Andy Burnham will move into Downing Street on Monday, but the question of who will occupy Number 11 as chancellor remains unanswered. Officially, Burnham's team says no decision has been taken and cabinet positions won't be announced until Monday. That hasn't stopped fevered speculation, with the home secretary, Shabana Mahmood, emerging as the frontrunner.
The BBC has been told there are “live discussions” about putting Mahmood into Number 11, while the Financial Times is reporting it as a certainty based on three sources close to Burnham. Although she does not have an economics background, she is a senior minister on Labour’s right and may be seen as able to reassure financial markets. The markets have already rallied: the pound is up about 1% against the US dollar this week. Kathleen Brooks, research director at XTB, said: “It tells us two things about Andy Burnham’s government: firstly, the market trusts Mahmood to take a sensible approach to economic policy, and to tackle the hard questions of welfare spending; secondly, Burnham is willing to have those to the right of the Labour party in his cabinet in key economic roles.”
“Andy Burnham faces choice between Shabana Mahmood and Ed Miliband as chancellor amid market rally and left-wing upset.”
However, according to separate reports from the Press Association, Mahmood is keen to remain as home secretary and see through changes she has brought in to the asylum system. The idea of Mahmood as chancellor is causing upset on the left of the party, according to The Times, which said those people would much prefer Ed Miliband in the role. In late June, Miliband, the former Labour leader, was the bookmakers’ strong favourite for the job, politically closer to Burnham than other rivals. But opinions differ on whether the former Treasury adviser would receive the backing of financial markets: some see Miliband as an inflation risk, believing his drive for net zero as energy secretary partly responsible for the UK’s high energy prices. Whoever takes the top Treasury role will face a daunting in-tray: high debt, low growth, welfare reform, defence spending and the economic fallout from the US-Israel war with Iran.
