John Healey becomes Chancellor as Andy Burnham names top Cabinet appointments
John Healey has been appointed Britain’s new Chancellor as Andy Burnham unveils a major shake-up of key Cabinet roles.
The Rawmarsh and Conisbrough MP, who had served as defence secretary under Keir Starmer before resigning earlier this year amid a spat over spending commitments, marks a surprise appointment for the top Treasury role, defying Westminster expectations of a promotion for Shabana Mahmood.
Former Labour leader Ed Miliband had also been in contention for the role, as well as former health secretary Wes Streeting, who appeared to have curbed his own party leadership ambitions in exchange for a top Cabinet position.
The fresh Treasury appointment may come as a relief for City bosses – and bondholders – who have voiced concern over Labour’s commitment to fiscal responsibility. Those anxieties may have been exacerbated by remarks given by Burnham to journalists on Monday, in which he pledged to stick to Labour’s fiscal rules but “use obviously any flexibility within them.”
A Bloomberg poll conducted last week found Miliband was comfortably the least popular candidate for chancellor in the City, with only 5 per cent support. Mahmood was second last, with a little over 10 per cent, while Streeting enjoyed a clear lead at more than 30 per cent. Healy came second with 19 per cent.
Reeves is ousted
Reeves had signalled her hope to cling on to her position as chancellor following the resignation of Keir Starmer, telling top City leaders last month she had “unfinished business in fiscal devolution” in a nod to Burnham’s plans to give greater powers to regional governments.
But those hopes were quickly dashed after it became clear Burnham was readying a huge Cabinet overhaul. Her right hand man, chief secretary to the Treasury Darren Jones, was also removed from his post.
In a statement on X, Reeves said it had been the “privilege of my life” to serve as Chancellor, adding that Burnham had her “full support”.
“To every young woman and girl let my time in office show there should be no ceilings on your ambitions, your hopes or your dreams,” she said.
Burnham, who previously served as chief secretary to the Treasury under Gordon Brown and authored the 2007 Spending Review, is expected to be heavily involved in fiscal policy.
Britain’s new prime minister has made devolution a key tenet of his administration’s mission, of which handing more tax and spend powers to regional governments is set to be a crucial part.
“We will take power out of here and carry it into every postcode in the land so that they can do more,” Burnham said in his inaugural speech outside Downing Street.
Healey departure marked beginning of end for Starmer
The resignation of Healey last month was seen within Westminster as the nail in the coffin for Starmer’s prospects for clinging on to power ahead of the expected arrival of Burnham in the Commons following the Makerfield by-election. His resignation was followed in short succession by that of armed forces minister Al Carns. Starmer had vowed to fight any leadership challenge but resigned shortly after Burnham’s election.
In a letter to Starmer, Healey said the government’s draft for the Defence Investment Plan (DIP) “falls well short of what is required for defence and the country at this dangerous time”.
“After explaining to you that I would not be able to accept a DIP settlement that does not give our forces the resources they need, I am now left with no other option than to submit my resignation as your defence secretary,” Healey wrote.
He added that the Treasury had also been “unwilling to commit the resources that the nation needs to defend the country at this time of rising threats”.
Healey also claimed there were “credible” ways of boosting defence spending and that the letter was one “I never expected to write” and “do so now with great regret and reluctance”.
The onus now falls upon Healey to ensure that the Treasury allocates further funds to defence investment in a way that is consistent both with Labour’s fiscal rules and his own resignation letter.