With Sir Keir Starmer standing down, Andy Burnham, the newly elected MP for Makerfield, looks all but certain to become the next prime minister. The bigger question now exercising Westminster, and the markets, is who he will install next door at No 11.
Many in the party believe Burnham will want his own chancellor rather than keep the current occupant, Rachel Reeves. Whoever takes the keys to the Treasury inherits a daunting in-tray: high debt, sluggish growth, an unfinished welfare reform programme, rising defence commitments and the economic fallout from the US-Israel war with Iran. It is a list that would test the most seasoned operator, and the choice matters well beyond Whitehall. Burnham’s arrival has already unsettled the business community, with eight in ten SME owners telling Business Matters they fear what his premiership would mean for their firm.
Here are the names in the frame for the second most powerful job in British politics, and what each could mean for your finances.
Wes Streeting
The bookmakers’ favourite is a former leadership contender, Wes Streeting. Having thrown his weight behind Burnham rather than running himself, the thinking is that the former health secretary could be rewarded with the number two job for his loyalty.
Not everyone is convinced that loyalty should be the deciding factor. Lord Jim O’Neill, the economist and cross-bench peer who has been advising Burnham, has warned against the approach. Without naming names, he told the BBC: “There are clearly some people pushing to be chancellor who feel they are owed it for their support.”
There is also a question of fit. Though Burnham may value Streeting’s backing, the two men’s instincts diverge, with Burnham seen as the more willing spender of the pair. Simon French, chief economist at the consultancy Panmure Liberum, describes Streeting as a “relatively market-friendly option” on the strength of his pro-growth language, but also flags a political risk: a chancellor who may one day want the top job himself. As for the suggestion that Streeting could be handed the role for his support rather than his ability, French is blunt: “Politics is what politics is. It’s a popularity contest.”
Ed Miliband
The bookies’ second favourite is Ed Miliband, the former Labour leader, who is politically closer to Burnham than Streeting is. Paul Johnson, former director of the Institute for Fiscal Studies, sees that alignment as a strength. “You really don’t want people in Number 10 and Number 11 having very different views,” he says.
Whether a former Treasury adviser such as Miliband could win over the markets is more contested. 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.”
Others see an inflation risk. Critics blame his drive for net zero as energy secretary for the UK’s high energy prices relative to its peers, and analysts say that reputation, fair or not, could colour how the bond markets greet him. Sharon Graham, general secretary of the Unite union, has gone further, warning that a Miliband chancellorship would be a “noose around the neck” of job creation because of his opposition to new oil and gas drilling in the North Sea.
Pat McFadden
Seen as a longer shot than Streeting or Miliband, Pat McFadden is regarded by some as the most qualified candidate of the lot. He has held shadow Treasury briefs, served as a business minister in a previous Labour government and is the current work and pensions secretary. It is that last role that could prove decisive, giving him a head start on what many expect to be the next chancellor’s single biggest task: welfare reform.
Panmure Liberum’s French believes the markets may view McFadden as “the safest pair of hands” among the runners, reacting either positively or with a shrug if he were chosen. The catch is political. If Burnham is hunting for a clean break from the Starmer era, he is likely to look past so loyal a servant of the outgoing regime.
Yvette Cooper
Foreign Secretary Yvette Cooper could be the compromise candidate. She brings years of government experience, having served as chief secretary to the Treasury under Gordon Brown, and sits somewhere between Miliband on one side and McFadden or Streeting on the other. Danni Hewson, head of financial analysis at AJ Bell, calls her a “middle of the road” option, but also “a bit more of an unknown”.
Rachel Reeves
There remains the possibility that the incumbent simply stays put. It looks unlikely, given how closely Reeves is tied to Starmer, but a few bookmakers are still taking bets on no change at the Treasury this year.
Lord O’Neill says his advice to Burnham has been to “figure out what his priorities are as prime minister before he picks a chancellor”. Follow that counsel and Reeves may yet survive, at least for now. Burnham has previously said he would stick to her fiscal rules, and the chancellor appeared in his Westminster photoshoot after he was sworn in as an MP on Monday. She was, tellingly, absent from Sir Keir’s resignation speech.
And the rest
Beyond the front-runners sits a longlist of wildcards. Home Secretary Shabana Mahmood, reported to be fiscally conservative but light on economic experience, is one. Former defence secretary John Healey, who quit very publicly over what he saw as inadequate defence spending, is another, though Paul Johnson cautions that appointing him would amount to a spending commitment in itself. “If I was Andy Burnham, I would not want to tie myself to that particular pillar that quickly,” he says.
Bookmakers and Westminster chatter also throw up Darren Jones, chief secretary to the prime minister, and Torsten Bell, the former chief executive of the Resolution Foundation, as outside bets.
Whoever lands the job, the backdrop is unforgiving. The Office for Budget Responsibility has warned that the UK’s public finances are in a relatively vulnerable position and facing mounting risks, leaving little room for error. That is precisely why the markets, and business owners already bracing for an end to “drift and delay” after Starmer’s exit, will scrutinise the appointment so closely.
For now, every name on the list wants the role. As Lord O’Neill puts it: “The ones whose names are in the papers are the ones who are putting themselves forward.”
Paul Jones
Harvard alumni and former New York Times journalist. Editor of Business Matters for over 15 years, the UKs largest business magazine. I am also head of Capital Business Media’s automotive division working for clients such as Red Bull Racing, Honda, Aston Martin and Infiniti.
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