Andy Burnham has appointed John Healey as Britain’s new Chancellor of the Exchequer, defying widespread Westminster expectations that the role would go to Shabana Mahmood.
Healey, the MP for Rawmarsh and Conisbrough, had served as defence secretary under Keir Starmer before resigning earlier this year over a dispute concerning spending commitments for the armed forces.
Former Labour leader Ed Miliband had also been considered for the Treasury role, alongside former health secretary Wes Streeting, who was widely reported to have tempered his own leadership ambitions in return for a senior Cabinet position.
A Bloomberg poll conducted last week found Miliband was the least popular candidate for chancellor among City figures, attracting only 5 per cent support, while Mahmood was second last with just over 10 per cent.
Streeting led the same poll with more than 30 per cent support, while Healey came second with 19 per cent, making his appointment a genuine surprise to many financial market observers.
The appointment may nonetheless reassure City bosses and bondholders who have expressed concern about Labour’s commitment to fiscal discipline following remarks by Burnham pledging to “use obviously any flexibility” within the government’s fiscal rules.
Rachel Reeves, who had signalled her intention to remain as Chancellor, had told City leaders last month she had “unfinished business in fiscal devolution”, but those hopes were dashed as Burnham prepared a sweeping Cabinet overhaul.
Reeves’s chief secretary to the Treasury, Darren Jones, was also removed from his post as part of the reshuffle, completing a comprehensive clearout of the previous Treasury team.
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” going forward.
“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 remain closely involved in fiscal policy decisions.
Britain’s new prime minister has placed devolution at the heart of his administration, telling the nation in his inaugural Downing Street speech: “We will take power out of here and carry it into every postcode in the land so that they can do more.”
Healey’s resignation from the defence brief last month was widely seen inside Westminster as a critical blow to Starmer’s grip on power, arriving ahead of Burnham’s anticipated entry to the Commons following the Makerfield by-election.
In his resignation letter, Healey wrote that the government’s draft Defence Investment Plan “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 also stated that the Treasury had been “unwilling to commit the resources that the nation needs to defend the country at this time of rising threats,” a pointed criticism that now carries fresh significance given his new role.
Healey further claimed there were “credible” ways of boosting defence spending, describing his letter as one “I never expected to write” and one he submitted “with great regret and reluctance.”
The appointment places Healey in a position where he must now reconcile his own public commitments on defence funding with the fiscal constraints he will be responsible for managing at the Treasury.