Sir Keir Starmer’s resignation has fired the starting gun on the race to be in charge of the UK’s finances – and with Andy Burnham almost certain to become prime minister, all eyes are on who will replace Rachel Reeves at Number 11 Downing Street. The newly elected Makerfield MP is expected to want a new chancellor, and the in-tray awaiting that person is daunting: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran.
Ed Miliband, the former Labour leader and current energy secretary, has emerged as the bookmakers' strong favourite for the number two job. Politically closer to Burnham than other rivals, Miliband’s candidacy has drawn both backing and fierce opposition. Paul Johnson, former director of the Institute for Fiscal Studies, welcomed the closeness: “You really don’t want people in Number 10 and Number 11 having very different views.” But opinions differ on whether Miliband would win over the financial markets, on which the government depends for borrowing.
“Ed Miliband is the bookmakers' favourite to become UK chancellor after Andy Burnham becomes PM.”
Nick Macpherson, the former permanent secretary at the Treasury, told the Financial Times: “The key to gaining the confidence of the markets is to articulate, implement and deliver a coherent strategy. Miliband is one of the few cabinet members with the intellect, experience, and authority to do that.” Others see him as an inflation risk, blaming his drive for net zero for the UK’s high energy prices. Analysts say that reputation – accurate or not – could affect how bond markets react to his chancellorship.
Lord Richard Walker, the boss of Iceland and the government’s cost-of-living tsar, warned Miliband would be “a disaster”, saying he has been “far too ideological” on climate change and his policies were “putting unfair pressure on households… in a very regressive way”. Sharon Graham, head of the Unite union, called Miliband a “noose around the neck” of job creation due to his opposition to new oil and gas drilling in the North Sea. However, the TSSA rail union backs him, saying he would take a “different approach” to “delivering an economy that works for everyone”.
Wes Streeting, a former contender for the Labour leadership, was the early favourite – with suggestions he could be awarded the job for backing Burnham and withdrawing his own ambitions. But as the race intensifies, Burnham’s choice will determine the economic direction of a government facing immense pressure from day one.