The biggest choice facing Andy Burnham now is who will become his chancellor. People who claim to know his mind say they expect him to make up his mind this weekend: market uncertainty through next week could become a big story in itself. No promises have been made to anyone. That’s something the prime minister-in-waiting should be mulling over during every quiet moment he has this weekend in Manchester.
The decision is still personal, even intimate. The relationship between prime ministers and chancellors is always intense, whether creative or toxic. Will this be destroyed by Blair-Brown tensions, or a softer Cameron-Osborne partnership? But beyond the personal, it is politically huge. Get it wrong, and Burnham could face a market crash before he’s even at No. 10. Get it right, and he could find the fiscal shirt unfastened quickly and all sorts of opportunities open up.
Although Rachel Reeves has been working hard with her business backers for words of support, the current chancellor appears to be fighting a desperate backdoor move. “No Rachel,” says a Burnham supporter. The most obvious candidates to replace him, although there are others, are centre-right Wes Streeting and centre-left Ed Miliband.
Streeting is one of the best explainers and verbal street warriors the party has. For what it’s worth (probably not much) he’s easily the favorite with Ladbrokes. Because he is aligned with the center right, he would be an effective hedge against bond market hostility. Pro-business, he has worked with influential pro-growth social democratic guru Will Hutton and former Bank of England economist Andy Haldane. If his appointment saw walnut yields fall, it would unlock billions of pounds for other purposes much more easily than raising taxes.
But contrary to other reports, after publicly endorsing him last week and arguing that there was no point in questioning minor differences, Streeting has neither lobbied nor asked Burnham for the chancellorship and, I am told, has no special expectations. The road has not been one of “door slamming” in the interim office of the much-hit former mayor. The case against him, it seems, is that he has made no secret of his appetite for high office, and so Burnham may be nervous about having him as his neighbor.
The case against Ed Miliband is best known because it was prosecuted so enthusiastically throughout the right-wing press. Attacked by union leaders for his net zero policies, and savaged by commentators who see him as the left-wing candidate, he would be watched very closely by the bond markets. If it doesn’t go well, it could end Burnham’s project very quickly. A senior MP says: “It’s really unfair, but the question is, can Ed move beyond his vicious caricature?”
However, the case for Miliband is strong and has not been properly aired. It is, in essence, the “Move to China” argument. Andy Burnham has seized on the need to move quickly to reform welfare, particularly Alan Milburn’s agenda to tackle youth unemployment and economic inactivity. After the botched Starmer-Reeves welfare reform package ran into trouble on the backbenches, to do so, it is argued, would require a reliable and credible centre-left voice: Miliband would be able to deliver for the PLP as perhaps no other candidate outside the soft left camp could.
A combination of this and a clear pledge to abandon the unaffordable and unequal triple-blockade as soon as politically possible, in the next election manifesto, would demonstrate a radical government still determined to keep control of public spending; this would be a signal to bond markets and sterling holders as Burnham pushed through his radical devolution plans.
I have even heard suggestions that Miliband as chancellor may look again at the oil and gas tariff as part of a Burnham effort to lower energy prices. The last part of his case is simply that he is a man, as he serves Gordon Brown, who understands the culture of the Treasury and can deliver on the cost of living agenda in a way that others could not.
Of course, there are many other names being bandied about – Yvette Cooper, a serious economist and a figure likely to be trusted by the markets, would give Burnham another woman in the top job; Shabana Mahmood, almost a blank slate in terms of her economic agenda, would allow her to impose more No 10 influence on a Treasury that has been largely left to its own devices during the Starmer years. John Healey, the former defense secretary, and Jonathan Reynolds, the chief whip, have also been discussed.
This weekend, the political world and financial markets will be watching carefully for a decision from Manchester. It’s really hard: in Westminster nobody thinks it’s taken yet. We will know soon.
(Further reading: Keir Starmer: A Political Obituary)
