Shabana Mahmood, the home secretary, has emerged as the frontrunner to become chancellor under Prime Minister Andy Burnham, according to Labour insiders and business leaders. However, her lack of economic experience has sparked debate, with some questioning whether she is aligned with Burnham's policy priorities.
Business reaction to Mahmood's potential appointment
Business leaders are scrambling to assess how Mahmood might run the economy if confirmed at the Treasury on Monday. While some express relief that Ed Miliband, the energy secretary, may not take the role, others describe Mahmood as an "unknown quantity." A public affairs boss at a large British manufacturer said, "I suspect there is relief. I can't see how it would work with Miliband at the Treasury because of his personal ambitions in terms of net zero."
Few business leaders have dealt with Mahmood directly due to her lack of experience in economic or business-facing departments. However, a security industry insider described her as a "straight talker, reads her briefs and well respected by officials." The Home Office reported no meetings between Mahmood and individual businesses during her tenure.
Miliband vs. Mahmood: The policy divide
Ed Miliband, seen as the most likely candidate for weeks, faced a backlash from big business due to his strong backing for net zero targets. These targets are seen by climate scientists as crucial for preventing damaging global heating, but critics claim they hinder job creation and threaten Britain's industrial base. Burnham has come under pressure to ditch them.
A senior lobbyist said Mahmood "probably wouldn't be the worst but I'd like someone who's more dynamic and more into business." The lobbyist added that the chancellor should not be chosen "just to give people jobs and move people around" for Labour's political management purposes.
Internal Labour divisions
Some Labour insiders question whether Mahmood is aligned with Burnham's policy priorities. One senior Labour figure pushing for Miliband said, "She would be a disastrous choice. No economic background or clear ideas on how we turn the economy around." Others suggested Yvette Cooper, the foreign secretary, as a compromise candidate. One economist in Labour's orbit called Mahmood a "bizarre choice" and noted she is "more divisive than Ed."
However, markets reacted positively to reports of Mahmood's likely appointment, with the pound rallying and government borrowing costs dipping, as investors assumed less radical policies or lower borrowing levels.
Burnham's transition team
As Burnham prepares to replace Starmer, his backroom team remains unclear beyond James Purnell, the former Labour cabinet minister appointed as chief of staff. Several economic advisers, including Miatta Fahnbulleh and Richard Hughes, are not expected to remain in his team. Some believe the choice of chancellor could still change, with figures close to Miliband warning his elevation would be a "disaster" for Burnham.
