The City, that nervous hummingbird of capital, is already fluttering its wings in anticipatory dread. Word from Labour’s backrooms carries the scent of a palace coup: Andy Burnham, the knight of the North, the man who made devolution his religion, is being lined up to replace the impeccably suited Rachel Reeves as Chancellor of the Exchequer. If the polls are to be believed, and if Sir Keir Starmer’s disciplined smile holds, we are about to witness the most dramatic reorientation of fiscal orthodoxy since Denis Healey’s IMF loan.
Let us not mince words. This is a declaration of war on the Treasury’s ancient regime. Reeves, with her Blairite pedigree and her stern talk of fiscal responsibility, was supposed to be the safe pair of hands, the woman who would assure the bond markets that Labour had abandoned its socialist fixations. But Starmer, ever the Machiavellian, has apparently decided that a safe pair of hands is not enough. He wants a pair of hands that can build a new cathedral out of the rubble of austerity.
Burnham is not a chancellor. He is a movement. His entire career has been a performance of northern grievance, a morality play against the technocratic consensus that has ruled Britain since the 1990s. He opposed tuition fees. He opposed foundation hospitals. He opposed the Iraq War. He is the ghost of Old Labour, haunting the shiny new building of Starmer’s moderation. And now he is being offered the keys to the kingdom.
The City’s reaction is predictable: a mixture of horror and fascination. The pound will wobble. Gilts will tremble. Analysts will produce stern papers on “fiscal credibility” and “market discipline.” But they miss the point. Burnham’s appointment is not an economic decision. It is a cultural one. It signals that Labour intends to govern not from the City’s boardrooms but from the cobbled streets of Wigan and the rain-swept precincts of Manchester. It is a bet that the electorate, tired of decades of managed decline, wants a chancellor who will break things.
What would a Burnham chancellorship actually mean? First, expect a dramatic rebalancing of fiscal power. The Treasury’s hallowed fiscal rules, the golden goose of orthodoxy, will be rewritten. Borrowing for infrastructure will become the norm, not the exception. A National Investment Bank will be established, staffed by people who have never worn a pinstripe suit. The Barnett formula will be torched. And the City’s vaunted independence will be curbed with new regulations on bonuses and lending.
Second, prepare for a war with the Bank of England. Burnham has made no secret of his belief that monetary policy has been too tight, strangling investment. He will demand lower interest rates, quantitative easing for the real economy, and a mandate to target employment as well as inflation. The Governor will resist. The Governor will lose.
Third, and most crucially, there will be a redistribution of wealth so naked it would make Robin Hood blush. Higher taxes on the rich. A windfall tax on energy companies. Freezing the triple lock on pensions. Universal basic services. Burnham talks of a “new settlement” between capital and labour. What he means is that capital will pay for the sins of the last forty years.
The risk? It is immense. Capital flight. A sterling crisis. The same sort of reckoning that brought down Truss and Kwarteng, albeit from the Left. But Burnham is no gambler. He is a strategist. He knows that the moment he becomes chancellor, he will be the most powerful man in Britain, answerable only to a prime minister who owes him everything.
And so the stage is set for the greatest drama of the decade. A Labour government, led by a cautious lawyer, but with a fire-breathing apostle of the North at the Treasury. The City braces itself. But it should also brace itself for something more profound: the end of an era. The era of the subdued, sophisticated, City-pleasing chancellor is over. In its place, we have the return of the Red Prince, ready to seize the throne.
Welcome to the Burnham era. It will not be boring.
