The biggest choice facing any new prime minister is who to appoint as chancellor of the exchequer, the government's chief financial minister. With Andy Burnham widely expected to succeed Sir Keir Starmer as Labour leader and prime minister, speculation is intensifying over who will get the job that effectively controls the nation's purse strings. The decision is not just about personalities; it can make or break a government, influencing everything from bond markets to public services.
The chancellor is the cabinet minister responsible for all economic and financial matters, including setting tax rates, managing government spending, and presenting the annual Budget. The role is so powerful that the relationship between a prime minister and chancellor is often described as the most important in government. Historically, tensions between Tony Blair and Gordon Brown shaped Labour's entire time in office, while the smooth partnership of David Cameron and George Osborne allowed for coordinated policy. The choice signals the new government's economic direction—whether it will prioritise fiscal restraint or public investment.
“Explains the role of chancellor and why Andy Burnham's choice matters for UK readers.”
Andy Burnham, who won the Makerfield by-election and is due to give a speech on the economy and devolution, has not yet made any promises about the role. People who claim to know his mind say he is expected to decide this weekend, with market uncertainty possible next week. The current chancellor, Rachel Reeves, appears to be fighting a rearguard action, with a Burnham backer saying "Not Rachel." The two leading candidates are Wes Streeting, from the centre-right of the party, and Ed Miliband, from the centre-left. Harriet Harman has publicly said that Ed Miliband should be chancellor.
For UK readers, the chancellor's appointment directly affects their personal finances. Decisions on income tax, VAT, National Insurance, and public spending on health, education, and infrastructure all flow from the Treasury. The bond market's reaction to the choice can also impact mortgage rates and the cost of government borrowing. A chancellor seen as fiscally irresponsible could trigger a rise in gilt yields, effectively making it more expensive for the government to borrow, which could lead to spending cuts or tax rises.
Q: What does the chancellor of the exchequer actually do? The chancellor is the UK's finance minister, responsible for setting tax and spending policies, managing the economy, and presenting the annual Budget. They also oversee the Treasury and have significant influence over public services and borrowing.
Q: Why is the relationship between prime minister and chancellor so important? The partnership can be either creative or toxic, as seen with Blair and Brown's rivalry or Cameron and Osborne's cohesion. A chancellor who clashes with the PM can destabilise the government, while a smooth relationship enables effective policymaking.
Q: How might the choice of chancellor affect me? The chancellor's policies on tax, benefits, and public spending directly impact your income, the services you use, and the cost of borrowing. Market reactions to the appointment can also affect mortgage rates and the economic outlook.
What happens next: Andy Burnham is expected to announce his chancellor this weekend, with market reaction likely to follow early next week. The decision will be a defining moment for his incoming government, either unlocking fiscal headroom or triggering a crisis of confidence.