Who is on the list to be Andy Burnham’s chancellor – and what would change?

Now that Andy Burnham seems set to be Britain’s next prime minister, two related questions arise. What will be his economic policy? And who will be the new chancellor of the Exchequer?

In large part, the answers to those questions will determine the fate of the Labour government and its prospects, now being talked about with more seriousness in relation to a second term of office. The economic consequences of Burnham and his choices are the issue of the moment.

Early on in the leadership crisis, that was an option, because of the perception that Reeves was actually respected in the City and could be relied upon to be prudent. Indeed, during the various crises of Keir Starmer’s leadership over the past year or so, whenever it was rumoured that Reeves might be moved or sacked, the gilts market took a turn for the worse.

Ironically or not, that was a substantial defence for Reeves, whose political touch has been found woefully wanting. Certainly she’s been lobbying to keep her role, but it seems inevitable that she’ll end up being both the first female chancellor and the second-shortest-serving Labour chancellor (Hugh Gaitskell clocked up one year in 1951).

Now, though, Burnham has stopped complaining about being “in hock” to the bond markets, has adopted Reeves’s fiscal framework, and has recruited some well-known and credible figures to advise him on policy. So Reeves is now dispensable, and appears to have accepted her likely fate of a cabinet-level demotion.

Some heavyweights. The informal team is led by crossbench peer Jim O’Neill, a former Goldman Sachs executive and a versatile technocrat who also served as a Conservative Treasury minister under George Osborne and Philip Hammond. He’s been closely involved with the Northern Powerhouse project, and plans to combat superbugs. He might end up as chief economic adviser to Burnham, or a minister again.

Andy Haldane is another brain for hire: a former chief economist at the Bank of England, and an unusually creative and engaging practitioner of the gloomy science. Adding still more institutional gravitas is Richard Hughes, who chaired the Office for Budget Responsibility before resigning when the OBR inadvertently leaked Reeves’s last Budget.

To borrow to invest, ideally – but within the fiscal rules, which have recently been revised, and may be revised again, to make that laudable plan more achievable.

The key is to make sure that any extra debt taken on by the state is balanced by the acquisition of some credible asset, usually infrastructure, that will confidently add to the growth of the economy. Thus “net government debt” (technically consisting of net public sector financial liabilities) is sensibly accounted for, and should still start to fall as a percentage of national income by the end of the parliament.

The aim is to raise the long-term trend rate of growth, and with it productivity, wages and living standards. It’s a plan.

Through “Manchesterism”. In his 2024 book Head North, co-written with Steve Rotherham, mayor of Liverpool City Region, Burnham (who was once a Treasury minister) criticises the way the Treasury so narrowly “scores” the viability of regional development schemes – the “green book” rules. He thinks he’s disproved the Treasury orthodoxy in Manchester with his “business-friendly socialism approach” – hence all the towers and cranes.

Reeves has reformed the green book, but the Manchester Mafia, as they’ll no doubt be called, want to go further, with an OBR-style independent body. The existing National Infrastructure and Service Transformation Authority, an agency within the Treasury, would be transformed into an independent organisation.

The idea is that it would be sufficiently transparent, and would be headed by such eminently sensible people, that international investors would be delighted to lend the UK more money. Still, there would still be a need to restrain “current” spending, such as doctors’ salaries, to make room for the tilt to higher investment.

This matters both less and more than it might otherwise, if an economic “powerhouse” is installed in No 10. Less, because policy will be driven by a beefed-up No 10. More, because it is essential that whoever is chancellor can work harmoniously with Burnham and his advisers, and not indulge in “turf wars” on behalf of the Treasury.

Guessing, it would require a Burnham ally, and someone with sufficient intellectual clout to engage with the likes of O’Neill – perhaps Ed Miliband? But the unions distrust his supposed net-zero zealotry, and would favour a more friendly figure, say Yvette Cooper.

Wes Streeting has a claim, and would love the role, but he is a big personality and liable to argue too much. Pat McFadden is someone Donald Trump would appoint, because McFadden comes out of “central casting” – he’s the epitome of a dour Scottish bank manager who doesn’t mind saying no.

Darren Jones, a loyal Starmer ally and former Treasury minister is another candidate – clever and persuasive, but not senior enough to mess with Team Burnham. John Healey is from the same wing of the party – but how could he possibly face down the Ministry of Defence?

Putting someone in No 11 is the personnel decision Burnham has to get right above all – not least because, after all the turmoil, they will have substantial leverage (a resignation would be calamitous). Burnham should take his time in choosing.