Shabana Mahmood is widely expected to be named as Andy Burnham’s chancellor after the prime minister-in-waiting’s inner circle objected to his original choice, Ed Miliband, The Independent understands.
The home secretary has impressed many with her sure footed handling of the immigration crisis and she is seen as a chancellor who will keep the markets calm when the new government takes over on Monday.
On Wednesday, after The Times first reported Ms Mahmood as a frontrunner, the pound rose from $1.34 to $1.35.
The choice of chancellor has been seen as crucial for Mr Burnham, who told Andrew Marr on LBC recently that he had yet to make up his mind who got the job.
But with Ms Mahmood previously endorsed by former prime minister Sir Tony Blair as a potential leader of the party, and as someone more on the right of the party than Mr Miliband, she is seen as someone who will not spook the markets.
A source told The Independent: “Shabana is in the driving seat for the job. It won’t be Ed now. But Andy is going to do things differently from before.”
Another added: “Ed Miliband’s previous as leader [of the party] is problematic. The net zero stuff isn’t ideal either.”
Last year, when there were rumours that Sir Keir was to sack Rachel Reeves, the outgoing prime minister was forced to make a public statement assuring her future to prevent a run on UK bonds, which would have hit the cost of borrowing.
Meanwhile, Mr Miliband, who has served as energy secretary under Sir Keir, has caused division within Mr Burnham’s team.
Some of his decisions in his current role have upset businesses, such as his move to drop opposition to drilling for new oil and gas in the North Sea, and were seen by some as a confirmation that he would get the chancellor job. But beyond concerns over his hardline stance on net zero policies, there have also been worries over his image as a former leader of Labour who spectacularly failed to win over voters in the 2015 election.
Other names in the frame for the chancellor job have been former health secretary Wes Streeting, outgoing chancellor of the Duchy of Lancaster Darren Jones and foreign secretary Yvette Cooper.
Mr Streeting was apparently discounted early as “too divisive”, while another potential candidate, welfare secretary Pat McFadden, was seen as too supportive of welfare cuts – an issue highlighted when texts to the disgraced Labour peer Peter Mandelson were published.
Part of the changes in cabinet will see more economic policy run from Downing Street and Cabinet Office, rather than the Treasury.
In an interview with former England football captain and ex-BBC presenter Gary Linker’s podcast, Mr Burnham hinted at introducing a wealth tax.
He said: “I’m going to obviously take my time to properly look at the state of things, particularly the state of finances. I’m not going rule things out right now. I do believe we need a greater sense of fairness and people feeling that things are being done in the right way and a fair way.
“But at the same time, you know, I don’t want to sort of be perceived as somebody who’s coming in with grudges and agendas and, you know, going to just immediately find or demonise one group or create a new way of dividing people.
“So, you know, decisions to be taken in time, they’re going to be difficult. I’m not going to shy away from that. You know, we are going to have to work quite hard to make sure, you know, we can pay our way.
“And at some point that might be having to ask for a little more. But, you know, those decisions are not for now. They’re for another day.”
The Independent earlier revealed that former transport secretary Louise Haigh is set to be running the Cabinet Office in a beefed up chancellor of the Duchy of Lancaster role which will see her controlling policy as well as aspects of economic policy.
Former deputy prime minister Angela Rayner and current deputy leader Lucy Powell are also set for cabinet roles, while culture secretary Lisa Nandy is expected to be promoted.
With jobs not set to be confirmed before Monday when Mr Burnham takes over officially from Sir Keir, having become Labour leader on Friday, there is still speculation as to who will end up in his top team.
But one very senior minister admitted to The Independent that very little is known about who will fill what roles.
“This has been such a spectacular coup that nobody has a clue what’s happening,” they said. “Let’s hope Andy and his team know what they are doing.”
Ms Mahmood’s spokesperson said it was a matter for Mr Burnham’s office. Mr Burnham’s team declined to comment.
Shadow chancellor Sir Mel Stride said: “Andy Burnham should be ruling out a fresh tax raid. Instead, he is fuelling speculation about new taxes.
“We know how this ends – we saw it already last year. Fears of tax rises at the Budget will mean investment and hiring get put on hold and wealth creators leave our shores.
“Labour’s answer is always more taxes. Only the Conservatives have a plan to build a stronger economy by getting the benefits bill down so we can bring down the tax burden and get Britain working.”
