Andy Burnham is expected to replace Rachel Reeves as chancellor and offer her a more junior cabinet position if he becomes prime minister, the BBC understands. The MP for Makerfield, the only candidate so far in the Labour leadership race, has already held talks with Sir Keir Starmer as he prepares for a likely entry to No 10. With senior cabinet minister Darren Jones ruling himself out of the contest on Wednesday, Burnham could become prime minister by 17 July if no other candidates emerge.
The biggest decision Burnham will make as he sketches out his cabinet is who will be chancellor – and most Labour MPs assume Reeves will not continue in that role. As first reported by the Financial Times, she is expected to be offered a more junior cabinet position. A close ally of Burnham told the BBC: "Andy really respects Rachel and I'm confident he'll want her in his top team." The Treasury has been approached for comment.
“Andy Burnham expected to replace Rachel Reeves as chancellor if he becomes PM, offering her a junior role.”
Four names have emerged in discussions about Burnham's potential chancellor: Darren Jones, Wes Streeting, Ed Miliband and Shabana Mahmood. Jones, a centrist and former chief Treasury secretary to Reeves, would provide continuity. Streeting, a Blairite centrist, has been asking for the role as part of a deal to drop his own leadership bid – which he did on Monday. Miliband, a leading figure on the soft left, has long hankered for the job and would likely shift economic policy leftward. Mahmood represents the party's right wing. James Purnell, who served as a minister under Gordon Brown, is expected to become Burnham's Downing Street chief of staff.
Whoever takes the Treasury will face immediate economic challenges. Paul Johnson, former director of the Institute for Fiscal Studies, said the UK had borrowed more than virtually any other country in the last 25 years at very high rates while failing to grow. "Simply borrowing more is certainly not an easy thing to do and it's absolutely not a costless thing to do," he told BBC Radio 4's Today programme, adding: "Growth clearly is the number one priority." He stressed the need for "really quite difficult decisions" on tax reform, welfare reform, investment focused on growth, and changes to regulatory and planning regimes.
A day after Starmer announced his resignation, he told his cabinet he intends to make the transition of power as easy as possible for his successor. Some in Labour are keen for a contest rather than a coronation, with a current and a former cabinet minister considering whether to run. But with Burnham the only declared candidate so far, the race may be over before it begins – leaving the question of who will run the economy as the defining battle of his early premiership.