Sir Keir Starmer’s resignation has fired the starting gun on the race to be in charge of the UK’s finances. With Andy Burnham — the newly elected Makerfield MP — almost certain to become the next prime minister, the question of who will replace Rachel Reeves at Number 11 Downing Street is suddenly the most consequential in British politics.
Whoever takes the job will inherit a punishing in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran. Against that backdrop, Burnham’s choice will send a powerful signal about his priorities.
“Andy Burnham faces a crucial choice for chancellor as favourites Wes Streeting and Ed Miliband vie for the job.”
The bookies’ favourite is Wes Streeting, the former health secretary who threw his weight behind Burnham during the leadership contest. The thinking is that loyalty will be rewarded with the second most powerful job in government. But there are already warnings against such an approach. Lord Jim O’Neill, the economist and cross-bench peer who has been advising Burnham, told the BBC: “There are clearly some people pushing to be chancellor who feel they are owed it for their support.”
Streeting’s politics differ from Burnham’s — the prime-minister-in-waiting is seen as more inclined to spend. Yet Simon French, chief economist at Panmure Liberum, described Streeting as a “relatively market-friendly option” because of his pro-growth comments, though he added that Streeting might one day want to be prime minister himself, a political risk. “Politics is what politics is. It’s a popularity contest,” French said.
The second favourite among bookmakers is Ed Miliband, the former Labour leader and energy secretary. He is politically closer to Burnham than Streeting, which Paul Johnson, former director of the Institute for Fiscal Studies, sees as a virtue. “You really don’t want people in Number 10 and Number 11 having very different views,” he said.
Yet Miliband’s record as energy secretary raises questions. Analysts blame his drive for net zero for the UK’s high energy prices, a reputation that — accurate or not — could spook bond markets. Others are more confident. Nick Macpherson, the former Treasury permanent secretary, 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.”
Meanwhile, Burnham has signalled that his agenda will not stop at the Treasury. According to the Financial Times, he is drawing up plans for a devolution blitz, aiming to shift power away from Westminster — a move that would reshape how the next chancellor operates, whoever they may be.