By Elizabeth Piper, Andrew MacAskill and Alistair Smout
LONDON, May 14 (Reuters) - British Prime Minister Keir Starmer was struggling to hold on to power after his main rival in the government resigned on Thursday, accusing him of political drift, and others positioned themselves for potential challenges to his leadership.
Disastrous results for the governing Labour Party in local elections last week have plunged Britain into a new crisis, just under two years after Starmer won a large majority on a vow to bring stability and end a decade of political chaos.
After days of calls by Labour lawmakers for Starmer to quit or set out a timetable for his departure, Wes Streeting resigned as health minister, the first senior minister to break cover. He said he was standing down because “it is now clear you will not lead the Labour Party into the next general election”.
But Streeting did not trigger a formal contest, and other senior cabinet ministers expressed their support for Starmer.
Labour members of parliament and trade unions said they wanted the debate about what comes next to focus on ideas rather than personalities or factions, his resignation letter said.
“It needs to be broad, and it needs the best possible field of candidates,” Streeting wrote.
Greater Manchester mayor Andy Burnham, like Streeting a Labour Party politician, said separately he would seek a seat in parliament - a move that could pave the way for him to challenge Starmer.
STREETING SAYS BRITAIN NEEDS VISION
“Where we need vision, we have a vacuum. Where we need direction, we have drift,” Streeting said. “Leaders take responsibility, but too often that has meant other people falling on their swords.”
Starmer responded with a letter expressing regret Streeting had stepped down, saying “it is incumbent on all of us to rise to what I see as a battle for the soul of our nation” and “turn the page on the chaos”.
A source close to Streeting said the former health minister had enough support to mount a formal leadership challenge but had not triggered an immediate contest because he felt it would be preferable for Starmer to set out an orderly timetable.
Starmer has said he will battle to keep his job, and sources close to him say he is determined to fight any leadership contest.
The pound edged lower after Streeting’s resignation and news that Burnham would seek to return to parliament.
“It moves us one step closer to a Labour leadership challenge. How many steps are between here and there, that’s still uncertain,” said Nick Rees, head of macro research, Monex Europe, London.
POTENTIAL CANDIDATES FACE OFF AGAINST STARMER LOYALISTS
Earlier on Thursday, Starmer’s former deputy, Angela Rayner, said she had been cleared of deliberate wrongdoing over her tax affairs, an impediment to any leadership contest, but she would not say whether she wanted to launch a formal bid.
Labour lawmaker Josh Simons said he would resign from his seat in Greater Manchester, opening a possible route for Burnham to win a place in parliament - something needed for him to bid to become prime minister.
Burnham said he would seek permission to stand as Labour’s candidate in the seat but stopped short of saying he would challenge Starmer.
“Much bigger change is needed at a national level if everyday life is to be made more affordable again. This is why I now seek people’s support to return to parliament,” he said on X.
Another potential candidate is armed forces minister Al Carns, a former Royal Marine seen by some in Labour as a new face who could freshen up the party.
But education minister Bridget Phillipson repeated her backing for Starmer and suggested the rest of his cabinet team was supportive.
“This is now a chance for us to pause, take a breath as a party and try and draw a line under all of this,” she said.
Starmer, 63, has adopted a “business-as-usual” approach and finance minister Rachel Reeves warned lawmakers against plunging Britain into chaos when its anaemic economy was turning a corner. The economy grew unexpectedly in March.
Business leaders fear another leadership race to choose what would be Britain’s seventh prime minister in about a decade would deter investment - something the Labour government has said must improve to turn around Britain’s fortunes.
The political instability has pushed borrowing costs higher, with some investors nervous about the possible election of a more left-wing, tax-and-spend Labour prime minister.
“There have been too many changes of government strategy, leadership, just in my six years of being CEO,” Amanda Blanc, boss of insurance company Aviva, told Reuters. “And I think that is harmful to a major economy such as the UK and how we are perceived abroad.” ($1 = 0.7398 pounds)
(Reporting by Elizabeth Piper, Andrew MacAskill and Alistair Smout, Additional reporting by Muvija M, Sam Tabahriti and William James; Writing by Elizabeth Piper and Kate Holton; Editing by Alison Williams and Timothy Heritage)
