The next prime minister of the United Kingdom is widely expected to be Andy Burnham, and the biggest decision he faces right now is who will serve as his chancellor. The choice is personal, politically huge, and could determine the fate of his government before it even begins.
Andy Burnham, the Labour MP for Makerfield and former mayor of Greater Manchester, is set to succeed Sir Keir Starmer as both Labour leader and prime minister. He has mainly focused on domestic policy since winning his by-election, and is due to give a speech on the economy and devolution. Reports suggest he will decide on his chancellor this weekend, with market uncertainty through next week potentially becoming a major story. No promises have been made to anybody.
“Explains Andy Burnham's upcoming cabinet choice for chancellor and its stakes for the UK economy.”
The relationship between a prime minister and chancellor is always intense—either creative or toxic. Past examples include the Blair-Brown tensions and the smoother Cameron-Osborne partnership. Getting it wrong could trigger a market crisis even before Burnham enters Number 10. Getting it right could loosen the fiscal straitjacket and open up possibilities.
Who are the contenders? The current chancellor, Rachel Reeves, appears to be fighting a forlorn rearguard action. A Burnham backer said simply: "Not Rachel." The two most obvious candidates are Wes Streeting from the centre right and Ed Miliband from the centre left. There are others, but these two dominate the speculation.
Streeting is one of the Labour Party's best explainers and verbal street-fighters. He is the favourite with Ladbrokes. Associated with the centre right, he would be an effective protector against bond market hostility. He has been working with pro-growth social democratic guru Will Hutton and former Bank of England economist Andy Haldane. If his appointment saw gilt yields fall, that would unlock billions for other purposes more easily than raising tax. However, contrary to other reports, Streeting has neither lobbied nor asked Burnham for the job of Chancellor and has no particular expectations. The case against him is that he has made no secret of his appetite for the top job, so Burnham may be nervous having him as his neighbour.
The case against Ed Miliband is better known, prosecuted enthusiastically by the right-wing press. Attacked by union leaders for his net zero policies and savaged by commentators who see him as a knee-jerk left-winger, he would be closely scrutinised by bond markets. If it didn't go well, that could end the Burnham project swiftly. One senior MP says: "It's actually unfair, but the question is, can Ed get beyond the vicious caricature of him?" Yet the case for Miliband is powerful and hasn't been properly aired, according to the New Statesman. Harriet Harman has publicly said Ed Miliband should become chancellor.
Meanwhile, the former foreign secretary David Miliband—Ed's older brother—has expressed optimism about a Burnham government. He praised Burnham's "openness and energy" and called the expected appointment of James Purnell as Downing Street chief of staff "fantastic". There is speculation that David Miliband, now president and CEO of the International Rescue Committee, could return to front-line politics in a Burnham government, potentially via a peerage to sit in the House of Lords—as David Cameron did when he became foreign secretary under Rishi Sunak. David Miliband did not reply when asked if he had been in contact with team Burnham, but a source said he would be "a massive asset to Andy Burnham's cabinet".
Q: Why does the choice of chancellor matter so much? The chancellor oversees the economy and public finances. Markets react to their reputation and policies. A chancellor perceived as fiscally responsible can lower borrowing costs (through lower gilt yields), freeing up billions for spending or tax cuts. A chancellor seen as a risk could spark a bond market sell-off, raising costs and limiting the government's room for manoeuvre.
Q: Could David Miliband join a Burnham cabinet? In theory, yes. He is no longer an MP, but could be given a peerage to serve in the House of Lords, as David Cameron did when he became foreign secretary. David Miliband has not confirmed any interest, but a source described him as a "massive asset" for his foreign affairs, humanitarian, and climate expertise.
Q: What will happen next? Burnham is expected to decide on his chancellor this weekend. He will give a speech on the economy and devolution on Monday. Market uncertainty through next week could become a major story as investors react to the choice. Once appointed, the new chancellor will face immediate pressure to present a credible fiscal plan that reassures bond markets and unlocks spending for Burnham's domestic agenda.