key details that led his deputy to refer herself for an ethics investigation in a sign No 10 is trying to limit the scope of the fallout.
It comes as sources close to Ms Rayner, who is also the Housing Secretary, said she was given three separate pieces of legal advice before buying an £800,000 flat in Hove at the centre of the row.
They said a conveyancer and two experts in trust law had all suggested the amount of stamp duty she paid on the property was correct and she acted on the advice she was given at the time.
Ms Rayner has been under mounting pressure in recent weeks after reports emerged she had saved £40,000 in stamp duty on her East Sussex flat by not paying the higher rate reserved for additional home purchases.
On Wednesday she admitted she had made a “mistake” and said she referred herself to standards adviser Sir Laurie Magnus after receiving fresh legal advice that she was liable for the extra duty following headlines about the purchase. It is understood the probe could report back as early as Friday.
In a public statement, Ms Rayner said a court-instructed trust was established in 2020 following a settlement with the NHS over a “deeply personal and distressing incident” involving her son.
He was left with life-long disabilities and to ensure he continued to have stability in the family home in Greater Manchester, she said her family had agreed that its interest in that property would be transferred to the trust.
She said she had put her stake in the constituency home in Ashton-under-Lyne into this trust, which a “leading tax counsel” had later told her made her liable to pay the additional stamp duty on her new Hove flat.
Details about the complex arrangements continued to emerge on Thursday, when the Telegraph reported that she had sold her remaining stake to the trust for £162,500, which the paper suggested had then been used to buy her new flat.
No 10 said Ms Rayner retained Sir Keir’s “full confidence” but declined to commit to her staying in post for the rest of this Parliament – an assurance which has previously been given publicly to Ms Reeves and Foreign Secretary David Lammy amid speculation about their positions.
“I’m not going to go through the Cabinet and do that,” a Downing Street spokesperson said on Thursday.
“You have the Prime Minister’s words in the House yesterday, he said that she followed the right course of action and expressed his pride in her work as his deputy.”
Meanwhile speaking to broadcasters earlier in the morning, Ms Reeves said: “I have full confidence in Angela Rayner. She’s a good friend and a colleague, she has accepted the right stamp duty wasn’t paid.
“That was an error, that was a mistake. She is working hard now to rectify that, in contact with HMRC to make sure that the correct tax is paid.”
But the Chancellor added that it was “incumbent on all of us to try to properly understand the rules”.
Ms Phillipson said: “She has acted in good faith, sought to act appropriately with the information available to her.”
She said the case was different from sleaze rows under the previous Tory government, of which Ms Rayner was an outspoken critic.
“What we saw in some of those cases in the past was a lack of scrutiny and a lack of transparency,” she told Times Radio.
“The Deputy Prime Minister has sought to be transparent, has set out in some detail, which has been difficult given that it relates to her family, extensive information.”
But she declined to guarantee Ms Rayner’s political future, insisting the investigation should “run its course.”
Asked if her colleague would still be Deputy Prime Minister by Christmas, she told LBC: “I’m not going to get into hypotheticals or speculate. I’m sorry to disappoint you. I’m just not going to do it.”
Lucy Powell, the Leader of the House of Commons, told MPs on Thursday the Conservatives were criticising Ms Rayner “because she is so bloody good at her job”.
Speaking at business questions, she added: “Suffice to say, the Deputy Prime Minister is a huge, huge asset to this Government. She’s an incredibly effective minister and she has been delivering.”
Downing Street said the Prime Minister was “kept updated” of the steps being taken by Ms Rayner over her tax affairs but declined to say when he was made aware of fresh legal advice that prompted her statement.
A Number 10 spokesman said the Deputy Prime Minister had received “draft” advice on Monday, the same day that Sir Keir said negative briefings against his deputy were a “mistake” in an interview with BBC Radio 5 Live.
He said she got the final advice suggesting that she had underpaid stamp duty on Wednesday morning but would not confirm whether this was “materially different” from the information given on Monday, or when the Prime Minister knew.
“The Prime Minister was kept updated on steps that the Deputy Prime Minister has taken, as was appropriate,” he said.
“As soon as that final legal opinion was received by the Deputy Prime Minister on Wednesday morning she immediately took steps to self-refer herself to the IA (independent adviser), and she updated the Prime Minister at the earliest opportunity as well.”
Asked if Sir Keir believed Ms Rayner had been transparent with him, the spokesman said: “The Prime Minister has been updated on the steps that the Deputy Prime Minister has taken – you’ve got his words from yesterday in the House when he said she has gone over and above in setting out the details.”
The Conservatives have written to HMRC calling for it to launch its own investigation on whether she tried to evade tax, with party chairman Kevin Hollinrake saying her explanation “cannot withstand scrutiny”.
Sir Keir Starmer stood by his deputy at Prime Minister’s Questions, saying he was “very proud to sit alongside her” amid calls from Opposition critics for her to resign over the row.
Ms Rayner has said she is “working with expert lawyers and with HMRC to resolve the matter and pay what is due”.
Losing the Deputy Prime Minister would cause a headache for Sir Keir as he seeks to reset Government following a difficult summer dominated by criticism of the small boats crisis and speculation about tax rises in the autumn budget.
She is key to his political project, overseeing the manifesto pledge to build 1.5 million new homes as well as Labour’s flagship workers’ rights expansion.
Widely seen a bridge between the No 10 operation and the wider party, she is popular among the grassroots and said to have played an important role in defusing the backbench revolt over proposed welfare cuts earlier this year.
Some Labour MPs have expressed hope that she will be able to remain in post, with one saying she was “doing a good job and everyone recognises she brings a perspective we need to the top team”.
Left-leaning Norwich South MP Clive Lewis, who has previously criticised the Government over policies like the backing of the Heathrow Airport expansion, said he did not think Ms Rayner should consider quitting.
He told the PA news agency: “I know Angela well enough to say with confidence that she is scrupulous when it comes to following the rules.”
He said there were “legal constraints” on how much she can disclose and that she has already done the “responsible thing” in referring herself to the ethics adviser, adding: “For those reasons, I don’t believe she should be considering her position.”
