Keir Starmer has sought to tighten his grip on his government with a wave of junior ministerial changes that has sidelined allies of the unions, raising questions over the future of Labour’s workers’ rights package.

The reshuffle has been used by Downing Street to signal a tougher stance on immigration in an apparent bid to take on Reform UK, with Shabana Mahmood – a self-described social conservative rising star – now in charge of the Home Office, supported by Sarah Jones who returns to her former policing brief.

Justin Madders, the employment rights minister, was one of the first on the junior benches to be sacked on Saturday. Despite being seen as one of the architects of Labour’s “new deal for working people”, Madders’ departure was not formally announced in No 10’s list of appointments. Instead, he revealed the news himself.

“It has been a real privilege to serve as minister for employment rights and begin delivering on our plan to make work pay,” he said on X. “Sadly it is now time to pass the baton on – I wish my successor well & will do what I can to help them make sure the ERB is implemented as intended.”

Madders’ removal, along with Rayner’s forced departure from her two government positions and post as Labour’s deputy leader, removes the key figures who helped design Labour’s employment rights bill – a policy unions praised as the government’s most ambitious commitment to workers’ rights in decades.

Starmer will also not attend this year’s TUC conference, a decision that has intensified concerns and rumours among unions and some inside Labour that the government is distancing itself. Rayner was the cabinet minister closest to the unions, and Madders had been given the job of turning the new deal into legislation.

Peter Kyle, a close ally of Starmer, was promoted to lead the business department on Friday, meaning he will oversee the employment rights brief.

Allies of Rayner who remain in government believe a fight is looming over workers’ rights. With Rayner and Madders gone, they believe Kyle has the ability to water down the bill – a package they feel many from the centre of the party were never comfortable with. The issue is likely to become factional, given polls show stronger employment protections remain popular with voters flirting with Reform UK.

The package had promised sweeping reforms including day one rights for workers, a ban on zero-hours contracts and stronger protects against fire-and-rehire. A union chief told the Guardian: “Rayner was the closest minister to the unions and her team have played an important role in pushing key parts of the employment rights bill through government.

“The commitment to the bill is there from Keir so I’m less worried about that, but more worried about the broader sense of who actually understands the unions, and has the personal relationships.”

Ellie Reeves has been shifted from her role as party chair to solicitor general and will no longer attend cabinet. She has been replaced by Anna Turley. Georgia Gould, from Labour’s 2024 intake, has been promoted to education minister.

For Starmer, the cabinet reshuffle was about showing decisive leadership in the midst of a major crisis, to which as his chief secretary, Darren Jones, alluded. But this junior reshuffle for many shows a broader ideological return that sees the government more cemented under centrist control, and potential fights with the unions along the way.

Meanwhile, the shake-up at the Home Office will be taken as a sign of strength by many within government. Mahmood, the new secretary of state, will lead a refreshed team that now includes Sarah Jones, a former shadow minister who has long wanted to return to the brief. Jones has been described by some as serious about public safety and police reform, and is well regarded in industry after her work on steel and the industrial strategy within the business department.

Dame Diana Johnson has been replaced by Jones and will now serve as a minister in the Department for Work and Pensions, while Dan Jarvis will remain a minister in the Home Office and has also been made a Cabinet Office minister.

Jason Stockwood, the former chair of Grimsby Town football club, will take a seat in the House of Lords to become investment minister as part of Starmer’s ministerial shake-up. He was Labour’s candidate for Greater Lincolnshire mayor but was beaten by Reform’s Andrea Jenkyns.

The local government minister Jim McMahon has been sacked and will return to the backbenches, along with Maria Eagle, the defence minister. Catherine McKinnell resigned as minister of state for school standards, which included overseeing Send reform. She said she declined the opportunity to stay in government.

Darren Jones dismissed the idea that Rayner’s departure could expose divisions within the Labour party, after Nigel Farage said “splits” will open.

“Nigel Farage is wrong there,” Jones told Sky News. “The Labour party is not going to split and there won’t be an early election.”

Labour’s most powerful union backer has warned that Keir Starmer is in danger of bolstering support for Nigel Farage, arguing that the government has failed to support oil and gas workers and watered down plans to boost employment rights.

Sharon Graham, the general secretary of Unite, said voters could be left feeling “duped” by Labour after the government scaled back planned changes to ban zero-hours contracts and exploitative “fire-and-rehire” practices.

As polls show Reform UK on course to become the largest party in the next parliament, the leader of the UK’s largest private sector union said Labour had not adopted its proposals to create new jobs for workers in fossil fuel industries.

Speaking to the Guardian before the start of the annual TUC conference on Sunday, Graham said Labour had a short time to turn things around or see support from union members leach away to other parties.

“They have one year to get this right because Nigel Farage is on their tail.

“And don’t get me wrong, Farage is not the answer, but he is a good communicator. And whether we like it or not, when he is talking about net zero, and about what’s happened to communities and workers, people are hearing what Labour used to say.”

She said that, with high inflation already taking a toll on household budgets, mooted tax rises in Rachel Reeves’s autumn budget would be the final straw for many Labour voters.

Graham said Labour needed to avoid taxing workers to fill the gap in the public finances and start drawing up plans for a wealth tax.

“If this keeps happening, the feeling that workers always pay, but they’re leaving the super-rich totally untouched – I think they won’t recover from it,” she said.

Echoing the Trades Union Congress general secretary Paul Nowak’s call for higher taxes on the richest households, she said: “[Labour] were very front foot forward with winter fuel. Now they should say absolutely [a wealth tax] is a good idea.”

Anger at Labour ministers from inside Unite’s ranks was high, she said, bringing the union close to cutting off party funds.

The fate of 30,000 workers in the oil and gas industry features on Graham’s list of priorities after a year spent trying to convince the energy secretary, Ed Miliband, that he should put more effort bringing green jobs to the UK.

He said: “Green jobs are not delivery workers on an electric scooter. I am talking about people in the oil and gas industry making the switch to green energy jobs.”

She said Unite had put forward proposals for investments in making sustainable aviation fuels and wind turbines to Miliband that had gained little traction.

There would be an almost unanimous vote to block further donations to Labour if a vote on the union’s political levy were held today, she said.

Earlier this year, its members overwhelmingly voted to suspend Angela Rayner’s membership over the former deputy prime minister’s “support for pay cuts” to striking Birmingham bin collectors.

The strike could continue for another six months after bin workers voted this week for pay cuts of up to £8,000 to be reinstated.

When it suspended her membership, Unite said Rayner had backed special commissioners appointed by her department against Birmingham city council’s management, who were prepared to end the dispute.

Graham said anger boiled over when the government amended the employment rights bill (ERB) to allow councils to fire and rehire workers.

Under the amendments, councils will gain the ability to sack and rehire workers on worse pay and conditions if they are in financial distress – an opt-out already secured by private sector organisations.

The ERB is expected to be agreed by MPs later this year and take effect from next spring, with elements such as the implementation of day-one rights to sick pay and unfair dismissal protections delayed until 2026.

Extra powers for unions to recruit new members and gain collective bargaining rights will be on the statute books from April 2026, allowing access for those at companies that have locked out unions for decades, including Amazon.

Employers organisations are upset by clauses in the legislation that reduce the thresholds for unions to gain recognition agreements.

Graham said Labour had watered down previous “no ifs, no buts” commitments and allowed employers to ultimately refuse access, forcing unions to embark on lengthy appeals.

“Most blue-chip companies allow access to trade unions and negotiate with them. It is the hostile employers that don’t. And if you look at the collective bargaining pieces in the ERB there isn’t much to grab hold of,” she said.