‘Bizarre choice’: business and Labour puzzle over Shabana Mahmood as future chancellor

 

‘Bizarre choice’: business and Labour puzzle over Shabana Mahmood as future chancellor

 

The home secretary, favourite to take over at No 11, has minimal economic credentials and many MPs would prefer Ed Miliband

 

Jasper Jolly, Richard Partington and Heather Stewart

Thu 16 Jul 2026 19.00 BST

https://www.theguardian.com/politics/2026/jul/16/shabana-mahmood-future-chancellor

 

Andy Burnham last month promised the UK he would bring “good growth in every postcode and hope in every heart” when he is installed as prime minister. Britain’s industry leaders also have a hope in their hearts: that Burnham will install a pro-business chancellor.

 

The energy secretary, Ed Miliband, was for several weeks seen as the most likely candidate to succeed Rachel Reeves but, after a brutal briefing battle and a backlash from big business, the home secretary, Shabana Mahmood, appears to have emerged as the frontrunner. Now businesses are scrambling to try to work out how she might run the economy if confirmed in the Treasury on Monday.

 

The emergence of Mahmood has reassured some bosses, several of whom privately said they were concerned about Miliband’s reputation as being more left-leaning, as well as his strong backing for Britain’s net zero ambitions. Miliband has held firm on the UK’s decarbonisation targets as other countries have rowed back.

 

The targets are seen by climate scientists and the government’s Climate Change Committee as a crucial contribution to preventing damaging global heating but Burnham has nevertheless come under pressure to ditch them by people who claim they hinder job creation and threaten Britain’s struggling industrial base.

 

“I suspect there is relief,” said a public affairs boss at a large British manufacturer who is in the latter camp. “I can’t see how it would work” with Miliband at the Treasury because of his “personal ambitions in terms of net zero”, the boss said.

 

Yet few business leaders have dealt with Mahmood directly because of her lack of experience in any economic or business-facing departments. Mahmood is an “unknown quantity” for businesses, said another insider at a FTSE 250 company.

 

One exception to that is the security industry that runs much of the UK’s immigration and justice system. One industry insider described her as a “straight talker, reads her briefs and well respected by officials”. The sector is hoping that her exposure to the realities of the UK’s security situation might make her more likely than Reeves to increase funding.

 

A senior lobbyist said that Mahmood “probably wouldn’t be the worst but I’d like someone who’s more dynamic and more into business”, given the importance of the chancellor in setting the conditions for UK firms. The Home Office has reported no meetings between Mahmood and individual businesses during her tenure.

 

The chancellor should not be chosen “just to give people jobs and move people around” for Labour’s political management purposes, the lobbyist added.

 

Reeves got into various scraps with business early in her two years as chancellor, most notably over the heavily criticised decision to raise employers’ national insurance contributions by £25bn. Business leaders – keen to avoid a repeat – have expressed frustration over how to approach Burnham amid hurried preparations for him to replace Starmer.

 

One senior corporate affairs adviser to FTSE 100 companies said it remained unclear, just days before Burnham’s installation in No 10, who would form the core of Burnham’s backroom team beyond James Purnell, the former Labour cabinet minister and ex-City adviser appointed as his chief of staff.

 

Those seeking an introduction say there were effectively three separate teams revolving around Burnham: his cadre of advisers as Greater Manchester mayor, the campaign team for the Makerfield byelection, and a discreet group operating behind the scenes planning for him to become prime minister. However, ahead of his elevation to Downing Street the circle around him is shifting and narrowing.

 

Several advisers on economic policy from earlier in the process – including the former local government minister Miatta Fahnbulleh – are not expected to remain part of his team. Fahnbulleh could however remain in the frame for a ministerial position. Richard Hughes, the former chair of the Office for Budget Responsibility, is not expected to take a formal position. Jim O’Neill, the former Goldman Sachs chief economist, and Andy Haldane, the former Bank of England chief economist, are also unlikely to have formal roles.

 

Some people believe the choice of candidate could still change. Figures close to Miliband warned the elevation of Mahmood would be “disaster” for Burnham because she lacked a serious background in economic policy and largely did not share his political vision as an MP from the right of the party.

 

“[She] would be a disastrous choice,” said one senior Labour figure who had been pushing for Miliband to get the job. “No economic background or clear ideas on how we turn the economy around. Stakes are too high. Big mistake if this is where it’s headed.”

 

Others suggested Mahmood’s appointment had not yet been “firmed up” and urged Burnham to pick a figure such as Yvette Cooper, the foreign secretary, as a compromise should he overlook Miliband for the role. Several economists and thinktankers in Labour’s orbit also questioned whether Mahmood was aligned with Burnham’s policy priorities.

 

“I would understand Yvette or even Wes. But Shabana is a bizarre choice. She’s more divisive than Ed, presents controversial policy as a fait accompli in contrast to how Andy wants to work, is a natural centraliser, and has no economic credentials or vision – risking Treasury capture and market credibility.”

 

Yet the pound rallied on reports that Mahmood had beaten Milband to No 11, while government borrowing costs dipped as markets assumed less radical policies or less high levels of borrowing.

 

One adviser on economic policy close to Burnham said Mahmood could have been picked to send a signal to centrist Labour MPs and those from its “Blue Labour” grouping, who are pushing for the party to appeal to traditional working-class voters by taking a hardline stance on immigration while taking a leftwing stance on industrial policy.

 

One disappointed Burnham ally said: “It’s a litmus test: if you’re serious about rolling back 40 years of neoliberalism and you want someone who’s intellectually in tune with that and capable of doing it, Ed’s your candidate.”

 

They speculated that the move was driven by fear of setting up an alternative power base in No 11. “He’s not going to be a supplicant next door,” they said of the current energy secretary.