Sir Keir Starmer’s resignation has fired the starting gun on the race to be in charge of the UK’s finances. With the prime minister stepping down, Andy Burnham, the newly elected Makerfield MP, is almost certain to be the next UK prime minister. And it is expected he will want a new chancellor to replace Rachel Reeves at Number 11 Downing Street.
Burnham has become more unpopular since Starmer’s resignation, according to a Financial Times report. The prime minister-in-waiting says the country is in a “rut” and needs a shift of power away from Westminster.
“Andy Burnham is set to become PM and choose a new chancellor, with Ed Miliband the favourite.”
Whoever takes the Treasury will face quite the in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran, to name a few issues.
Ed Miliband is now the bookmakers’ strong favourite for the number two job in British politics, with the former Labour party leader politically closer to Burnham than other rivals. Paul Johnson, former director of think-tank the Institute for Fiscal Studies, sees this closeness as a positive. “You really don’t want people in Number 10 and Number 11 having very different views,” he says.
However, opinions differ on whether Miliband would receive the backing of financial markets, on which the government depends for borrowing. 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.”
Yet others see Miliband as an inflation risk, believing his drive for net zero as energy secretary partly responsible for the UK’s high energy prices. Analysts say that reputation, whether accurate or not, could affect how bond markets react to his time as chancellor.
Lord Richard Walker, the boss of Iceland and the government’s cost-of-living tsar, has warned Miliband would be “a disaster” in the role. He said Miliband had been “far too ideological” about tackling climate change, and that his policies were “putting unfair pressure on households… in a very regressive way”. Sharon Graham, head of the Unite union, says Miliband as chancellor would be a “noose around the neck” of job creation because of his opposition to new oil and gas drilling in the North Sea. However, the TSSA union backs Miliband, with the Labour-affiliated rail union saying he would be willing to 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 for chancellor, with suggestions that he could be awarded the job for backing Burnham and withdrawing his own ambitions. The choice of chancellor will signal the direction of the new government’s economic policy, and the pressure is on to win back public confidence.