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Rachel Reeves appears to have survived her moment of peril. When it emerged this week that she had failed to obtain the right licence to rent out her family home, and had originally misinformed the Prime Minister about the circumstances of the case, the Chancellor appeared to be in some danger. There were comparisons with Angela Rayner, who resigned in September for a similarly inadvertent property-related mistake.

In short: Reeves started renting out her four-bedroom family home in London after last year’s election at a per-calendar-month rate of £3,200. The local council required her to get a licence to do this. She and her husband asked the estate agents to get one but they didn’t. She failed to follow up and so the property was rented without a licence until the error became news this week. Reeves could now be ordered to pay a fine or to return thousands of pounds in rent to the tenants.

On Thursday evening, in an exchange of letters, the PM told her he would take no further action. But he rebuked her for failing to provide accurate information when the case was first reported by the Daily Mail. In the first instance Reeves had claimed no knowledge of the need for a licence, before discovering correspondence with her estate agent from last year which showed she did know.

The Prime Minister said not once but twice that her job was safe – in the first instance after she claimed no knowledge of the problem, and second when she presented the full facts of the case. So why did Reeves survive while Rayner fell?

Rayner’s case – in which she underpaid £40,000 in stamp duty on a flat in Hove – was worse from a public relations perspective because it was easier to understand: she benefited from it financially and looked like a hypocrite because she was housing secretary at the time (although, again, like Reeves, her mistake was inadvertent).

But more importantly, Starmer stood by his Chancellor because she is a key part of his political project. This incident re-emphasised that, despite months of speculation that Reeves could be replaced (Pat McFadden’s name has been floated).

The stories about Reeves have been unrelenting. There were the tears at Prime Minister’s Questions in July when Starmer would not confirm if her position was secure. No 10 has also tightened its grip on economic policymaking, bringing in the economist Minouche Shafik as the PM’s adviser on such matters, and appointing the Treasury official Dan York-Smith as Starmer’s principal private secretary. Darren Jones, Reeves’s effective deputy, was also moved into the new Chief Secretary to the Prime Minister role. Reeves’s communications Spad, Ben Nunn, is moving to No 10 after the Budget. And, in what was seen by some as a further slight, the Chancellor’s sister Ellie Reeves was steeply demoted in the September reshuffle from party chair to solicitor general.

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While it was all part of a wider programme of political consolidation by Starmer, this week showed that these developments have been over-interpreted as a weakening of Reeves’s position. Here’s why: this would have been the perfect opportunity to dispose of the Chancellor without it looking like a policy disagreement. The relationship between numbers 10 and 11 Downing Street is the core of the British government and the act of removing a chancellor is fraught with risk. Few prime ministers have been able to do so and survive long afterwards. In Starmer’s case, a sudden bust-up with Reeves on economic policy could spook the bond markets into thinking the PM wanted to go on a spending spree, dump the fiscal rules, etc.

Letting Reeves go over this mistake could have been a way to junk the Chancellor without such a panic – though it would probably have caused jitters anyway because bondholders, rightly or wrongly, fear any replacement Labour chancellor would be more profligate. Failing further revelations, the minor scandal over a rental licence has re-stressed the PM’s confidence in his Chancellor and reminded us that she won’t be going anywhere any time soon.

[Further reading: Starmer’s sweeteners for sacked ministers]

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