Shabana Mahmood is emerging as the leading contender to become chancellor of the exchequer in Andy Burnham’s prospective cabinet, according to Westminster speculation hardening in recent days. The home secretary is understood to be highly regarded by figures in the prime minister-in-waiting’s camp, with sources indicating that her name has gained significant traction in discussions over who would take charge of the Treasury under a Burnham premiership.
A move to No 11 would create one of the most consequential vacancies in government, forcing Burnham to fill the Home Office at a time when the department is seen as a “hell of a job” requiring a particularly tough replacement. Helen MacNamara, the former deputy cabinet secretary, told the In The Room podcast that Westminster sources had pointed to John Healey — who resigned as defence secretary less than a month ago — as the frontrunner to succeed Mahmood at the Home Office. Those conversations, MacNamara said, had “very, very firmly” hardened in the past few days, alongside the growing expectation that the current chancellor, Rachel Reeves, would be moved on.
Why Mahmood is seen as a strong candidate for chancellor
Mahmood’s potential elevation to the Treasury is built on a combination of political standing, personal qualities and the demands of Burnham’s economic agenda. MacNamara described her as “clever, well-regarded, and tough enough” for the role, adding that the essential requirement for any chancellor is to “project massive amounts of confidence”. She noted that the next chancellor would have to make “really difficult decisions” and “carry some of the things that Andy Burnham has already signalled he’s going to do”.
Burnham set out his economic plan on 29 June, with a central focus on reducing welfare spending. That emphasis, MacNamara suggested, could strengthen the case for keeping the current work and pensions secretary, Pat McFadden, in his post rather than moving him to the Treasury — a scenario that would leave Mahmood as the natural candidate for chancellor. McFadden is described by MacNamara as a “widely respected, tough, old Labour/new Labour guy” who might be best deployed to lead a major welfare transformation. “If you’re Burnham, and you know that welfare needs this really big transformation, you might want to keep Pat McFadden in that role,” she said.
Mahmood’s own background adds weight to the speculation. She has served as home secretary since September 2025, and previously held the roles of secretary of state for justice and lord chancellor from July 2024 to September 2025. An MP for Birmingham Ladywood since 2010, she is associated with the Blue Labour faction. MacNamara acknowledged that moving her from the Home Office would be a risk — “she’s doing an amazing job” — but maintained that Mahmood would be “great as chancellor” precisely because of the combination of intellect, reputation and toughness she would bring to a Treasury facing difficult fiscal choices.
Healey in line for Home Office after dramatic resignation
The potential reshuffle is driven in part by the chain of events triggered by Healey’s resignation on 11 June. Healey quit as defence secretary after accusing Keir Starmer of failing to defend the country at a time of “rising threats”, and arguing that the Treasury had been “unwilling to commit the resources that the nation needs”. His resignation was widely seen as the final straw for an already weakened prime minister, with Starmer stepping down 11 days later on 22 June.
MacNamara said Healey’s exit “essentially got the ball rolling for Keir Starmer going”, and noted that if Mahmood became chancellor the Home Office would need someone “really tough”. Healey, she described as “a man everyone likes”. He has been the MP for Rawmarsh and Conisbrough (formerly Wentworth and Wentworth and Dearne) since 1997, served as defence secretary from July 2024 to June 2026, and previously held ministerial roles including economic secretary and financial secretary to the Treasury. His departure, along with that of armed forces minister Al Carns, was considered a major blow to Starmer’s authority.
Burnham, who has confirmed he will stand for the Labour leadership and is considered the frontrunner, has been an MP for Makerfield since June 2026, having previously served as mayor of Greater Manchester. Nominations for the leadership election open on 9 July and close on 16 July.
David Miliband rumoured for foreign secretary return
Alongside the Mahmood and Healey speculation, rumours have surfaced that David Miliband could be open to returning to Labour as foreign secretary. Cleo Watson, a former No 10 special adviser and co-host of In The Room, said she had heard that Miliband might be willing to serve under Burnham. She speculated that he could be made a lord in order to take the role, echoing the way David Cameron was brought back into government by Rishi Sunak. “It could be a move from Burnham of, ‘He’s an old mucker of mine, I just want to give him this brief, and I can crack on,’” Watson said.
Miliband, who served as foreign secretary from 2007 to 2010 and was MP for South Shields from 2001 to 2013, was questioned about the prospect during a panel for the Institute for Government. “Let him make his choices. We should give him the space to form his government,” he said. MacNamara called the rumour “really heartening”, adding that it appeared Burnham was “drawing on the actual storied, star ranks that the Labour Party has at its disposal”. She contrasted this with the Starmer government, which she said “had a really good team of people, and they just didn’t really use them”.
