Labour Ministers Demand Rethink as Reeves Faces Fiscal Revolt at Party Conference

Rachel Reeves, the Chancellor, has arrived at the Labour Party conference in Liverpool amid growing unrest within her own government. Senior ministers are urging Reeves to relax her stringent spending rules as they seek funds to deliver Labour’s manifesto pledges. The pressure has mounted as Reeves tries to fill a £30 billion shortfall in public finances ahead of the November Budget, where tax increases and spending cuts are expected to please international creditors.

Her commitment to eliminate the deficit by 2030, described as “iron clad,” is causing frustration across Whitehall. One minister revealed to The Telegraph that colleagues were “begging” Reeves to loosen borrowing restrictions, warning that “austerity lite” policies risk alienating voters and pushing them towards Nigel Farage’s Reform party. Recent polling shows Reform with a 12 point lead over Labour, which has fallen to its lowest level since 2009. Reeves herself is facing record unpopularity as Chancellor, matched by Sir Keir Starmer’s historically low approval ratings as Prime Minister.

Within the party, pressure is now mounting to signal a shift towards more expansive public investment. Labour members want to see the abolition of the two child benefit cap and new taxation on wealth to fund policies such as freezing energy bills. Major unions including Unite and GMB have submitted conference motions pushing for these changes, with Unite calling for a wealth tax targeted at the richest to begin redressing economic inequality.

Andy Burnham, Mayor of Greater Manchester, has staked his reputation as the leading internal challenger to Starmer by advocating for a “mansion tax” on high value properties and more investment in social housing. His stance is gaining popularity among Labour MPs, some of whom have urged him to launch a leadership challenge if current policies remain unchanged. Burnham is expected to repeat these calls on the conference floor.

Despite the mounting disquiet, Reeves remains unyielding, telling Cabinet colleagues that government must “keep spending under control” and live within its means. She has rejected proposals to introduce wealth taxes and dismissed suggestions to relax borrowing rules. Reeves argues that substantial funds currently go towards servicing debts inherited from previous administrations, diverting resources from priorities such as reducing NHS waiting lists and tackling illegal migration.

The Treasury is reportedly assessing plans to limit the influence of the Office for Budget Responsibility by potentially reducing its fiscal forecasts from two each year to one, a move contested by the watchdog on grounds of transparency. Meanwhile, Labour insiders speculate that Sir Keir Starmer may announce an end to the two child benefit cap at the conference, a move intended to pacify backbench MPs and rebuild party unity after a turbulent month.