Former top civil servant says ‘intense commentary around my position risked becoming a distraction’

Gray will take on a new government role as the prime minister’s envoy for the regions and nations. Photograph: PA Images/Alamy

Sue Gray has resigned from her position as Keir Starmer’s chief of staff after finding herself at the centre of a political storm since Labour came into power.

Gray will be replaced by Morgan McSweeney, the party’s election guru who masterminded Starmer’s succession from Jeremy Corbyn, with whom she is said to have found herself at odds in government.

While a number of senior Labour figures had downplayed the friction between Gray and McSweeney, both of whom are close to the prime minister, one cabinet minister had foreshadowed Gray’s future weeks ago, telling the Guardian: “One or both of them will have to go. It’s not going to be Morgan.”

Gray would take on a new government role as the prime minister’s envoy for the regions and nations, No 10 announced, as Starmer shook up his entire top-team after facing intense pressure to put an end to the hostile briefings that had at times overshadowed his first 100 days.

The prime minister has sought to change the narrative, and said he made the five changes to his team to “strengthen his Downing Street operation ahead of marking his first 100 days in office”.

In a written statement, he said: “I’m really pleased to be able to bring in such talented and experienced individuals into my team. This shows my absolute determination to deliver the change the country voted for.”

The political director at No 10, Vidhya Alakeson, and the director of government relations, Jill Cuthbertson, have been promoted to Starmer’s deputy chiefs of staff.

Nin Pandit, the director of the Downing Street policy unit, has been appointed parliamentary private secretary to the prime minister, while the former journalist James Lyons will join to head up a new strategic communications team, Downing Street has confirmed.

Gray had been blamed by some Labour figures for the party’s inability to avoid the controversy over freebies, with some claiming she lacked “political experience”, even though she undoubtedly knew exactly how the civil service worked. Her salary had been leaked to the press, revealing she was being paid £3,000 more than the prime minister, which prompted a huge backlash among advisers.

The new envoy had also been blamed for the lower pay special advisers receive in comparison with Conservative-era aides, prompting many Labour advisers to join a union over their concerns.

While a number of cabinet ministers defended her, saying the “appalling” rows must stop or risk undermining the government, it had become clear Gray had alienated some of her political colleagues, who accused her of “control freakery” and creating a “bottleneck” within No 10 that had delayed policy decisions and appointments.

Gray said she was pleased to accept her new role but was standing down because it had “become clear to me that intense commentary around my position risked becoming a distraction to the government’s vital work of change”.

The prime minister thanked her for the support he said she had given him in opposition and in government, adding in a statement: “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.”

Gray said in a statement: “I am pleased to have accepted a new role as the prime minister’s envoy for the regions and nations. After leading the Labour party’s preparation for government and kickstarting work on our programme for change, I am looking forward to drawing on my experience to support the prime minister and the cabinet to help deliver the government’s objectives across the nations and regions of the UK.”

She added: “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.”

A Conservative party spokesperson described Downing Street as being in “chaos”. They 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. Sue Gray was brought into deliver a programme for government and all we’ve seen in that time is a government of self-service.

“The only question that remains is: who will run the country now?”