Keir Starmer appears to have escaped the huge political damage of potentially losing his chancellor weeks before the budget, after 24 hours of intense scrutiny over whether Rachel Reeves broke the law when she rented out her family home.
The Conservatives said Reeves must be sacked if she committed an offence by not obtaining a council licence before letting out her four-bedroom house in south London when the family moved into 11 Downing Street. No 10 was initially unable to explain why Starmer believed an apology from the chancellor was sufficient.
But after a chaotic day, the lettings agency employed by Reeves said it was to blame for not applying for the licence, and apologised for the error.
Emails subsequently released by Downing Street between the agency and Reeves’s husband, Nicholas Joicey, a senior civil servant, supported this version of events.
Kemi Badenoch, the Conservative leader, argued that this did not close the matter and called for Starmer to hold a full investigation. But with Southwark council saying it had no plans to take action against Reeves, her position seemed secure.
Starmer confirmed there would be no further action after consulting with his independent adviser on ministerial standards, Laurie Magnus. In a letter to Reeves, he said: “I still regard this as a case of an inadvertent failure to secure the appropriate licence, which you have apologised for and are now rectifying … I see no need for any further action.”
The departure of Reeves would have been a devastating blow for Starmer. The chancellor is pulling together a budget, to be announced on 26 November, that is seen as crucial to the prospects of his government.
It would also have been the second loss of a key minister in recent months, after Angela Rayner stood down as deputy prime minister and housing secretary in September over another property-related controversy, in her case the underpayment of stamp duty on an £800,000 seaside flat.
The row over Reeves’s property affairs began on Wednesday evening with the publication of letters between her and Starmer about her failure to pay for a £945 “selective licence” before she let the home, as required in some parts of Southwark.
In her letter, Reeves said she had been unaware of the need for a licence, and that she had applied as soon as she was made aware.
In his reply, Starmer said that, having consulted Magnus, he was satisfied the breach was “inadvertent” and that given her prompt action once she knew about the licence, an apology was sufficient.
Downing Street refused to say whether Magnus had seen any evidence to support Reeves’s claim of having made an inadvertent mistake, or had taken her word for it.
No 10 declined to say whether Reeves contravened the ministerial code or had potentially broken the law. Badenoch argued that if Reeves was fined she should be dismissed, citing Starmer’s argument after Boris Johnson’s fine for breaching Covid rules that “lawbreakers cannot be lawmakers”.
In an early piece of good news for Reeves, Southwark released a statement saying that while it could not comment on individual cases, it pushed for enforcement action such as fines only when someone did not apply for a licence within 21 days of being warned they needed one, or if a property was found to be in an unsafe condition.
No 10 later announced that Magnus had reopened his examination of the case after new information emerged in emails to and from Joicey.
Shortly afterwards, Harvey & Wheeler, an estate and lettings agency based in Dulwich, south London, said it took responsibility for the lack of licence. While owners of properties usually applied for these, it said, in this instance a now-departed staff member offered to do so on Reeves’s behalf and then did not.
In a statement, the company said that “in an effort to be helpful” the then property manager offered to apply for a licence on behalf of Reeves’s family, but did not and then left the company just before the tenancy began.
“Unfortunately, the lack of application was not picked up by us as we do not normally apply for licences on behalf of our clients; the onus is on them to apply. We have apologised to the owners for this oversight,” it said. “We deeply regret the issue caused to our clients as they would have been under the impression that a licence had been applied for.”
A redacted email chain supported the statement released by the lettings agency. Photograph: No 10
The emails released later by Downing Street between the agency and Joicey supported this narrative.
A message from the agent to Joicey read: “I will do the selective licence once the new tenant moves in as I won’t need to do this just yet. At the moment as we are only applying for a council licence.”
In response, Joicey asks the agency to “please, do go ahead” and obtain the licence, plus an electrical safety test, asking if any more administrative tasks needed to be completed.
In a new letter to Starmer, Reeves wrote that the agency had accepted responsibility, adding: “Nevertheless, as I said yesterday, I accept it was our responsibility to secure the licence. I also take responsibility for not finding this information yesterday and bringing it to your attention.
“As I said to you today, I am sorry about this matter and accept full responsibility for it.”
A Tory party spokesperson said: “Last night Rachel Reeves said ‘she had not been made aware of the licensing requirement’. Today, we find out that Reeves was alerted to the need for a licence in writing by the estate agents.
“Having been caught out, the chancellor is now trying to make the estate agents take the blame … With more information coming to light every few hours, the prime minister needs to grow a backbone and start a proper investigation.”
