Rachel Reeves is sparking civil war in the Cabinet ahead of Wednesday’s spending review, as she prepares to strangle funding to key government departments. The Chancellor is making enemies with deputy PM Angela Rayner and Home Secretary Yvette Cooper in particular, as she braces to fund an uplift in NHS spending by withholding cash for councils and the police.
It’s been reported that the spending talks have led to “very unpleasant” scenes between the three most senior women in the Cabinet. A source told the Mail: “It turned nasty between Yvette and Rachel. It was just as bad as that between Rachel and Angela, who walked out during her negotiations. Yvette was just passing on the concerns of the police, who said that without more money they would be forced to make stark choices about which crimes they prioritise.”
“The anger of the police shows they’ve been briefed by Cooper on how the negotiations are going, and they’re not happy.”
The rows are the latest evidence of major tensions between the Chancellor and deputy Prime Minister, after it was revealed Ms Rayner had privately called on Ms Reeves to hike taxes to avoid spending cuts.
A leaked memo showed Ms Rayner calling for raises in taxes on pensions and dividends to raise billions and avoid the need to cut welfare.
The leak was seen by many in Westminster as a strategy to boost her leadership credentials among Labour’s grassroots, as Keir Starmer’s time at the top looks increasingly unstable.
The Tories’ Mel Stride said the Cabinet tax row proved that this “is the same old Labour – divided at the top and dangerously addicted to taxing more and spending more.”
“The Chancellor won’t rule out more tax rises because Labour’s leadership is already planning them.”
A minister told the Mail: “The negotiations over the final settlements are still not sorted for some departments.”
“They’re going to carry on fighting it out over the weekend.”
Another source added: “Rachel will stand up and promise things she can’t deliver. There will be a lot of guff about how she will deliver security for the country.”
“But how can you promise to deliver security when Trump’s doing what he’s doing on tariffs and Putin is so active?”
Ms Reeves will deliver her spending review just after midday on Wednesday, in which she will confirm billions more for defence while cutting foreign aid spending.
The NHS, transport, and tech and science investment, are also expected to receive uplifts.
However this risks squeezing other departments, as day-to-day spending will grow by just 1.2% over the next three years, less than half that seen in the first two years of Labour’s time in office.
The Department of Work & Pensions will be cut, as will police and local councils.
Sources close to Yvette Cooper denied a “bust up”, but confessed there had been “tough conversations”.