Sue Gray 'could be handed a peerage to smooth her exit from No10'

Downing Street is considering whether to hand Sue Gray - Sir Keir Starmer's beleagured chief of staff - a peerage to smooth her exit, it has emerged.

The former civil servant has been the Prime Minister's top aide in No10 since Labour's general election victory in July.

But there have been repeated reports of bitter tensions between Ms Gray and other senior figures in Government and Downing Street.

According to the Sunday Times, Ms Gray's critics are now discussing how to force her out by Christmas.

The newspaper reported this includes giving Ms Gray a place in the House of Lords.

A Government source said: 'Sue's future is the elephant in the room. Everyone knows things can't go on like this.'

Some senior Labour insiders said it was now a matter of 'when, not if' Ms Gray departs Downing Street.

Recent leaks about Ms Gray's £170,000 salary - which is larger than the PM's - came after other special advisers saw their pay held down and added to reports of civil war within Sir Keir's No10 team.

There have also been bitter briefings about Ms Gray's role in Downing Street amid claims of a power struggle between the PM's most senior aides.

Sir Keir has insisted he is 'completely in control' despite the speculation over Ms Gray's position.

The ongoing row over Ms Gray comes as the PM faces a critical decision over who to appoint as Britain's next head of the civil servant, with current Cabinet Secretary Simon Case having announced he will depart the role at the end of the year. 

Sir Oliver 'Olly' Robbins, the architect of Theresa May's doomed Brexit deal, is seen as a leading candidate due to his relationship Ms Gray.

Prior to the general election, it was reported that Ms Gray had held secret talks with Sir Oliver about returning to a top job in Whitehall.

But any return for Sir Oliver to a senior civil service job would likely anger Tory Brexiteers due to his past role as the negotiator of Mrs May's Brexit deal.

The former PM's agreement, thrashed out by Sir Oliver with the EU, was rejected three times by the House of Commons before her downfall.

Sir Oliver is currently working at Hakluyt, a Mayfair-based strategic advisory firm, having previously worked for Goldman Sachs after leaving the civil service in 2019.

A source close to Ms Gray told the Sunday Times they did not recognise discussion about a peerage.