Keir Starmer is facing a Cabinet revolt over plans to impose "huge" cuts on departments in the Budget.
A group of the most senior government ministers - including Deputy Prime Minister Angela Rayner - have raised concerns to the Prime Minister about the impact of potential cuts. Several top Labour figures are said to have by-passed Chancellor Rachel Reeves to raise the alarm in formal letters directly with Mr Starmer. It comes amid reports the Treasury is eyeing up plans to slash some departments' spending plans by up to 20%.
Ms Rayner, who is also Housing, Communities and Local Government Secretary, is said to have been joined by Justice Secretary Shabana Mahmood and Transport Secretary Louise Haigh in raising concerns. Sources said concern is widespread across the Cabinet beyond the three ministers named, according to reports.
The crisis in prisons has been top of the agenda since Labour was elected to power, with Ms Mahmood being forced to release thousands of inmates early to ease overcrowding in jails. Meanwhile Ms Haigh was forced to announce an internal review of the Department for Transport's capital spend portfolio when Labour entered No10, with the minister explaining that "the financial inheritance this government has received is extremely challenging".
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It is not uncommon for there to be discussions within the Cabinet and between ministers and the Treasury ahead of the Budget. But sending formal letters to the PM, which were first reported by Bloomberg, expose the seriousness of ministers' concerns.
On Tuesday the Chancellor told the Cabinet that filling "the £22billion black hole inheritance from the previous government" would only be enough to "keep public services standing still". Ms Reeves is said to be looking at making tax rises and spending cuts to raise £40billion in the Budget on October 30.
Education Secretary Bridget Phillipson admitted ministers are having to "make some really tough choices" before the Budget. The Labour minister insisted there will be "no return to austerity", adding: "We do, all of us have to make some really tough choices because of the inheritance (...) given to us by the Conservatives."
Ms Phillipson pointed to the issues with prisons overcrowding and accused the former prime minister Rishi Sunak of not being "prepared to confront that difficult choice". She added: "We've got to fix the problems that we've inherited but we want to make sure that we're delivering on the commitments that we made, making sure that there are more jobs, more opportunities, a growing economy."