Allies of Chancellor Rachel Reeves are fighting for her to keep control of the Treasury in the Andy Burnham era. Here are nine reasons why she may survive the coming reshuffle when Sir Keir Starmer moves out of Downing Street.
1. Sacking the Chancellor Would Admit Economic Failure
If Andy Burnham fires Rachel Reeves as Chancellor, it will be an admission that Labour has messed up the economy – and that will make winning the general election due in 2029 incredibly difficult. Rishi Sunak was unable to banish voters' anger at the turmoil of the Liz Truss era, and Mr Burnham cannot look forward to a long tenure as prime minister if Labour is seen as a party of economic incompetence. If he ousts Ms Reeves, he will come under intense pressure to deliver radically faster growth than she achieved, just as the world economy confronts a host of challenges. If Ms Reeves is banished and the UK splutters, Mr Burnham will be cast as a hapless PM who made a bad situation worse.
2. Market Panic Would Doom His Premiership
Mr Burnham will be desperate to avoid even a modest spike in the cost of borrowing. In the last financial year, the Government spent around £110 billion on debt interest – the equivalent of 3.6% of GDP. To put it in perspective, the UK spent just £60.2 billion on defence in 2024-25. Higher borrowing costs would make it even harder to ramp up defence spending and invest in public services – and would hike pressure on any PM to cut the country's giant benefits bill. Putting a Left-winger in control of the Treasury would fuel market anxiety. Ms Reeves has spent her time as Chancellor working to pacify the bond markets, and Mr Burnham may conclude he needs her to calm traders' nerves.
3. Avoiding a Rival Power Centre at the Treasury
Sir Tony Blair's premiership featured nearly-daily reports of tensions between Downing Street and Chancellor Gordon Brown's Treasury team. Mr Burnham may fear that if he puts a big beast such as Ed Miliband or Wes Streeting in the Treasury – someone who has plentiful ideas about how the country should be run – this will set the stage for a similar power struggle. Ms Reeves is not aspiring to be prime minister. This is her dream job. If she stays in post, she will be focused on ensuring financial stability and supporting growth, not plotting how to move from Number 11 to Number 10.
4. Old Allies: Burnham and Reeves Have History
Back in 2015, Ms Reeves endorsed Andy Burnham in the Labour leadership contest and looked set to be his Shadow Chancellor. Instead, the contest was won by Jeremy Corbyn and John McDonnell took on this role. Personal relationships only count for so much in politics, but Mr Burnham may decide he wants an old ally by his side in the difficult days ahead. His premiership may well be defined by the economy and he needs a confidante who will talk him out of making mistakes.
5. Britain Risks Looking Like a Basketcase
Britain is about to have its seventh prime minister since 2016 and a narrative is taking hold in the wider world that Britain, far from being a bastion of stability, is a country where something is fundamentally broken. Brits used to chuckle at the rapidity with which Italy changed leaders, but Giorgia Meloni has been PM there since October 2022. Mr Burnham will want some familiar faces to show up at international summits in case the world thinks the UK is in the grip of inexperienced but power-hungry apparatchiks who are likely to be replaced imminently by the next round of plotting politicos. Ms Reeves has a wide circle of influential friends and if she shows up at Davos, she can assure investors and finance ministers that UK PLC is still on the road to growth.
6. Avoiding Powerful Enemies on the Back Benches
The downside of having a giant majority is the challenge of keeping Labour MPs happy, and this will be an even tougher challenge if seething, well-connected former ministers glare at him and hope he suffers a speedy comeuppance. Allies of Sir Keir and Ms Reeves may well believe they have been ousted for taking tough decisions; the likes of Margaret Thatcher and Bill Clinton once suffered abysmal poll ratings but went on to win millions of voters around – the PM has been denied this chance. Keeping Ms Reeves in the Treasury would be a clear signal of respect to Starmerites who could otherwise prove dangerous foes.
7. A Chancellor to Say No to Trade Unions and the Left
Mr Burnham positioned himself as a ready alternative to Sir Keir by courting Labour's soft Left. Trade union leaders and socialists will want him to match his rhetoric with action as PM, and he can expect demands for generous public sector pay hikes and wealth taxes. He needs a Chancellor who is not worried about trying to win over these groups for a future leadership bid; someone who will spell out in brutal detail the dangerous consequences of abandoning fiscal discipline. Ms Reeves sees the preservation of financial stability as a core aspect of her legacy, and she may even relish the challenge of taking on the Left.
8. Avoiding Chaos Before the Autumn Budget
Preparing the Autumn Budget will be the challenge of the summer for the new administration. Ms Reeves and her team will have laid the groundwork in recent months and replacing her with a new Chancellor could trigger civil war, with departments re-fighting battles over cuts and investment. Getting a new team up to speed would take weeks and feed market uncertainty. A botched Budget would torpedo confidence in Mr Burnham and fuel demands for a general election. Ms Reeves's allies will say this bolsters the case for continuity at the Treasury.
9. A Chancellor to Play Bad Cop
One of the recurring criticisms of Mr Burnham is that he likes to say what his audience wants to hear. While crowd-pleasing is an essential element of getting elected, a Prime Minister needs someone who will play bad cop and say No to MPs demanding mass nationalisation of industries, compensation for worthy groups, unfettered support for local employers and slashed transport fares. If Ms Reeves stays in post, part of her job would be taking the blame for unpopular decisions. This would be a chance for her to burnish her reputation as a champion of prudence.
