Andy Burnham will move into Downing Street on Monday, but the identity of his chancellor remains unconfirmed — and the battle over the direction of his government is already taking shape.
Officially, Burnham's team says no decision has been taken on the occupant of Number 11, with cabinet announcements due on Monday. But speculation has centred on the home secretary, Shabana Mahmood, amid reports of “live discussions” about her moving next door. The Financial Times, citing three sources close to Burnham, reported the appointment as a certainty.
“Burnham's chancellor pick sparks market rally amid reports Mahmood is favourite, as fossil fuel row brews.”
The prospect has buoyed financial markets. Kathleen Brooks, research director at XTB, said the pound had risen about 1% against the US dollar this week in relief. “It tells us two things about Andy Burnham's government: firstly, the market trusts Mahmood to take a sensible approach to economic policy, and to tackle the hard questions of welfare spending; secondly, Burnham is willing to have those to the right of the Labour party in his cabinet in key economic roles,” Brooks said.
But the idea of Mahmood as chancellor is causing upset on the left of the party, according to The Times, which reported that critics would prefer Ed Miliband for the role. The former Labour leader was the bookmakers' strong favourite in late June and is politically closer to Burnham. However, analysts see Miliband as an inflation risk, partly blaming his drive for net zero as energy secretary for the UK's high energy prices compared to other countries.
Meanwhile, reports have emerged that new oil and gas drilling will be allowed in the North Sea under Burnham — a “drill baby drill” message pushed by Donald Trump, the Conservatives and Reform UK. The Greens declared it would be a “terrible start” to Burnham's premiership. The current energy secretary, Ed Miliband, has previously called drilling a “climate disaster”.
Whoever becomes chancellor will face high debt, low growth, welfare reform, defence spending and the economic fallout from the US-Israel war with Iran. And Mahmood, according to separate Press Association reports, is said to be keen to remain as home secretary to see through changes to the asylum system — raising the question of whether she would want the Treasury job at all.
