Sue Gray is set to become Keir Starmer’s envoy to the regions and nations, a new role that is understood to be part time, and there are question marks over whether it is salaried

Sue Gray is set for a bumper pay cut after being demoted by Keir Starmer.

The former chief of staff, who announced her resignation on Sunday, is moving to a newly-created role. It followed weeks of public mudslinging, which saw her £170,000 salary leaked to the BBC.

It is unclear whether her new role as envoy to the regions or nations will be salaried. There has been speculation that she could be elevated to the House of Lords.

Defence Secretary John Healey rejected suggestions the Government is already at “crisis point” after Ms Gray’s departure from No10 just three months after the General Election. He praised the former senior civil servant as having a “great talent” for “bringing people together” and described her as a “natural team player” who “raises the standards of those around her”.

Asked how he would characterise the Labour administration and whether it was at “crisis point”, Mr Healey told LBC: “No, I’d characterise this as a new Government getting on with the job.” He refused to be drawn on whether Ms Gray’s new role as envoy to the regions and nations was salaried or whether she would be elevated to the House of Lords, saying: “None of those are decisions for me.”

Asked whether her new position was paid, Mr Healey said: “She has this great talent, Sue Gray, to bring people together, she’s a natural team player and she raises the standards of those around her.”

Ms Gray will be replaced as the chief of staff by Morgan McSweeney who led Labour’s general election campaign. She was reported to have clashed with him.

There are two new deputy chiefs of staff in Vidhya Alakeson, the political director at Number 10, and Jill Cuthbertson, who has been director of government relations in Downing Street since their election win in July.

And after weeks of briefings about reported splits in Number 10, former journalist James Lyons will be in charge of a new strategic communications team, joining Downing Street from TikTok. Nin Pandit, who previously ran the Downing Street policy unit, has been appointed principal private secretary to the Prime Minister, a senior civil service position.

In her statement on Sunday, Ms Gray said: “It has been an honour to take on the role of chief of staff, and to play my part in the delivery of a Labour Government. Throughout my career, my first interest has always been public service.

“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. 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.”

Mr Starmer thanked Ms Gray for “all the support she has given me, both in opposition and government, and her work to prepare us for government and get us started on our programme of change”.

“Sue has played a vital role in strengthening our relations with the regions and nations. I am delighted that she will continue to support that work,” he added.

A Tory spokesperson said: “In fewer than 100 days Sir Keir Starmer’s Labour Government has been thrown into chaos, he has lost his chief of staff who has been at the centre of the scandal the Labour Party has been engulfed by”.

Leadership hopeful Robert Jenrick described the Government as being in “free fall” after the news, while fellow contender James Cleverly said Labour’s “first 100 days have been a disaster, and their civil war continues with the loss of Sue Gray”.

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