Home Secretary Shabana Mahmood is now the frontrunner to be Andy Burnham’s chancellor, with a decision expected once he formally takes office as Prime Minister next week.
No Cabinet appointments have been confirmed, and Burnham’s team have declined to comment beyond calling the reports “speculation.”
But a senior Labour source told The i Paper that Mahmood had previously been saying she wanted to stay at the Home Office, and is now saying she is “prepared to move wherever helpful” — heavily hinting at a shift to the Treasury.
Mahmood has never held an economic brief in government. Her only Treasury experience was as shadow financial secretary a decade ago, under Ed Miliband, which makes her approach hard to predict.
One clue lies in her politics. Mahmood is strongly associated with Blue Labour, a faction that mixes socially conservative views with support for a bigger role for government in the economy.
It backs policies like protecting British industries from foreign competition, keeping services such as water and rail in public hands, and shifting power away from Westminster to regional mayors.
Here is our analysis of what Mahmood in the Treasury might mean for different policy areas…
Economy
Financial markets reacted positively on Wednesday to reports that Mahmood could move to the Treasury.
The pound rose in value, and the interest rate the government pays to borrow money — reflected in the price of UK government bonds, known as gilts — fell slightly. Both are typically read as signs investors are reassured rather than rattled.
But that reaction might have less to do with Mahmood herself, and more to do with who she’d be replacing as the frontrunner for the job — the current Energy Secretary Ed Miliband.
Miliband is seen as sitting further to the economic left within Labour, and there were reports that investors had worried that installing him at the Treasury could mean looser borrowing rules and higher spending.
Chris Beauchamp, chief market analyst at the trading platform IG, put it bluntly, saying markets had been “firmly in the ABM, Anyone But Miliband, camp”.
He argued Mahmood is more likely to act as a “cipher” for Burnham’s own economic vision, rather than bringing a strong agenda of her own to the Treasury.
Taxes
There are already hints of what a Mahmood Budget could involve.
Most of it, however, comes from Burnham’s own mouth.
Speaking on Gary Lineker’s podcast this week, Burnham said: “I do believe we need a greater sense of fairness,” and did not rule out a wealth tax — a tax on the total value of what someone owns, rather than on their income.
His ally Louise Haigh, thought to be central to organising his move into No 10, has separately called for capital gains tax, paid on profits from selling things like shares or a second home, to be brought closer into line with income tax.
Rachel Vahey, head of public policy at AJ Bell, said there has also been speculation Burnham could reform inheritance tax and council tax, alongside introducing “stronger public control” of services like energy, transport and water.
As Chancellor, it would fall to Mahmood to turn that thinking into policy, and to defend it to the markets already watching this appointment closely.
Whether she shares Burnham’s appetite for taxing wealth more heavily, or would act as a brake on it, is untested.
Pensions and benefits
Burnham has committed to protecting the state pension triple lock, which guarantees pensions rise each year by whichever is highest of inflation, average earnings, or 2.5 per cent, for the rest of this Parliament.
But its long-term cost is due to be examined by the Pensions Commission, which reports early next year.
For a decision this significant, the Chancellor and Prime Minister would be expected to act in tandem, and with the next general election still a few years away, neither is under immediate pressure to show their hand.
On benefits, Mahmood’s Home Office record offers one clue as to how she might approach that decision.
She has shown a consistent willingness to tighten eligibility and push through changes that make a system harder to access, even at real political cost.
That may feed through into Labour’s approach on welfare, with Burnham saying he wants to reduce the ever-growing benefits bill in a “sustainable” way.
Immigration
The clearest pattern in Mahmood’s career so far is a willingness to make an unpopular decision, then hold her ground even when it upsets people in her own party.
As Justice Secretary, she pushed through a scheme to release some prisoners early, despite warnings it would make Labour look soft on crime.
As Home Secretary, she has driven through the toughest asylum rules in decades, prompting anger even from political rivals.
Moving Mahmood out of the Home Office could give Burnham room to soften some of her toughest reforms, such as the extended wait for permanent settlement or the tightened rules on asylum appeals, without confronting her directly over policies she has staked her reputation on.
But it may not mean those changes disappear altogether.
As one of the four great offices of state, the Treasury would still give Mahmood significant weight around the Cabinet table, and a direct stake in defending a record she built at real political cost.
Burnham’s full Cabinet is expected to be confirmed once he enters Downing Street next week.
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