Rachel Reeves has thrown her support behind Andy Burnham to be the next prime minister, even as reports swirl that he could demote her to a junior cabinet role. Speaking at the British Chambers of Commerce conference on Thursday, the chancellor said her economic approach was “beginning to bear fruit” and urged her successor to stick with it.
“I hope that whoever is chancellor, in the future … sticks to what I’m doing because it is beginning to bear fruit,” she told Sky News journalist Sophy Ridge, who was hosting the event.
“Rachel Reeves backs Andy Burnham as next PM, despite reports he may demote her to a junior cabinet role.”
The endorsement comes after Sir Keir Starmer announced he was standing down on Monday, losing the support of Labour MPs. Burnham, the former Greater Manchester mayor, is so far the only contender and could take over as soon as 17 July if no other challenger emerges. Reports suggest he is considering Ed Miliband, Wes Streeting or Shabana Mahmood as possible replacements for Reeves.
Asked about the prospect of a less prominent role, Reeves refused to pre-empt Burnham’s decisions. “I’m not going to pre-empt the decisions that the new prime minister will make,” she said. “I’m backing Andy. I think he’d be a great prime minister, but those are his decisions, not mine to make.”
She stressed her close work with Burnham on “fiscal devolution” — transferring more powers to English regions — and said he had been “really explicit” in backing her fiscal rules. Those rules ensure day-to-day spending is funded through tax revenue, borrowing only for capital investment and reducing debt as a proportion of GDP. Some on the left of the party have called for them to be relaxed to allow more defence spending.
Reeves staunchly defended her record, claiming she had brought “stability” to the economy and pointing to progress on inflation and growth. “Yes, there is more to do,” she said, adding that the budget later this year would include further reforms to business rates and fiscal devolution.
On defence, she said a new investment plan would be published before the next prime minister is appointed, involving “more money, spent more effectively”. When pressed on whether classifying defence spending as capital investment could allow more borrowing, she said: “That’s exactly what my fiscal rules allow. We do treat now, for the first time ever, day-to-day spending and capital spending differently because of the fiscal rules.” She added that co-operation with Nato allies “is really important” to get better value for money.
Reeves acknowledged the party needed to reconnect with voters. “Clearly we need to do more to connect to the country to tell a better story of what we’ve done in government but also set out the vision of where we want the country to go,” she said. “That is what Andy will be able to provide as our next prime minister.”
Whether that vision includes Reeves as chancellor remains an open question.