Andy Burnham’s putative administration has been thrown into turmoil as uncertainty deepens over whether Ed Miliband or Shabana Mahmood will be handed the crucial role of Chancellor.
A bruising briefing battle has broken out in Westminster after reports suggested Mr Miliband’s long-held hopes of taking control of the Treasury may be about to collapse.
Ms Mahmood is now being widely talked up as the frontrunner, with one Burnham ally claiming her appointment is already “nailed down as Chancellor”.
However, other figures close to the incoming Prime Minister pushed back against that suggestion, insisting that, just days before he is due to enter Downing Street on Monday, Mr Burnham has yet to reach a final decision on the Treasury post — a choice likely to define the early direction of his government.
Foreign Secretary Yvette Cooper is also understood to still be pressing her case for the job, with supporters pointing to her previous experience as a Treasury minister during the last Labour government.
Mr Miliband had for months been seen as the leading contender for Chancellor and has worked closely with Mr Burnham on the economic programme he hopes to implement in government.
But the possibility of Mr Miliband taking charge of the Treasury has prompted a fierce backlash, bringing together business leaders, trade unions and Blairite Labour MPs in opposition.
Sharon Graham, the general secretary of the influential Unite union, warned Mr Burnham last month that Mr Miliband’s focus on Net Zero risked becoming a “noose around the neck” of job creation.
On the other hand: Andy Burnham is struggling to decide on his Chancellor
Some Burnham allies believe Shabana Mahmood has won the race to be Chancellor, while Ed Miliband’s Net Zero obsession has worried investors and unions
A Bloomberg survey of investors on Wednesday found that just five per cent support the idea of installing the former Labour leader as Chancellor. Ms Mahmood fared only slightly better, with 11 per cent support. Former health secretary Wes Streeting was the frontrunner with the backing of more than 30 per cent of investors, but has fallen out of favour.
But ditching Mr Miliband now could trigger a huge row with Left-wing MPs who are pushing Mr Burnham to deliver a major change of direction.
There was speculation last night that Mr Miliband could be made foreign secretary as a consolation prize. But denying him the Treasury would risk angering a key ally who played a major role in forcing out his former friend Keir Starmer.
Last night, his supporters were still lobbying for him to get the job.
One Labour MP sympathetic to Mr Miliband said he was the only minister with the experience needed to push through radical changes at the Treasury.
‘Ed has shown he can get things done in government and he has the experience to take on the Treasury, which is the biggest obstacle to delivering real change,’ the source said. ‘If Andy bottles it now he is going to end up running a continuity Starmer government where the Treasury is basically still in charge. That is a recipe for certain failure.’
Tory frontbencher Ben Obese-Jecty said Mr Burnham’s dithering was already damaging the country.
Burnham and Mahmood pictured in October last year
The Prime Minister in waiting gives Miliband a hug in July 2024
He told the Mail: ‘With only a few days until he takes over as Prime Minister, Andy Burnham’s paralysis over who will be his Chancellor amid infighting in his inner circle shows how unprepared he is for Government.
‘After the disaster of the Starmer administration Burnham’s rush to seize power whilst avoiding scrutiny, without a plan or an economic vision, shows he is on the cusp of filling his Cabinet with last-minute panic appointments.
‘The next stage of this ill-thought out coup already appears to be in trouble.’
A spokesman for Mr Burnham said ‘no decisions’ have been made about the make-up of his new cabinet.
But an ally of the new PM told the Financial Times: ‘Shabana is nailed down as chancellor. That’s definitely happening.’
Ms Mahmood has been keen to stay at the Home Office and moving her would create a vacancy that would be hard to fill. She has limited economic experience, having served as a junior member of Labour’s Treasury team in opposition. Appointing a member of the Labour Right to the role would also risk a backlash from Left-wing MPs.
By contrast, Ms Cooper has significant experience, serving as chief secretary to the Treasury in the last Labour government.
Mr Miliband was an adviser to Gordon Brown in the Treasury for years.
Treasury officials are preparing to brief Mr Burnham and his new chancellor on the dire state of the public finances when he takes charge next week. The Resolution Foundation think tank last night warned that the new PM and chancellor are ‘not starting from a position of fiscal strength’, with the Iran war cutting the government’s fiscal headroom by almost £15 billion.
Mr Burnham last night hinted he is preparing to impose tax rises, saying people might be asked to pay ‘a little more’.
Kemi Badenoch said: ‘We are heading for another summer of chaos with Labour obsessing about who they can tax to pay for more benefits. It doesn’t matter who is in charge, the problem is the Labour Party.’
