The resignation of Sir Keir Starmer has fired the starting gun on the race to be in charge of the UK’s finances, with Andy Burnham expected to want a new chancellor to replace Rachel Reeves. The newly elected Makerfield MP is almost certain to become prime minister, and the person he picks for Number 11 will face an in-tray loaded with 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 energy secretary, has emerged as the bookmakers’ strong favourite for the role. Paul Johnson, former director of the Institute for Fiscal Studies, sees Miliband’s political closeness to Burnham as a positive. “You really don’t want people in Number 10 and Number 11 having very different views,” he says.
“Ed Miliband is favourite to become UK chancellor after Sir Keir Starmer's resignation, but faces opposition over his net-zero record.”
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.”
But others see Miliband as an inflation risk, blaming his drive for net zero for high energy prices. Lord Richard Walker, boss of Iceland and the government’s cost-of-living tsar, warned Miliband would be “a disaster”. 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, called Miliband a “noose around the neck” of job creation because of his opposition to new North Sea oil and gas drilling. However, the TSSA union backs him, saying he would take a “different approach” to “delivering an economy that works for everyone”.
Analysts say that reputation, whether accurate or not, could affect how bond markets react to his time as chancellor. Wes Streeting, a former contender for the Labour leadership, was the early favourite for the job, with suggestions he could be rewarded for backing Burnham and withdrawing his own ambitions. Economist and cross-bench peer Lord Jim O’Neill has also been mentioned as a possible contender.
Whoever gets the post will inherit a daunting economic landscape, with markets watching closely for signals of stability and direction.