Mahmood Frontrunner for Chancellor as Burnham Faces Briefing War

Home Secretary Shabana Mahmood has emerged as the frontrunner to become Chancellor of the Exchequer in Andy Burnham’s incoming cabinet, following a contentious internal briefing war that has sidelined Ed Miliband for the role. Senior Labour figures with knowledge of Burnham’s thinking told the Guardian they expect the Home Secretary to be moved to the Treasury, citing concerns that appointing Miliband would make him a target for criticism and potentially unsettle financial markets.

The decision comes as Burnham prepares to enter No 10 on Monday, having taken over as Labour leader on Friday. While sources in Burnham’s team insisted no final decision had been made, the row over who succeeds Rachel Reeves has divided the party’s allies for weeks. Supporters of Miliband argue he is the only candidate capable of challenging Treasury orthodoxy, but critics within the party, including Louise Haigh, have raised qualms about the economic challenges of the autumn and the political risk of appointing the politician who led Labour to a general election defeat in 2015.

Financial markets reacted positively to reports of Mahmood’s likely appointment, with the pound rallying and the yield on a 10-year government bond dropping 0.06 percentage points. City investors had expressed unease regarding Miliband, fearing his ideologically driven approach could lead to a radical shift in economic policy funded by higher borrowing. In contrast, Mahmood is regarded in the City as a more centrist option, bolstered by her hardline stance on immigration and a reputation for standing up to the civil service.

If confirmed, Mahmood faces immediate pressure to draft an emergency cost-of-living package, which could include targeted support for energy bills, a rent freeze, and caps on bus fares. She would then prepare an autumn budget, with Burnham indicating a willingness to consider tax increases to ensure fairness, though he refused to rule out a future wealth tax. Burnham stated he wants to avoid being perceived as having grudges, but acknowledged that asking for a little more in tax may be necessary at some point.

Miliband is reportedly being considered for the Foreign Office, potentially with the additional title of first secretary of state, a role regarded as on a par with deputy prime minister. Meanwhile, Wes Streeting is suggested as a potential replacement for Mahmood as Home Secretary. Allies of Miliband have accused his opponents of coordinating a campaign to sabotage his prospects, arguing that not appointing him would signal that Burnham is too susceptible to pressure. However, the reported appointment of Graeme Cooke as No 10 policy chief signals Burnham’s intent to take greater charge of policy output.