Labour Leadership Secured, Chancellor Choice Remains
The contest for Number 10 Downing Street has concluded with Andy Burnham receiving overwhelming support from Labour MPs. According to Labour's regulations, he also required backing from trade unions, which he secured today. Burnham is set to move into Number 10 on Monday.
However, the less visible contest for Number 11 Downing Street, the Chancellor's residence and office, continues. The individual Burnham appoints as Chancellor will signal his political intentions to both fellow politicians and financial markets.
The official stance from Burnham's team is that no final decision has been made. Cabinet appointments are expected to be announced on Monday, coinciding with Burnham's move to Number 10.
Discussions have been confined to a small circle including the incoming Number 10 chief of staff James Purnell, Louise Haigh, and former MP Josh Simons, who stepped aside for Burnham.
Speculation Around Ed Miliband's Potential Appointment
Following Burnham's victory in the Makerfield by-election, many anticipated that Energy Secretary Ed Miliband would transition to the Treasury. However, there have been both overt and subtle efforts to influence Burnham's Chancellor selection. These range from unions representing oil and gas workers, who are wary of Miliband's approach, to Lord Walker, the unpaid 'cost of living' tsar and Iceland supermarket boss, who cautions that bond markets would react negatively to an "ideological" Chancellor.
In recent days, several MPs close to Burnham, who hold no personal opposition to Miliband, sense that the likelihood of his appointment has diminished considerably. They emphasize they are not decision-makers but are gauging the prevailing sentiment.
Conversely, Miliband's supporters argue that his appointment remains both highly probable and desirable. They highlight his economic expertise, including his background as a Treasury adviser under Gordon Brown and his role as chair of the Council of Economic Advisers. His ministerial experience spans both the previous and current Labour governments, providing him with comprehensive knowledge of Treasury operations.
"He can make the Treasury do what it doesn't want to do,"
a colleague remarked.
Miliband has been a regular advisor to Burnham and aligns with Burnham's goal of distributing economic growth "to every postcode." Regarding financial markets, supporters emphasize his commitment to fiscal rules on debt and borrowing. One supporter stated,
"He isn't Che Guevara."
Many within the parliamentary party anticipate Miliband's move to Number 11. Should this not occur, some on the party's soft left may interpret it as Burnham hesitating at the initial hurdle in his mission to transform Britain.
Influence of Economic Advisers and Alternative Candidates
Other factors are influencing the decision. Lord Jim O'Neill, former chief economist at Goldman Sachs, commercial secretary to the Treasury under David Cameron, a key figure behind the Northern Powerhouse initiative, and chairman of the Cities Growth Commission, has been advising Burnham. Similarly, Andy Haldane, former chief economist at the Bank of England, has provided counsel.
O'Neill hails from Greater Manchester, and Haldane from northeast England. Their potential government roles remain undisclosed. If Burnham views the Treasury as a constraint rather than a catalyst for regional growth, his Number 10 team—both in Downing Street and soon in Manchester—may exert greater control over economic policy.
Louise Haigh has advocated for a "beefed-up No 10" to promote growth. In such a scenario, with advisers like Haldane and O'Neill involved, Miliband's Treasury expertise might be less critical.
Thus, Burnham's personnel decisions could reflect a broader strategic vision.
Potential Appointments and Market Considerations
There are ongoing discussions about appointing Home Secretary Shabana Mahmood as Chancellor. Although she lacks an economics background, her position on the party's right wing might reassure markets and facilitate a smoother transition for Burnham.
However, a senior source indicates the decision is not yet "clear cut." Foreign Secretary Yvette Cooper is also considered a potential candidate for Number 11.
No confirmations are expected before next week, and Burnham's team emphasizes that no final decision has been made. As Burnham's move to Downing Street approaches, private decisions will need to be finalized soon.
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