New Prime Minister, Andy Burnham, has appointed John Healey as chancellor, replacing Rachel Reeves.
Commentators had predicted Shabana Mahmood as the front runner for the job, with Ed Miliband a close second.
Healey was elected to Parliament as MP for Wentworth in the 1997 general election and later held ministerial posts, including housing and local government. He was economic secretary and financial secretary to the Treasury from 2002 to 2007 under Gordon Brown, and minister of state for housing from 2009 to 2010. He returned to the shadow cabinet as shadow secretary of state for housing under Jeremy Corbyn.
In Andy Burnham's new cabinet, Angela Rayner returns to her former role as housing secretary, while Matthew Pennycook remains minister of state at the Ministry of Housing, Communities and Local Government.
Richard Carter, head of fixed interest research at Quilter Cheviot, commented: “Following his coronation as Labour leader, and now in the hot seat as Prime Minister, Andy Burnham has opted for what is arguably a safe pair of hands for chancellor in John Healey. Shabana Mahmood was deemed the favourite, but Healey brings Treasury experience and is a sign that Burnham will respect the bond markets as a check on his radicalism, rather than plough ahead with significant changes that could unsettle the fiscal position. This is important after his comments on the flexibility available within the fiscal rules.
“Burnham has made it clear he will take an interest in Treasury matters so will want to be able to steer the direction of economic policy and see less resistance for what could still end up being a fairly radical agenda. Indeed, Burnham will need a pliant chancellor if he is to drive through the change that voters are desperate for, yet whether that is Healey remains to be seen, especially given his departure from Starmer’s government. Healey’s previous Treasury experience should keep bond markets calm for now, while the spectre of Liz Truss and the lettuce continue to play in the minds of politicians terrified of a repeat. Keeping up appearances between the two will be crucial if Labour is to stand any chance of recovering in the polls.
“What Burnham and Healey need to continue focus on is growth. Burnham has said he wants ‘good growth’ in all areas of the country, although at this stage the nation is crying out for any kind of sustained economic growth. Healey has been supportive of additional borrowing ringfenced for defence spending, but data out later this week will likely paint a difficult picture of the challenges facing this new government. Borrowing and spending has soared, employment remains weak and inflation sits above target – the Office for National Statistics will confirm all three remain the case later this week.
“Without a change to the fiscal rules, which in itself would be a difficult sell to markets, the options are limited for Burnham and Healey. Spending cuts are unlikely to feature in a Burnham premiership, which means tax rises will be back on the table when the Budget comes along in the autumn. We have seen the damage such speculation and policy can have on business confidence and thus the UK economy, so that period will need to be carefully managed. Burnham is in his honeymoon period for now, but by the Autumn he may just find the problems that brought down Keir Starmer have failed to disappear.”
Maria Harris, chair of the Open Property Data Association (OPDA), said: "Angela Rayner’s return to the housing brief should be welcomed across the sector. She has a strong understanding of the challenges facing the housing market, a genuine passion for housing policy, and had already begun building constructive relationships with industry stakeholders before leaving the role. That existing knowledge and engagement should allow her to hit the ground running.
"At a time when the housing market needs confidence and certainty, the priority must be stability and continuity. The industry now needs to see the government follow through on its commitments to modernise the homebuying process through Smart Data and wider digital transformation.
"With a second chance at the role she was clearly committed to, and with first-hand experience of how complex property transactions can be, Angela Rayner has the opportunity to bring compassion and a personal touch. With the recent MHCLG roadmap announcement, she can build on the foundations already laid and help deliver reforms that will benefit consumers, businesses, and the wider economy. We look forward to working with her and her team to ensure these commitments are delivered with the full support, collaboration and technical expertise of our industry and that the modernisation of the homebuying process remains a government priority."
Nathan Emerson, CEO of Propertymark, added: “Propertymark looks forward to working with Angela Rayner as she returns to her former role as housing secretary. Housing must remain at the centre of the political agenda to deliver much-needed progress.
“With an already demanding programme of new legislation to implement across the sector, alongside the significant challenge of delivering the key manifesto pledge to build 1.5 million new homes across England, the urgency of meeting future housing demand has never been greater.
“Further priorities should include the ongoing reform of the home buying and selling process, as well as making long-overdue progression towards a comprehensive regulatory framework for property agents."
