Andy Burnham will move into Downing Street on Monday, becoming the UK's next prime minister after the resignation of Sir Keir Starmer. But the question of who will live next door in Number 11 as chancellor remains unanswered – and the decision could shape the economic direction of his government.
Officially, Burnham's team says no cabinet positions will be announced until Monday. But speculation has intensified, with increasing talk that Home Secretary Shabana Mahmood could take the Treasury role. The BBC has been told of "live discussions" about putting Mahmood in Number 11, while the Financial Times reports it as a certainty based on three sources close to Burnham. Kathleen Brooks, research director at XTB, said the pound has risen about 1% against the US dollar this week in relief at the prospect. "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," she said. However, according to reports from the Press Association, Mahmood is keen to remain as home secretary and see through changes she has brought in to the asylum system.
“Andy Burnham faces crunch decisions on chancellor, council tax, and JP Morgan's £10bn tower.”
Ed Miliband, the former Labour leader and current energy secretary, was the bookmakers' strong favourite for the role in late June. Politically closer to Burnham than other rivals, Miliband's reputation as an inflation risk – some analysts blame his net zero drive for the UK's high energy prices – could affect how bond markets react if he becomes chancellor.
Whoever gets the job will face a daunting in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran. Even before taking office, Burnham is under pressure on multiple fronts. A cross-party group of MPs has urged him to allow councils to increase council tax by as much as they want – a move that could prove politically toxic. And his government will also face a crunch decision on the future of JP Morgan's £10bn flagship tower in Canary Wharf, as it weighs whether to uphold a major business rates exemption for the project despite industry opposition. The next chancellor will serve as the final arbiter on that framework.
With the pound rallying on one rumour and councils demanding more taxing powers, Burnham's choice of neighbour in Number 11 will signal not only his economic priorities but how he intends to govern.