Andy Burnham has all but locked in his chancellor before he has even picked up the keys to Downing Street. The Financial Times reported Wednesday that the incoming prime minister will name Home Secretary Shabana Mahmood as his finance minister, a move three people close to the transition described as settled.
“Shabana is nailed down as chancellor. That’s definitely happening.”
Person briefed on Andy Burnham’s plans, quoted by the Financial Times
The appointment resolves a question that had shadowed Labour’s leadership handover for weeks: would Burnham lean left and elevate energy secretary Ed Miliband, or steady the markets with a chancellor seen as fiscally cautious? Sterling answered before Burnham did. The pound touched a one-year high against the euro on Wednesday as traders priced in Mahmood over Miliband, whose net-zero agenda has unsettled parts of British business.
The incoming premier, 56, is due to replace Keir Starmer in Downing Street on Monday, becoming Britain’s seventh prime minister in a decade. Neither Mahmood’s office nor Burnham’s team confirmed the move publicly. A spokesperson for Burnham said only that ministerial appointments would not be discussed before Monday’s formal reshuffle, according to the Financial Times report.
Mahmood brings little economic policy experience to the Treasury. What she does bring is distance from Labour’s left flank: her record on immigration is famously tough, and colleagues place her well to the right of Miliband on fiscal and energy questions. That positioning looks like the point. A chancellor who reassures gilt markets, not one who reopens spending arguments Labour has spent two years trying to close.
She would inherit a Treasury with almost no room to maneuver. A Resolution Foundation report published Thursday put the scale of the problem at roughly £330 billion ($442 billion) a year, blaming weak per-person economic growth, an ageing population and rising ill health. About two-thirds of the hole traces to sluggish growth since 2007. The think tank’s fixes are politically uncomfortable by design: replace the pensions triple lock with a link to average earnings, find new revenue as electric vehicles erode fuel-duty income, and raise public investment even as the war in Iran has already trimmed the government’s fiscal headroom from £23.6 billion in March to roughly £10 billion now.
There’s a hint, though, of how Burnham intends to square that circle: not the market alone, but public money used to pull private investment into places it has stopped reaching.
Interviews Reuters conducted with more than a dozen former advisers and Labour insiders describe him wanting to take the model behind Stockport’s £2 billion regeneration, which has already drawn £600 million in private investment and a 40% jump in shopping-centre footfall, and apply it nationally starting with the “drive-through” town center of Middleton. Were we going to let the market decide what Stockport could be, or were we going to do that? It has paid dividends already — that development is fully let,
Burnham said in November.
The ambition collides with the arithmetic. He has already pledged fiscal discipline, committing to rules that match day-to-day spending against revenue and to Labour’s 2024 promise not to raise taxes on working people. That leaves Mahmood scant headroom for the regional investment Burnham wants to scale up from Greater Manchester, where the economy grew 17.4% between 2017 and 2023, the fastest of 46 British sub-regions.
That tension was already on display this week, in an interview with broadcaster Gary Lineker posted to Lineker’s Goalhanger channel on YouTube. Pressed on whether taxes would rise, Burnham wouldn’t rule it out.
“We are going to have to work quite hard to make sure we can pay our way and, at some point, that might be having to ask for a little more — but those decisions are not for now, they’re for another day.”
Andy Burnham, incoming prime minister
That reluctance to commit, on tax, on the pace of Middleton’s redevelopment, on anything beyond Monday’s handover, may define the opening weeks of his government as much as the Mahmood appointment itself.
Business groups are withholding full judgment. The Confederation of British Industry welcomed Burnham’s focus on investment outside London while warning that the cost of doing business in Britain is already near a “tipping point.” Economic benefits of devolution are unclear, but the costs are tangible,
said Allan Monks, a JPMorgan economist tracking the transition. It’s an early preview of the scrutiny awaiting Mahmood from her first day at the Treasury.
