Andy Burnham has delivered a dramatic Cabinet surprise, naming John Healey as his Chancellor and leaving Ed Miliband and the Labour Left out in the cold.
The newly installed Prime Minister handed the powerful Treasury brief to the former defence secretary after weeks of Westminster chatter suggesting the race had narrowed to Mr Miliband or Shabana Mahmood.
Instead, Mr Miliband has been moved to the Foreign Office in what will be seen as a lesser prize, while Ms Mahmood keeps her role as Home Secretary.
Speculation had grown that Mr Healey could be brought back into a senior role after stepping away from Keir Starmer’s government, but his appointment to No11 has still caught many in Labour circles by surprise.
In another major move, Louise Haigh has been appointed Chancellor of the Duchy of Lancaster and First Secretary of State, placing her effectively as the Cabinet’s second-in-command. Angela Rayner has also arrived in Downing Street as speculation intensifies over her expected return to the top team.
Mr Burnham has wasted little time reshaping the Labour government, launching a sweeping Cabinet overhaul after using his first address to the nation to admit the party “needs to be better”.
Earlier, Rachel Reeves conceded that her bid to remain at the Treasury had failed under the new Prime Minister. She is understood to have rejected the offer of a different ministerial post.
A string of Starmer allies have also been removed from government, including David Lammy, Steve Reed, Peter Kyle, Liz Kendall, Baroness Chapman and Attorney General Lord Hermer. Darren Jones said he was dismissed by phone, while Northern Ireland Secretary Hilary Benn is also departing.
Mr Reed said he was ‘disappointed’ to be going from his Housing Secretary role, and swiped that he ‘hoped those who did not show loyalty to Keir will now show it to you’. Outgoing deputy PM Mr Lammy bemoaned that he ‘would have been proud to continue serving in Cabinet’.
The Left has been pushing hard for Mr Miliband to be Chancellor, despite alarm from businesses and moderates. But after the Net Zero Secretary walked into No10 arm-in-arm with Ms Mahmood, Mr Healey was unveiled by No10 tonight.
No10 sources said Mr Burnham wanted an ‘experienced, trusted’ figure and Mr Healey shared the PM’s outlook ‘on the need to maintain economic stability and the current fiscal rules’. They also agree on ‘reindustrialisation, devolution, helping people with the cost-of-living crisis and backing British jobs and British industry to drive growth across the country’.
One Labour veteran told the Daily Mail it was a ‘smart’ move, and Mr Burnham could now tell Mr Healey: ‘You wanted the money for defence? Great. Go find it.’
Mr Healey served as a Treasury minister under Tony Blair, and is known to have long harboured ambitions to be Chancellor.
Mr Miliband dropped a broad hint that he will be leaving the Department for Energy and Net Zero in a speech to staff this morning – although he insisted he did not know what decisions Mr Burnham had made.
The reshuffle began after Mr Burnham used his Downing Street debut to hint at a lurch to the Left.
Watched by an adoring crowd of aides and supporters, Mr Burnham said he wanted to put services under ‘stronger public control’ and ‘reindustrialise’ with a ‘ten-year plan’. He repeated his view that Britain has been heading in the wrong direction since Margaret Thatcher was PM.
He made clear his first instruction to officials would be to end rough sleeping, and revealed there would be some help on the cost of living announced tomorrow.
Speaking to reporters afterwards, Mr Burnham suggested that could include rent controls and curbs to energy bills. Landlords warned that artificially capping rents would just force properties off the market.
He also signalled he intends to bring back his ‘death tax’ inheritance raid to fund social care reforms. And he confusingly left the door open to introducing a 50p top rate of tax, even though he has committed to the Labour manifesto that ruled the move out.
On another momentous day in UK politics:
- Government borrowing costs lifted and the Pound weakened after Mr Miliband insisted he would use ‘any flexibility’ in the fiscal rules to borrow more;
- The EU has led international welcomes to Mr Burnham, who has previously backed rejoining the bloc;
- The new premier has had his first call with Donald Trump, inviting him to visit Manchester;
- Mr Burnham has revealed his Alzheimer’s-hit father does not know he is becoming PM;
- Eco-tycoon Dale Vince was spotted in Downing Street, amid confusion over whether the Government will allow more drilling in the North Sea;
- The new PM has hinted at an earlier end to the freeze on the basic rate tax threshold, without saying how it would be funded;
- Mr Burnham will become the first openly Catholic PM, with work-arounds put in place to protect the Church of England;
- Loudspeakers have been banned near Downing Street today after protesters blighted Sir Keir’s speech announcing his resignation.
Andy Burnham has installed former defence secretary John Healey as Chancellor
Ed Miliband and Shabana Mahmood – who had been widely regarded as rivals for the key role of Chancellor – walked into No10 arm-in-arm this evening
Angela Rayner is in Downing Street as she closes in on a return to the Cabinet
Andy Burnham has launched his Cabinet reshuffle after making his Downing Street debut
David Lammy and Rachel Reeves were early casualties in the reshuffle, hours after they watched Keir Starmer’s farewell speech outside No10
Mr Burnham and wife Marie-France van Heel waved to supporters as they entered No10
Mr Burnham shunned a lectern in his first speech after being officially installed as PM
Keir Starmer is giving a farewell address outside the famous black door of No10, just two years after winning an extraordinary election landslide
Mr Burnham was invited to form a Government at an audience with the King in Buckingham Palace – where he was unusually accompanied by wife Marie-France van Heel, known as Frankie.
In his seven-minute speech afterwards, delivered without notes, Mr Burnham said: ‘Later this year I will bring forward a new plan for Britain, a ten-year plan laying out a path from where we are now to where I believe we all want Britain to be, wherever we’re coming from, whatever party we support.
‘But I can do something to give people some breathing space now, some help with the cost of living.
‘And I will set out some of those measures starting tomorrow, including how we pay for them.’
Mr Burnham said he was aiming for the ‘biggest changes in the last 40 years’, with a ‘new political model and a new economic model’.
‘In the 1980s, Britain took some wrong turns. Political power was centralised, economic power privatised, large parts of the country de-industrialised, and they still haven’t recovered,’ he said.
‘Many feel as though they’re still in decline, and they don’t have the ability to turn things around.
‘And that’s why we will change politics, to make it more collaborative, more about problem solving than point scoring.
‘We will take power out of here and carry it into every postcode in the land so that they can do more.
‘And in doing more, build a new economy where we put life’s essentials back under stronger public control to make them affordable to you again.
‘Reindustrialising Britain, using public procurement to back British industry.’
Speaking to reporters afterwards, Mr Burnham was asked whether bus fares, energy bills or rent freezes would be part of his package of help.
He said ‘we’re looking at all of those things’ but stressed no final decisions had been made.
He said: ‘We’re looking at measures that could make a difference this year. So we are looking at all of those things, but we’ll make more announcements tomorrow.
‘We’re just finalising the details, so it’s premature to say it will be any one of those particular things.
‘We just want to do some things that people will feel and feel quite quickly.
‘It won’t solve everything. It won’t take all of the pressure off, but it just shows a direction of travel and that we’re serious about helping them out.’
The constitutional changeover came after Sir Keir used a farewell address outside No10 to insist he has not been a failure – despite only surviving two years following a huge election victory.
Sir Keir said he was ‘closing the book on my time’, saying ‘my work is done’ and the country is ‘stronger’. He insisted Mr Burnham – who orchestrated a coup to secure the leadership – would have his ‘full support’.
‘I go with good grace, I go with a smile and I go proud of everything we have achieved,’ he said, thanking wife Victoria and his family.
Close Cabinet allies including David Lammy and Rachel Reeves had gathered with hundreds of aides in a sunny Downing Street to watch Sir Keir say goodbye. London Mayor Sadiq Khan was also present for the emotional moment.
In his valedictory statement , Sir Keir said: ‘I am about to visit His Majesty The King to offer my resignation and close the book on my time as Prime Minister.
‘My work is done. In six and a half years, I took our party from a historic defeat in 2019, changed it so it was fit to face the country and won a landslide general election victory in 2024.
‘Since then, it has been the privilege of my life to serve you and this great country as Prime Minister, and I am confident that Britain is now stronger and fairer than it was two years ago.
‘Our economy is stronger. Our public services are on the up, with the biggest fall in waiting times for 17 years. Children are being lifted out of poverty every single day.
‘Immigration is down significantly. Our defence and security are on a far stronger footing and our international reputation is greatly enhanced.’
The handover comes barely a month after Mr Burnham returned to Westminster following his victory in the Makerfield by-election.
He has been installed by Labour MPs in a ‘coronation’, without a formal vote by activists – or having to spell out any policies.
Mr Miliband was given the news by Mr Burnham in Downing Street this evening
Louise Haigh has become Chancellor of the Duchy of Lancaster and First Secretary of State, effectively making her the second most powerful person in Cabinet
The fate of Yvette Cooper has yet to be decided, after Ed Miliband took her job as Foreign Secretary
Ms Reeves said the economy is ‘stronger, fairer and more resilient’ after her time in No11
Mr Lammy said Mr Burnham was ‘entitled to build his own team’
The new residents of Downing Street were applauded into the building by staff
Andy Burnham was officially installed as PM by the King today after Keir Starmer bowed out
Among the vague commitments laid out by the incoming PM so far are devolving power away from Westminster.
He has announced he will scrap Sir Keir’s flagship digital ID programme to focus money and attention on the cost of living.
In an interview with The Times, Mr Burnham said he had already spoken to the Treasury about his planned announcements and stressed the importance of making people ‘feel better’.
Adding that complaints about frozen tax thresholds had been ‘lodged in his mind’ since the Makerfield contest, he said: ‘So when people, they’re just characterising me as a tax raiser, well again, it’s never that simplistic is it? The breathing space point is a really serious one.’
The comments raise more questions about how Mr Burnham will pay for giveaways, after he backed a ‘land tax’ and harked back to the 1970s condemning Thatcherite reforms.
But the weekend was dominated by bungled briefing over whether the new Government will allow new oil and gas drilling in the North Sea.
The leader’s team has now confirmed he will stick to Labour’s 2024 manifesto, which promised not to issue new licences.
Instead he could merely allow expanded drilling at the Rosebank and Jackdaw sites – something that was being considered by Sir Keir’s administration.
That could bode badly for Mr Burnham’s relations with Donald Trump, who yesterday jubilantly hailed more drilling as a way of stopping Britain being a ‘poverty stricken disaster’.
Mr Burnham also faces a decision on whether to temporarily nationalise Thames Water as the firm struggles with a £20billion debt pile.
He has already expressed support for greater public control of essential services, and Thames Water’s main creditors have said they are willing to discuss the issue with his new ministers in an effort to agree a rescue deal and avoid the business falling into a so-called ‘special administration regime’.
Another priority is likely to be reforming social care, which he has said is something he wishes to ‘expend political capital’ on.
Keir Starmer’s resignation was accepted by the King at an audience in Buckingham Palace today
Close Cabinet allies including David Lammy and Rachel Reeves had gathered with hundreds of aides in a sunny Downing Street to watch Sir Keir say goodbye
Sir Keir and Lady Victoria got into a car to be driven to Buckingham Palace after his speech
Kemi Badenoch warned Mr Burnham he will have to cut spending instead of increasing taxes
Liberal Democrat leader Sir Ed Davey has urged Mr Burnham to engage other parties to solve the ‘social care crisis’, calling for guaranteed rights for family carers, a universal safety net and protection against ‘catastrophic costs’.
Kemi Badenoch has also written to Mr Burnham, saying her party will work with him to cut the welfare bill and calling for him to rule out tax rises and back new oil and gas drilling.
Mrs Badenoch told Mr Burnham she would ‘never shirk’ from holding him to account, adding: ‘You will enter office without having set out a clear plan on any of the issues facing our country.
‘You have refused calls to come to Parliament for questions from MPs, and you have not submitted yourself to serious media scrutiny. This is not a promising start.’
