There has been increasing talk of the current home secretary becoming chancellor.
The BBC has been told there are “live discussions” about putting Mahmood in Number 11, while the Financial Times, external is reporting it as a certainty based on three sources close to Burnham.
While she does not have an economics background, she is a senior minister on Labour’s right and it may be felt that she could reassure financial markets and smooth the transition to a Burnham government.
Kathleen Brooks, research director at XTB, said the markets were already rallying in relief to reports that Mahmood would become chancellor, with the pound up about 1% against the US dollar this week.
“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,” Brooks said.
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.
Ed Miliband
Image source, Getty Images
In late June, Ed Miliband was the bookmakers’ strong favourite for the number two job in British politics, with the former Labour party leader politically closer to Burnham than other rivals.
However, opinions differ on whether former Treasury adviser Miliband would receive the backing of the financial markets, which the government depends on to lend money.
Some see Miliband as an inflation risk, believing his drive for net zero as energy secretary as partly responsible for the UK’s high energy prices compared to other countries.
Analysts say that reputation, whether accurate or not, could affect how bond markets react to his time as chancellor.
In recent days, several MPs close to Burnham – who have no issues with the energy secretary – believe the likelihood of appointing Miliband has significantly lessened.
But others close to Miliband believe it was both highly possible he would become chancellor, and something that was still wanted.
Yvette Cooper
Image source, Getty Images
Foreign Secretary Yvette Cooper could be a surprise compromise pick, and is seen as a potential for chancellor.
She has years of experience in government, serving as chief secretary to the Treasury under Gordon Brown, and sits somewhere in between Miliband and McFadden or Streeting politically.
Danni Hewson, head of financial analysis at financial services firm AJ Bell, calls her a “middle of the road” option but also “a bit more of an unknown”.
Wes Streeting
Image source, Getty Images
Wes Streeting, a former contender for the Labour leadership, was the early favourite for chancellor, with suggestions that he could be awarded the job for coming out and backing Burnham and withdrawing his own ambitions.
However, economist and cross-bench peer Lord Jim O’Neill, who has been providing advice to Burnham, has warned against this approach.
Lord O’Neill told the BBC the advice he has given Burnham is to “figure out what his priorities are as prime minister before he picks a chancellor”.
Though Burnham may appreciate Streeting’s backing, the pair’s politics differ – with Burnham seen to be inclined to spend more than Streeting.
Simon French, chief economist at consultancy Panmure Liberum, says Streeting is a “relatively market-friendly option” because of his pro-growth comments, but also a political risk because he might someday want to be prime minister.
Pat McFadden
Image source, Getty Images
Though seen as a less likely option than Streeting or Miliband, some view Pat McFadden as the most qualified pick, having held shadow Treasury jobs, been a business minister in a previous Labour government, and also being the current work and pensions secretary.
It is his experience in the latter role that could help him to tackle what many say will be any future chancellor’s biggest task: welfare reform.
Panmure Liberum’s French believes the markets may view McFadden as “the safest pair of hands” out of those in the running and will either react positively or neutrally if he were picked.
But if Burnham is looking for a clean break from the previous government, he will likely overlook the Sir Keir-loyalist.
Rachel Reeves
Image source, Getty Images
It’s looking increasingly unlikely that the current Chancellor, Rachel Reeves, will keep her job.
A spokesperson for Burnham said no decisions had been made about who he would appoint, but reports suggest Reeves would be replaced and offered a junior or mid-level cabinet position.
Reeves has urged a Burnham-led government to stick to what she is doing because it is “beginning to bear fruit”. Burnham has said previously he would stick to Reeves’ fiscal rules.
She defended her handling of the UK economy in an interview with the BBC, in which she backed the former Manchester mayor, despite the reports of her potential demotion. She opted to welcome him to parliament in a photoshoot with other MPs and was notably absent from Sir Keir’s resignation speech.
Reeves told the British Chambers of Commerce conference she was proud of her record so far but there was “more to do”.
And the rest
Then there are the longlist of wildcards.
Former defence secretary John Healey, who very publicly quit because he did not believe the government was spending enough on defence, is another option.
However, Paul Johnson says Burnham would essentially be committing to meeting that spending demand if he chose him.
“If I was Andy Burnham, I would not want to tie myself to that particular pillar that quickly,” he said.
Bookmakers and reports also mention chief secretary to the prime minister Darren Jones, who ruled himself out of the running for the leadership, and former chief executive of the Resolution Foundation Torsten Bell as outsiders.
While some politicians are more likely to be hired than others, each one will want the job.
As Lord O’Neil puts it: “The ones whose names are in the papers are the ones who are putting themselves forward.”
admin
