Angela Rayner’s return to frontline politics began in earnest this week as the former deputy leader set out the challenge in the upcoming May elections.
“We are running out of time,” she told MPs at a party event. “The very survival of the Labour Party is at stake.”
The intention is clear: Rayner wants to demonstrate she is back and Sky News understands that her allies are increasingly confident that issues around her tax affairs will be resolved before the May elections, paving her return to the frontline at a moment of clear peril for the prime minister.
Politics latest: Sarwar hasn’t spoken to PM since urging him to quit
Angela Rayner delivering a speech in Liverpool in February. Pic: Reuters
Rayner was forced to resign in September after it emerged she had broken the ministerial code by underpaying stamp duty on her second home on the south coast by £40,000.
At the time, Rayner admitted her mistake, but said it had been her initial “understanding, on advice from lawyers” that she had paid the correct amount, having put her stake in the family home into a trust of her disabled son following her divorce in 2023.
But a fresh probe concluded Rayner should have paid more stamp duty because her new property in Hove was classified as a second home.
Since then, Rayner has been trying to resolve the matter with HMRC through lawyers and that process is reaching a culmination.
She has also been involved in speaking engagements and is writing an autobiography in an effort to raise enough funds to pay stamp duty owed and possible fines.
It’s thought she’s poised to earn over £100,000, more than enough to pay stamp duty owed and possible fines.
As the tax dispute rumbles on, Rayner is rallying MPs ahead of critical elections in May.
‘Losing faith in the PM’
Friends of Rayner tell me the former deputy to Starmer – like many MPs across the party – has increasingly lost faith in the prime minister after the performance of his Number 10 operation, which has seen a huge turnover of staff, a series of damaging U-turns and bad decisions, culminating in the Mandelson scandal that has so badly wounded the prime minister and the party.
I understand that Rayner verbally warned the prime minister not to appoint Mandelson but was ignored.
Rayner had all but disappeared from view after her resignation in September over her tax affairs, but has become more vocal in recent weeks, urging the government not to water down capping ground rents and being a leading figure forcing Number 10 to disclose the Mandelson files.
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Her rallying cry to Labour MPs this week was her strongest yet as she told MPs “not to be embarrassed by Labour values” and took aim at the party’s divisive immigration proposals.
Her speech to Labour’s centre-left campaign group Mainstream’s spring reception on Tuesday was a clear rebuke as she urged the prime minister to reconsider “un-British” immigration reforms.
The proposed changes to make it harder for migrant workers to quality for permanent residence in the UK have become a lightning rod for unhappy MPs, with over 100 signing a letter in recent weeks demanding that the prime minister water down the reforms.
Labour ‘running out of time’
She also warned MPs in the wake of the Gorton and Denton by-election defeat to the Greens that the Labour Party “cannot just got through the motions in the face of decline”, telling MPs: “There is not safe ground, we are running out of time.”
“When the British people voted for us, they voted for change, we put it in our manifesto. The Labour Party is at its best when we are bold and stand by our values. We should make clear our mission is to represent working people,” she said, warning that the party under Starmer had left voters with the impression that it represents the “status quo”.
All of this adds weight to leadership speculation, with the popular former deputy and bookies’ favourite to replace Starmer widely seen as the centre-left candidate in waiting should the PM face a leadership challenge post-May.
Allies of Rayner are clear the former housing secretary would not engineer a scenario to oust Starmer or directly challenge him.
But equally, she would consider running if MPs triggered a race, with one ally telling Sky News that if the May elections prove disastrous, there could well be 81 MPs prepared to call for his resignation and trigger a contest.
“She would have to weigh up the personal and the political and see what level of support there is in the party.”
She is also testing support in the City.
‘No lurch to the left’
The Financial Times reported this week that Rayner has joined a call with City investors, hosted by French bank BNP Paribas, in which she reassured them Labour would not lurch to the left.
The former deputy prime minister told investors on the call that the party would stick to the manifesto and not resort to more borrowing.
In essence, Rayner committed to sticking to Chancellor Rachel Reeves’ fiscal rules. This would be in part to assuage investors over the prospect of a more left-wing leader and also to ensure that there is no deviation from the manifesto.
Her allies say the meeting was one of various speaking events she is doing in order to raise the funds to settle her bill with HMRC.
Possible leadership challenge
Anas Sarwar, the Scottish Labour leader, is the only senior figure to go public and call for the PM’s resignation, but in private a number of senior colleagues are openly discussing a possible challenge.
When Sarwar called for the PM to resign in February, Rayner joined the rest of the cabinet to back the prime minister, but friends suggest that if the situation deteriorates further she would not be so willing to come out in support again.
There is growing speculation among MPs that a terrible result for Labour in the May elections could precipitate a leadership challenge, although those at the top of Labour are divided about what might happen.
One senior figure told me recently that they thought Starmer would survive the bloodbath of May because there are “enough people in the Labour Party that dislike the alternative enough that they’ll keep Keir Starmer in” – be that Angela Rayner on the left, or Wes Streeting on the right.
Others think the scale of losses could spur MPs, and senior figures, into action in a way that Sarwar’s resignation in February did not.
What is clear is that the prime minister would fight any challenge to his leadership. Starmer has made it repeatedly clear that he has no intention of quitting Number 10, throwing down the gauntlet to his MPs to try to force him out.
When I asked Anas Sarwar this week whether he thought the PM should resign if the results are bad, he simply told me that he had stated his position in February and was “recoiling from that position”.
The Scottish Labour leader clearly felt he needed to cut Starmer loose to have any hope in convincing Scottish voters to back Labour, such is the dislike for Westminster government in Scotland.
“I feel I had a duty to be straight to the people that I’m going to have to look in the eye over the course of the next 50 days and ask them to put their support in me to replace an SNP government that’s been in power for 20 years and to change the first minister of this country,” said Sarwar of his decision to call for Starmer to go.
“I’m the person that’s putting myself in front of the people of Scotland in 50 days’ time. And people in Scotland have a right to know what are my standards, what are my principles, what am I willing to accept, and what would I do differently if I have the honour of being first minister of my country.”
What happened at the last general election?
Back in 2024, Labour took 37 seats from the SNP in the general election – its best performance since 2007, as Starmer’s Labour clocked up 35% of the vote and the SNP came in with 30%.
Back then, it looked like Sarwar could be heading to become Scotland’s first minister.
Instead Labour has performed woefully in Scotland, coming in third behind the SNP and Reform in several polls.
The outlook is pretty bleak in Wales too, where Labour look set to lose control of the Senedd for the first time, according to polling, as Welsh voters turn to Plaid Cymru.
Welsh Labour had run the parliament in Cardiff for 26 years in a row, making it the most successful democratic party in the world.
Look to London and Labour are contemplating the prospect of a Zack Polanski green wave while in councils across England Reform are looking to make more gains.
When I asked Sarwar if May was the crunch point for Labour, he simply replied “absolutely”.
Like Rayner, he seems clear that Labour are running out of time. What is far from clear, is where that goes next.
