When Andy Burnham walks into Downing Street on Monday, he will inherit a Treasury in-tray piled high with debt, low growth, welfare reform, and the economic fallout from the US-Israel war with Iran. But the identity of the person who will help him tackle it—his chancellor—remains officially undecided, even as speculation and political jockeying reach fever pitch.
The BBC has been told there are “live discussions” about moving Home Secretary Shabana Mahmood into Number 11, while the Financial Times, citing three sources close to Burnham, reports it as a certainty. The pound has rallied about 1% against the US dollar this week on the news. Kathleen Brooks, research director at XTB, said the market trusts Mahmood “to take a sensible approach to economic policy, and to tackle the hard questions of welfare spending”.
“Shabana Mahmood tipped for chancellor as Burnham faces oil and gas row”
Yet the choice is already causing tension within Labour. According to The Times, the left of the party is upset at the prospect of Mahmood as chancellor, preferring Ed Miliband—the former Labour leader and current Energy Secretary who was the bookmakers’ strong favourite for the role in late June. But analysts see Miliband as an inflation risk, partly because his drive for net zero is blamed for high UK energy prices.
Mahmood herself may not want the job. The Press Association reports she is keen to remain as home secretary and see through changes to the asylum system. Burnham’s team insists no decision has been taken and cabinet posts will be announced only on Monday.
Meanwhile, another controversy is brewing. Reports have emerged that new oil and gas drilling will be allowed in the North Sea under Burnham—a policy Donald Trump has pushed, along with the Conservatives and Reform UK. The Greens have declared it would be a “terrible start” to Burnham’s premiership. Miliband, who would have to implement any such policy, has previously called drilling a “climate disaster”.
The confrontation between a market-friendly chancellor and a left-wing energy secretary opposed to fossil fuels could define the early days of a government that must also navigate welfare reform and defence spending while the economy remains fragile.