The keys to the British economy will soon be handed to a figure as yet unnamed. As Andy Burnham prepares to move into 10 Downing Street on Monday, the question of who will live next door in Number 11 – the official residence of the Chancellor of the Exchequer – has become the most intense guessing game in Westminster.
The chancellor is the UK's finance minister, responsible for setting taxes, deciding public spending, and managing the nation's debt. It is arguably the second most powerful job in government, and whoever gets it will inherit a daunting in-tray: high national debt, low economic growth, welfare reform, rising defence spending, and the economic fallout from the US-Israel war with Iran.
“Explaining the race to become the UK's chancellor under incoming PM Andy Burnham and what it means for your finances.”
Burnham's team insists no decision has been taken and cabinet positions will not be announced until Monday. But speculation has settled on two main contenders: Home Secretary Shabana Mahmood and Energy Secretary Ed Miliband.
Mahmood, who hails from the right of the Labour party, has been the subject of increasing talk. The BBC has been told there are "live discussions" about putting her in Number 11, while the Financial Times reports it as a certainty based on three sources close to Burnham. The pound has rallied about 1% against the US dollar this week on the reports, suggesting financial markets trust her to take a sensible approach. However, according to the Press Association, Mahmood is keen to remain as home secretary and see through changes to the asylum system.
Ed Miliband, the former Labour leader and current energy secretary, was the bookmakers' strong favourite in late June. He is politically closer to Burnham than Mahmood. But some analysts see him as an inflation risk, blaming his drive for net zero for high energy prices. That reputation could affect how bond markets react.
The Guardian reports that a consensus has formed among those close to Burnham that he intends to give the chancellorship to Mahmood, not Miliband – a move that has alarmed the soft-left Labour faction from which Burnham derives much of his support, according to Bloomberg. Burnham's "black box" approach to cabinet planning has left Westminster guessing.
For UK readers, the choice matters directly. The chancellor decides how much you pay in income tax, VAT, and council tax – a cross-party group of MPs has already urged Burnham to allow councils to increase council tax by as much as they want. The chancellor also shapes funding for the NHS, schools, and welfare.
Q: What does the Chancellor of the Exchequer actually do? The chancellor is the government's chief financial officer, in charge of the Treasury. They set tax rates, decide public spending, manage the national debt, and deliver the annual Budget. Their decisions affect inflation, interest rates, and the value of the pound.
Q: Who are the frontrunners to be the next chancellor? Home Secretary Shabana Mahmood and Energy Secretary Ed Miliband are the two main candidates. Mahmood is from the right of the Labour party, Miliband from the left. Reports suggest Mahmood is now the favourite, with markets reacting positively.
Q: Why does the choice matter for my finances? Different chancellors have different priorities. Mahmood is seen as fiscally cautious and market-friendly, which could mean lower borrowing costs and steadier taxes. Miliband's green agenda could push up energy costs in the short term but aims to reduce them long term. Both face tough choices on welfare, defence, and council tax.
What happens next is clear in timing, if not in name. Burnham will announce his cabinet on Monday. Until then, the black box remains closed.
