Keir Starmer launched a desperate bid to ‘reset’ his team today amid fears he is bracing to mount another huge raid on Brits.
The PM has moved to bolster his influence over economic policy, drafting in ‘tax fanatics’ as a crucial Budget looms.
No10 strategic communications director James Lyons dramatically announced this morning he is leaving the role after less than a year.
Meanwhile, Treasury minister Darren Jones has been appointed to the new post of ‘secretary to the PM’, tasked with enforcing Sir Keir’s will.
Former Bank of England deputy governor Minouche Shafik – said by critics to be keen on wealth taxes – has been made Sir Keir’s chief economic adviser.
The overhaul looks designed to give Sir Keir more grip of financial policy, after the disastrous Treasury missteps over winter fuel allowance and benefits reforms.
It follows a torrid summer for the premier, dominated by protests about Channel boats and asylum hotels.
Labour is trailing far behind Nigel Farage’s Reform in the polls, with predictions Rachel Reeves will have to impose more eye-watering tax hikes at the Autumn Budget to fill a huge black hole in the public finances.
The departure of Mr Lyons raises fresh questions about Sir Keir’s judgment, after the exits of his previous comms director Matthew Doyle and chief of staff Sue Gray.
As Sir Keir battles to revive his floundering premiership:
IN
Darren Jones – The Treasury minister has been promoted to a new position as Chief Secretary to the PM.
Minouche Shafik – The former deputy governor of the Bank of England has been drafted in as the PM’s Chief Economic Adviser.
Dan York-Smith – The top Treasury official is moving to No10 as the PM’s Principal Private Secretary (PPS).
Tim Allan – The former adviser to Tony Blair, who went on to found the Portland public affairs agency, is the new Executive Director of Communications in Downing Street.
Vidhya Alakeson – The PM’s Deputy Chief of Staff is to take on an additional role overseeing policy and delivery in No10.
OUT
James Lyons – The former journalist is quitting as No10’s strategic communications director after less than a year in the role.
Nin Pandit – The former NHS England official is no longer the PM’s PPS. But she is remaining in No10 to lead work on delivering the PM’s key priorities.
Mr Jones is regarded as a rising star in Labour and often deployed on broadcast, but critics warn he is gaffe-prone.
Last week it emerged that Nin Pandit had been moved from the key civil service role of principal private secretary to the PM.
That job is now being taken by Treasury veteran Dan York-Smith.
Ms Pandit will head up a Downing Street Delivery Team.
James Murray has been promoted to Chief Secretary to the Treasury, taking over from Mr Jones.
Tim Allan has become the Government’s Executive Director of Communications, working alongside the existing No10 comms chief Steph Driver.
A wider anticipated ministerial reshuffle appears to have been shelved.
The Conservatives pointed out that many of the new key players have consistently advocated higher taxes.
Mr Jones, who takes up a powerful new role as the PM’s ‘chief secretary’ was caught on tape before the last election making the case for higher council tax on valuable properties and arguing of the need for inheritance tax to ‘ease intergenerational inequality’. In recent months, he has refused to rule out a new wealth tax.
Mr Murray has made the case for a wealth tax, arguing that the tax system ‘needs to look at wealth and not just income’.
Newly-appointed Treasury minister Dan Tomlinson has also made the case for a wealth tax and for higher capital gains tax, saying in in 2022: ‘Our tax system that is unfair to most working people, leaving those who pay Capital Gains and other taxes paying less.’
The Conservatives described Mr Tomlinson, who has opposed cuts to fuel duty, as a ‘tax fanatic’.
A Whitehall source told the Mail that Mr York-Smith has pushed for the VAT threshold on small businesses to be reduced dramatically at previous Budgets. He is also said to have made the case for levying National Insurance on pensioners and introducing road pricing for electric vehicles.
‘Dan is a bright guy and may prove to be a good appointment, but he does love his taxes,’ the source said. ‘He always saw the case for the VAT threshold coming right down, both to broaden the VAT base and to get rid of some of the distortions caused by the current system.
‘With him and Torsten you are going to have two super-smart guys who know how the system works making the case for this and other changes they have wanted for years. The question is who is going to exercise the political judgment to prevent them making another winter fuel-style mistake that has to be reversed.’
Tory chairman Kevin Hollinrake said: ‘This chaotic reshuffle shows a Downing Street in crisis – totally distracted from fixing the damage they’ve done to the economy, jobs and small businesses. It’s like firefighters arguing about the hose whilst the house burns down.
‘Inflation has doubled, borrowing costs have soared, and Britain is on the brink of a debt crisis, with working people left to pay the price through higher taxes.
‘Only the Conservatives, under new leadership, will take a responsible approach to the public finances and ensure our economy grows whilst we live within our means.’
The PM’s spokesman said the Downing Street shake-up reflects the shift into a ‘second phase’ of government.
‘It reflects the Prime Minister’s view that phase one of this government was about fixing the foundations and the second phase has to be about a relentless focus on delivery,’ Sir Keir’s official spokesman said.
Asked if the shake-up was an implicit acknowledgement that delivery has not gone as the Prime Minister might have hoped, his press secretary said: ‘The Prime Minister came into government with commitment to deliver change for working people. He spent the first year getting on with that job.’
She added: ‘Of course, the Prime Minister is always determined to make sure that we are straining every sinew to deliver for the British people.
‘That is what they rightly expect and what he comes to work and focuses on every single day.’
Mr Lyons insisted he had never intended to stay on indefinitely and had wanted to help ‘get a grip’ after a ‘difficult’ few months for the Labour government.
In a message to colleagues, he said: ‘It was an honour to be asked to come in.
‘I’m proud to have helped to get a grip on Whitehall comms after what was a difficult few first months for the Government.
‘It wasn’t just filling the grid. Launching the Plan for Change brought focus and direction.
‘But I gave up a lot to come in and this was never intended as a long haul.
‘When I came back from the summer break I told colleagues I was looking to leave by the end of the year.
‘I’ve brought this forward to be part of the other changes.’
Ms Reeves is facing a perfect storm at the Budget this Autumn, with a clamour for more spending even as the economy slows down and interest rates on the UK’s debt mountain rise.
There have been estimates that the black hole in the public finances could be as big as £50billion.
Fears are mounting that Ms Reeves is plotting another huge tax raid, with an array of grim options having been floated over the summer.
Many MPs have been demanding a wealth tax in a bid to raise huge sums, despite alarm that entrepreneurs are already leaving the country.
By Patrick Tooher, consultant City Editor
Sir Keir Starmer’s new economics guru has ‘no experience of business’, carries ‘little clout in the markets’ and is a big fan of wealth taxes, it has been claimed.
Baroness Minouche Shafik has been hired as the PM’s chief economic adviser in the latest revamp of No10’s top team.
In her new role Lady Shafik, a former deputy governor of the Bank of England, will act as a bridge between Sir Keir and Chancellor Rachel Reeves, who is lining up tax hikes to fill a hole in the public finances of up to £50billion.
Lady Shafik has previously worked with Torsten Bell, the pensions minister and former boss of the Resolution Foundation think-tank who was last week promoted to play a key role in Budget preparations.
In 2023, Lady Shafik co-chaired a Resolution Foundation inquiry which called for the abolition of inheritance tax relief on farms and bringing pension pots within a dead person’s estate.
Both measures were enacted by Ms Reeves in her maiden Budget to the fury of farmers and savers.
Born in Egypt, Lady Shafik has spent much of her career in academia, the civil service and at the International Monetary Fund, where she oversaw its response to the Eurozone debt crisis in 2009.
Tory shadow business secretary Andrew Griffith said Sir Keir had hired ‘an establishment academic with no experience of business’, adding: ‘Any one of thousands of British businessmen and women could have educated him on the harsh realities of trying to tax your way to growth.’
Last year Lady Shafik quit as head of Columbia University in the US amid criticism of her handling of student protests in response to the Israel-Hamas war.
‘Her recent failures in leadership in academia suggests she has difficulty engaging with the challenges of the real world,’ said Julian Jessop, a former Treasury economist.
Lady Shafik seemed ‘even keener on wealth taxes and income redistribution’ than Ms Reeves and Mr Bell, he added.
‘She has no business experience and little clout in the financial markets.’
Darren Jones has been promoted as part of a No10 ‘reset’ – but his Downing Street colleagues might be wary of the new Chief Secretary to the PM going near a TV studio.
Mr Jones, the MP for Bristol North West, has twice recently sparked rows with his comments on flagship BBC politics shows.
Most Channel migrants ‘children, babies and women’
In June, in his previous role as Chief Secretary to the Treasury, Mr Jones prompted anger when he said the majority of people crossing the Channel in small boats he had seen were ‘children, babies and women’.
It came as he clashed with Reform UK’s Zia Yusuf on BBC Question Time over the migrant crisis.
Mr Jones said: ‘Let me tell you, when you’re there on the site, seeing these dinghies put together by these organised criminal gangs, which are clearly not safe.
‘And when you see that the majority of the people in these boats are children, babies and women… you have got to take note.’
As he interrupted Mr Jones, Mr Yusuf claimed more than 90 per cent of those who cross the Channel in small boats are adult men.
Asked if he disputed the 90 per cent figure, Mr Jones said: ‘I’m just saying it’s not true.’
‘When there are babies and children put into that position by human trafficking gangs who are coming across the Channel with skin burns from the oil in those boats, mixing with the salt sea water, I would ask any of you to look at those babies and children and say go back where you came from,’ he added.
According to Home Office figures, in the first three months of 2025, there were 6,420 small boat arrivals where the age and sex of the person was recorded. Of these, 81 per cent (5,183) were adult men.
Tory leader Kemi Badenoch called on Mr Jones to apologise, while Reform UK’s Nigel Farage branded him ‘another clueless Labour minister’.
Mr Jones later sought to clarify his remarks, posting on social media: ‘Of course the overall majority of people arriving illegally on small boats are men – but not ‘north of 90 per cent’ as Reform claimed.
‘On Question Time, I shared a story from my visit to the Border Security Command about a dinghy that arrived mostly carrying women, children and babies who had suffered horrific burns.
‘I’m happy to clarify this given how this is now being misrepresented.’
Welfare squeeze ‘like cutting my kid’s pocket money by £10 per week’
Mr Jones had previously been at the centre of a row when he compared Labour’s welfare squeeze to cutting his children’s pocket money by £10 per week.
As he attempted to defend Government’s benefits cuts, Mr Jones pointed to how an impact assessment of the measures did not consider other action being taken by ministers.
‘My understanding is what the impact assessment doesn’t account for is the benefit that you get from our additional money into support for training, skills or work,’ he told BBC Politics Live.
‘Take, for example, if I said to my kids: ‘I’m going to cut your pocket money by £10 per week, but you have to go and get a Saturday job’.
‘The impact assessment on that basis would say that my kids were down £10, irrespective of how much money they get from their Saturday job.’
Mr Jones’ comments were swiftly branded ‘offensive’ and ‘patronising’ by critics.
He later apologised, telling ITV’s Peston programme: ‘I’m sorry about it. It was tactless and it wasn’t well considered. I apologise if I’ve offended people.’