Ed Miliband is reportedly ignoring calls from Sir Keir Starmer as the Energy Secretary prepares to defy his boss and throw his weight behind Andy Burnham in a mounting leadership crisis that threatens to tear apart the Government.
Miliband at odds with Starmer over defence cuts
Over the past week, Mr Miliband and Sir Keir are understood to have clashed over proposals to cut the former leader’s Net Zero budget in order to funnel more money into defence. According to The Times, the Energy Secretary has been accused of declining his boss’s telephone calls while the pair remain at an impasse on the spiralling funding dispute. A source close to Mr Miliband denied the claim and insisted the two men did eventually speak, with the Energy Secretary ultimately accepting a one per cent reduction to his department’s green spending.
Despite that compromise, Mr Miliband remains on Downing Street’s “resignation watch”, a sign of the deep mistrust between the two camps. Labour officials were said to have been “blindsided” last Thursday when Defence Secretary John Healey resigned from the Ministry of Defence, citing the Government’s unwillingness to devote sufficient resources to the military. Healey’s departure — which came amid rising global threats from the war in Iran and Russia’s invasion of Ukraine — further undermined Sir Keir’s authority and exposed a rift between the Treasury and the MoD over the adequacy of the Defence Investment Plan.
Party insiders note that Mr Miliband and the Mayor of Greater Manchester, Andy Burnham, have been close colleagues for more than a decade, long before Mr Miliband led the Labour Party, and that they continue to speak on a regular basis. The Doncaster North MP has already chipped in with economic guidance, suggesting that Burnham should obey Whitehall’s fiscal rules in order to calm the bond markets. “Ed is clearly working on the basis of that is what he wants — to be Chancellor — and that’s what he is assuming he will get,” a close ally of Mr Burnham said.
That prospect has alarmed allies of the current Chancellor, Rachel Reeves. Facing the possibility of packing her bags and leaving No11, supporters of the Leeds West and Pudsey MP have rallied behind her, insisting she must not be removed if the Prime Minister is forced out. They warned that switching the Chancellor could risk “spooking” the markets, adding to the investor unease that has already seen sterling trade with a higher risk premium as traders factor in a possible loosening of fiscal discipline under a Burnham premiership.
Burnham’s return and the challenge to No10
With the Makerfield by-election just a day away, political tensions are brewing behind the door of No10 as Sir Keir attempts to head off a mounting coup should Mr Burnham be victorious. The Mayor of Greater Manchester, often referred to as the “King of the North”, has already admitted he would seek to replace Sir Keir upon his return to Westminster. He is now said to be planning to issue the Prime Minister a final ultimatum: set out a timetable for his departure or face the wrath of a sudden revolt within the party. However, sources say Mr Burnham will not tell Sir Keir to resign on the spot.
Wes Streeting, the former Health Secretary who resigned from the cabinet criticising Sir Keir’s leadership, has already told the embattled Prime Minister to establish a timetable for his own departure. “When the results from Makerfield are in, I hope the Prime Minister will, at that stage, reflect on his own position and set out a timetable,” Streeting told reporters yesterday, adding that it was time to conclude the “drift and uncertainty” of Labour’s leadership.
A Burnham victory would have profound consequences. As MP for Makerfield, he would immediately become a contender for the leadership under party rules requiring a challenger to secure the nominations of 20 per cent of Labour MPs — currently 81 members. Polling consistently places him as the top choice among Labour supporters. His policy platform, including a proposal to halve VAT on hospitality to 10 per cent to align with European rates — a move welcomed by industry leaders — signals a potential shift in tax and spending priorities.
Yet his past advocacy for higher public spending and nationalisation has caused unease among investors, who fear a widening budget deficit and a possible market sell-off. Rachel Reeves, who became the first woman to serve as Chancellor in July 2024, has vowed to lead a “pro-growth” Treasury built on strong fiscal discipline and modern supply-side economics. If Burnham were to become Prime Minister and install Mr Miliband as Chancellor — as many expect — the markets would face the prospect of a dramatically different economic approach. Allies of Reeves have warned that removing her could trigger a loss of confidence, compounding the volatility already priced into UK assets.
John Healey’s resignation on 11 June — a direct consequence of the defence spending dispute — has only deepened the sense of crisis. The former Defence Secretary argued that the Government’s investment plan was insufficient given the threat environment, a position that strained Sir Keir’s relationship with the Treasury. With Mr Miliband also pushing back against cuts to his Net Zero budget, Sir Keir is reportedly considering scaling back the 2030 electric vehicle sales target from 80 per cent to 50 per cent to free up funds for defence, a move that would overrule the Energy Secretary’s green agenda.
Makerfield: the by-election that could reshape Labour
Voters in Makerfield will go to the polls on 18 June in a by-election triggered by the resignation of Labour MP Josh Simons, who stepped down specifically to allow Andy Burnham to stand for the seat and re-enter Parliament — a rare manoeuvre that underscores the high stakes. The constituency is traditionally a safe Labour seat, but recent local elections in the Wigan area have seen Reform UK make significant gains, indicating a potential shift in voter sentiment. A wide field of 14 candidates is standing, including Robert Kenyon for Reform UK, Michael Winstanley for the Conservatives, and Jake Austin for the Liberal Democrats.
Mr Burnham has framed his candidacy as an opportunity to bring change to Labour and focus on areas often overlooked by Westminster. The outcome is widely seen as a potential turning point that could determine the next Prime Minister. By mid-May, more than 95 Labour MPs had already called for Sir Keir’s resignation or a timetable for his departure, and his popularity has declined sharply, drawing comparisons to Liz Truss. While Angela Rayner has also been mentioned as a potential contender, Mr Burnham and Mr Streeting remain the most prominent figures in the current discussions, with some reports suggesting Streeting’s organisers have indicated he might withdraw if Burnham wins.
Voters will head to the polls tomorrow.
