Sue Gray has quit her role as Prime Minister Sir Keir Starmer’s chief of staff, saying she “risked becoming a distraction”.
She had been caught up in rows over pay, after the BBC’s political editor revealed her salary was higher than Sir Keir’s, and donations from Lord Alli.
A Downing Street spokeswoman confirmed Ms Gray is to take up a new role as the PM’s envoy for nations and regions.
Labour said Ms Gray will be replaced by Morgan McSweeney, who was previously chief adviser to the PM and masterminded Labour’s election campaign.
Resigning, Ms Gray said it had been an honour to “play my part in the delivery of a Labour government” as Sir Keir’s chief of staff, both in opposition and in No 10.
“However in recent weeks it has become clear to me that intense commentary around my position risked becoming a distraction to the government’s vital work of change,” she said.
“It is for that reason I have chosen to stand aside, and I look forward to continuing to support the prime minister in my new role.”
Ms Gray has been subject to intense internal briefings and criticism in a government yet to reach its first 100 days in office, and it’s that level of dysfunction that has made it clear to Sir Keir that something needed to shift.
The recent Labour conference was overshadowed by controversy over clothing donations from Labour peer and longstanding donor Lord Waheed Alli, for whom Ms Gray reportedly authorised a temporary Downing Street pass after the election.
Much more damaging for her, though, was the level of anger towards her at the heart of government, indicated by high level sources being willing to leak the BBC confidential details of her salary.
One reason for that turbulence was special advisers in the team being asked to take pay cuts, on top of unhappiness about a lack of contracts after the election victory.
Now the prime minster has reshuffled his top team, not only by promoting Mr McSweeney, but also making four other appointments, most notably by hiring a strategic communications lead.
These announcements tell us publicly what people within government have been saying privately for weeks, with the perception that not enough of the right people were in the right roles or the right structures – and this, it is believed, contributed to missteps and unforced errors by the government.
The government’s list of planned announcements, known internally as “the grid”, had been under the command of Sue Gray, but will now be under the control of the No10 communications team, where some believe it should always have been.
The move follows private frustration voiced by several sources over Downing Street’s communication strategy, which has led to the appointment of James Lyons as a strategic communications lead.
Mr Lyons is a former political journalist at the Sunday Times and the Daily Mirror, who went on to work for the NHS and for TikTok, and he will now be in charge of plotting the government’s communications strategy three, six and nine months ahead.
Sir Keir now also has two new deputy chiefs of staff, Vidhya Alakeson and Jill Cuthbertson, and a new principal private secretary – a key civil service role for every prime minister – in Nin Pandit.
Ms Cuthbertson is a Labour veteran, who worked for Gordon Brown and Ed Miliband, and has been promoted alongside Ms Alakeson, who worked as a civil servant before working for Labour in opposition and then in No 10.
Thanking Ms Gray for her work preparing Labour for government and in Downing Street, Sir Keir said he was “delighted” she would stay by his side in her new role, and added the shake-up showed his “determination to deliver”.
There is another role that will need to be filled in the coming months, because the most senior civil servant in the country, Simon Case, is stepping down as cabinet secretary at the end of the year, following 18 months of treatment for what is described as a neurological condition.
There had been reports of tension in No 10 between Mr Case and Ms Gray, who replaced him as the head of the Partygate inquiry after it emerged a gathering had taken place in his own office in December 2020.
Lord Gavin Barwell, who worked with Ms Gray in his role as chief of staff to former PM Theresa May, told Radio 4’s The World this Weekend that she had “made the right judgment” to stand down from her role.
“On a personal level I’ve worked closely with Sue…and she is an incredibly dedicated public servant and I feel for her, but I think she’s made the right judgment, which is when you’re in this kind of job once you become the story it becomes very hard to do the job,” he said.
The Conservative peer criticised the Number 10 operation put in place by Sir Keir since becoming prime minister, claiming “because Number 10 hasn’t been right we’ve had government by Treasury, too much doom and gloom.”
He added today was a “crucial moment for the prime minister – he’s got to get the second iteration of his No 10 operation right if he’s going to recover some of the political ground he’s lost over the last couple of months.”
