Chancellor of the Exchequer Rachel Reeves has had a tumultuous two years in the job, with the economy suffering under her watch. But according to political editor Martyn Brown, things could get a whole lot worse when incoming Prime Minister Andy Burnham decides upon her successor. Burnham is expected to announce within days who will get the keys to the Treasury, effectively deciding the financial future of the nation.
Who Could Be the Next Chancellor?
Red Ed Miliband is the bookies' favourite for the job, while former Health Secretary and one-time leadership rival Wes Streeting is another potential candidate. Pat McFadden, regarded as the wise old owl of Sir Keir Starmer’s current Cabinet, is also in the running. But can any of them do a better job than Reeves, the first ever woman to become Chancellor?
Reeves' Record: A Catalogue of Controversies
Within weeks of entering government, Reeves set the tone for her Chancellorship by snatching the Winter Fuel payment away from almost 10 million pensioners in a political catastrophe. The decision triggered an immediate groundswell of anger. A massive U-turn some 10 months later, largely thanks to campaigning by the Express, did little to assuage the feeling that she wasn’t up to the job. The political damage will linger for years to come.
Less than three months after the winter fuel debacle, Reeves delivered a double hammerblow in her first Budget in October 2024. First, she decided to clobber farmers with a punishing ‘Family Farms Tax’ by hiking the Inheritance Tax threshold. This prompted high profile demonstrations backed by celebrities including Jeremy Clarkson. She also chose to ramp up National Insurance contributions for employers, the effects of which are still being felt by firms across the country.
Economic Indicators Under Reeves
Inflation was at 2.2% — very close to the Bank of England target — when Labour took over from the Tories in July 2024. It’s now 2.8%, having hit 3.8% last summer. In the same period, unemployment has gone up from 4.1% to 4.9%, while government borrowing has surged above 5%. Overall, the economy has largely flatlined in the past two years, albeit fighting against significant global headwinds of two wars and Donald Trump’s tariffs chaos.
Burnham's Tax Plans: A £38 Billion Blitz?
So what will a Burnham government do to reignite the UK’s economic fortunes? Unleash a £38 billion tax blitz, according to Nigel Farage's Reform UK. Farage's party has conducted a report into the prime minister-in-waiting's pledges which claims he would bring Labour's total increase in taxation from about £66 billion to more than £100 billion a year. This includes promises of a "care levy" of up to 10 per cent of the value of estates after death, reforming the rates of capital gains tax (CGT), and imposing National Insurance on landlords' rental income.
Implementing a torrent of new taxes not mentioned in Labour's 2024 manifesto will increase pressure on Burnham to call an early election. He is due to be elected unopposed as Labour leader and prime minister on Friday. The UK already has its highest tax burden on record, following Reeves' multiple raids.
Market Jitters Over a Left-Wing Chancellor
Burnham has declined to set out detailed tax plans ahead of his first Budget, but has pledged to remain within Labour's fiscal rules, which require debt to be falling as a percentage of GDP. But there would be jitters if he appoints Miliband, the Energy Secretary, as his Chancellor next week. City bosses and ultra-high-net-worth individuals have warned that a Left-wing Chancellor would reduce market confidence in his government. Six more days until we find out.
