Rachel Reeves has been accused of a "rank betrayal" of Sir Keir Starmer by using her Mais Lecture to tear up Labour's Brexit red lines and promise regulatory alignment with the European Union as the "norm rather than the exception". Bob Lyddon, a fierce critic of the bloc, launched a blistering attack on Ms Reeves, claiming she had deceived No 10, gone rogue and handed the Prime Minister "the pistol with which to shoot himself" ahead of the May local elections.

In her Mais Lecture at Bayes Business School on Tuesday, Ms Reeves made closer EU ties one of three "big choices" for growth, alongside AI and regional devolution. Under her new "Securonomics" framework, she declared: "Where it is in our national interest to align with EU regulation, we should be prepared to do so - including in further areas of the single market." Crucially, she added that while regulatory autonomy might sometimes be needed, "that should be the exception, not the norm".

The Chancellor also unveiled a £1.5 billion investment package, including a £500 million Sovereign AI unit and a £1 billion quantum computing programme, alongside plans to allow regional mayors to retain a share of income tax.

However, her Brexit comments appear to directly contradict Sir Keir's repeated insistence that rejoining the customs union or single market remains a red line.

As recently as December he reaffirmed the position, which No 10 reiterated today amid separate controversy over Health Secretary Wes Streeting's calls for a "deeper trading relationship" with Brussels.

Mr Lyddon, founder of Lyddon Consulting Services, said the speech amounted to a major rewriting of Labour policy. He told Express: "Rachel Reeves gave her Mais lecture promising regulatory alignment with the EU as the norm rather than the exception.

"That is both a major re-writing of Labour policy on Brexit, a departure from the content of the 2024 General Election manifesto, and an erasure of Starmer's Red Lines."

He went further, claiming the Chancellor had blindsided Downing Street. Mr Lyddon claimed: "Reeves' speech came as a surprise compared to the version trailed by government sources beforehand.

"That means it did not have the approval of Number 10. Reeves has deceived Number 10 about what she was going to say. She has gone rogue in setting out a new policy apparently without discussion in Cabinet or with the Prime Minister."

Mr Lyddon accused Ms Reeves of positioning herself for a post-Starmer future. He argued: "This looks like a brazen and desperate attempt to reposition herself and to stay in post as and when Starmer is defenestrated.

"Chummying up to Starmer's possible successors who may not remember that there ever were any Brexit Red Lines is not just self-serving. It is a rank betrayal of the Prime Minister."

He predicted that the move would trigger electoral disaster. Mr Lyddon stated: "In the same movement Reeves has virtually guaranteed the kind of wipe-out for Labour in the May elections that would unseat the Prime Minister.

"The Prime Minister has repeatedly been warned that crossing the Brexit Red Lines would be electoral suicide in the Red Wall areas. Now his closest lieutenant has crossed the Red Lines for him, and handed him the pistol with which to shoot himself after a catastrophe in the May elections."

Mr Lyddon added: "That cannot be allowed to stand. It would be a betrayal of the United Kingdom's democratic system to allow any cabinet minister to reformulate national policy at the drop of a hat and with the prolongation of their own career at the forefront of their calculations. Reeves has knifed the Prime Minister in the back, and Starmer must now knife Rachel Reeves in the front."

The intervention comes only hours after No 10 insisted Sir Keir was "very happy" with his Cabinet and "sticking to EU red lines" despite Wes Streeting's Observer interview floating closer trade ties and even a customs union. A government source had accused the Health Secretary of "setting out his stall" for a future leadership bid.

Labour has faced mounting backbench pressure on Brexit, with 13 MPs recently voting for a customs union bill. Critics such as Mr Lyddon say Ms Reeves' lecture - delivered as the Government grapples with sluggish growth - signals a decisive shift towards Brussels that risks alienating the Red Wall seats which delivered Labour's 2024 landslide.