Henry ZeffmanChief political correspondent
PA MediaWell, at least nobody is asking Rachel Reeves about tax rises today.
Not that this will feel like a pleasant episode for the chancellor.
Her failure to apply for a selective licence before renting out her family home is at the very least embarrassing.
But is it more than that?
That’s a question that can be answered on multiple levels: ethical, political and legal.
Start with the ethics – specifically, ministerial ethics.
All government ministers are required to abide by the ministerial code, a 34-page document about standards in public life.
A breach of the ministerial code can often result in a minister’s resignation, including less than two months ago that of Angela Rayner, the former deputy prime minister.
That is why the exchange of letters released between Reeves and Sir Keir Starmer just before midnight was so important, and why Downing Street was not willing to wait for the morning.
The prime minister said that he had consulted Sir Laurie Magnus, the Conservative-appointed independent ethics adviser, whose unflinching approach did for Rayner and several other ex-ministers besides and that they had agreed that no further investigation would be necessary.
Sir Keir said that this was because the breach was inadvertent, Reeves had acted promptly to rectify it by applying for the licence, and had apologised.
“The ministerial code makes clear that in certain circumstances, an apology is a sufficient resolution,” Sir Keir wrote.
In terms of the prime minister drawing a line that Reeves’s position as chancellor is not at all in question here, he could not have been clearer.
That said, there is still an outstanding question.
Is the prime minister’s position that his chancellor did break the ministerial code but that the apology is sufficient resolution?
Or is it that the apology is sufficient for there not to be an investigation into whether she broke the ministerial code?
This may sound niche but it does matter – the chancellor breaking the ministerial code in any way, however minor, is worth noting.
Of course the political implications of this will depend on much less technical questions than that.
The Conservative Party smells vulnerability.
“It’s one rule for the Chancellor and another for everyone else,” a spokesperson said.
“Keir Starmer pledged to restore integrity to politics, but now he’s laughing in the face of the British public. He should grow a backbone and sack the chancellor now.”
However, Kemi Badenoch appeared to slightly muddy the position this morning, suggesting that Reeves should be sacked only if she is found to have broken the law.
A demand that Starmer sack his chancellor is not par for the course.
In fact, for all their criticism of Reeves’s stewardship of the economy over the past 16 months or so, this is the first time the Conservatives have called for her to be sacked.
It’s an important strategic judgment they have made.
Potential fine
As pungent as our political discourse may often be, calling for a sacking still has an extra severity to it. That’s a card the Conservatives have now played.
This morning, some in Labour think this is a histrionic overreaction from Kemi Badenoch’s party, which would significantly lower the bar for ministerial sackings.
Yet the Conservatives believe that they can make the most toxic charge in politics stick: one rule for them, another for the rest of us.
Whether they are right or wrong may depend in large part on the legal dimension to all this.
Will Southwark Council take action against Reeves for not having had the right licence? We don’t yet know.
Would they generally take action against other individuals, non-politicians, caught up in this scenario?
In this pretty niche area of housing law, we don’t yet know, though we are trying to find out.
A Freedom of Information request by Direct Line Group in 2024 found that in the financial year 2023-24, 245 councils had levied fines totalling £2.5m for non-compliance with selective licensing rules.
The level of fines imposed can vary massively between different parts of the country.
Under section 95 of the Housing Act 2004. it can be a criminal offence not to have the right licence as a landlord, unless the landlord can show that they had a “reasonable excuse”.
Importantly, sources close to the chancellor are adamant that her letting agent had told her it would advise her if a selective licence was needed and did not do so.
Would this typically be considered a reasonable excuse in the eyes of the authorities?
We do not know but are trying to get an answer from experts.
Political judgement
Away from some of these technicalities, the risk for the chancellor is that this episode folds into deeper, pre-existing questions about her personal and political judgment.
Should the kind of person prudent enough to be chancellor at a time of global economic turmoil have been prudent enough to double-check the licensing situation for herself?
Not least given she had backed the expansion of selective licensing in her own Leeds West and Pudsey constituency?
These are the kinds of questions which may now be asked.
Before the general election Labour MPs had a deep and consistent trust in Reeves’s decisions on matters big and small.
Her credibility as an economist and an individual was at the heart of Labour’s election pitch and its ability to convince the public to trust the party again with the public finances.
After a turbulent period in office so far that perception is under threat like never before.
And even if this development merely goes down as an embarrassing but fleeting row, the Budget looms.
