Rachel Reeves has warned the incoming prime minister, Andy Burnham, that he needs to be properly prepared to govern when he arrives in Downing Street in a little more than a week.
Speaking exclusively to the BBC in what is likely to be her last major interview as chancellor, Reeves told Laura Kuenssberg that “it is important that when Andy walks through that door he has a worked-through plan, because governing is hard in Britain, and lots of challenges and shocks will come his way”.
She said Burnham and his team coming into Downing Street must be “really clear about what they want to achieve”, and that “he needs to stay laser-focused on those things that have always motivated him, have always driven him”.
Asked why Sir Keir Starmer’s time in office was coming to an end, she said: “People are impatient for change – I’m impatient for change and I totally get that people want to see their lives changed faster.”
We sat down in one of the lavish 17th Century state rooms upstairs in No 11 Downing Street – exactly the same room where she gave her first full interview as chancellor in July 2024.
She would never have suspected then that she and her next-door neighbour would be moving out just 24 months later. Reeves wouldn’t explicitly say who should be the next chancellor, or even if she would like to stay.
She has always told us that being chancellor is her “dream job”. She and her team clearly do not expect to stay in No 11, but with the incoming No 10 team tight-lipped about its cast list, we just don’t know.
Reeves said that she had returned “stability and trust” to the economy over the past two years, and that “Andy will take over an economy that is much stronger than the one I inherited from the Conservatives just two years ago.”
In the interview, Reeves wanted to focus on what she described as the “big picture” – government borrowing costs that have gone down, inflation way down from its peak, increased investment in infrastructure like roads and railways, and the economy growing faster than the UK’s nearest competitors.
But by other measures, there are still big problems in the economy. Inflation is still above target and is expected to rise, growth has been slow, and just this week, the Bank of England warned that interest rates might have to go up again.
The country’s debts are due to be higher at the end of this parliament than they were when Labour moved in. And more than anything else, firms and families’ spending power is still under pressure, with the latest ONS figures showing disposable income falling.
One former senior minister told me Reeves had “spent a lot of time and energy painting a picture of her grim inheritance in the expectation things would brighten up quickly and she could claim credit”.
“By the time she found that things were different, with tight public finances, mushrooming welfare, and the economy stuck in a low-growth trap, she had used up all her political capital and was unable to win the big arguments on welfare reform,” they said.
“It’s all actually sad because I think her instincts are generally OK, but by the time she figured out the right things to do, it was too late”.
A close political ally of Starmer, Reeves became shadow chancellor in 2021 as Labour campaigned to return to power, resulting in their landslide victory two years ago.
Many Labour MPs believe mistakes made in No 11 soured the prospects for Starmer’s government soon after he and Reeves moved into Downing Street. Starmer himself has pointed to the decision to take away the winter fuel allowance from millions of pensioners, later partly reversed, as being one of the government’s errors.
A senior Labour figure told me: “She’d underestimated the desire for radical change, and lacked political nous on key decisions like winter fuel.”
Reeves however, would not acknowledge this had been a specific problem, and was eager to highlight the progress she believed the economy has made on her watch. Nor was she in the mood to admit that her relationship with business had worsened after she hiked National Insurance tax for employers.
One City source told me the increasing costs for business had an immediate effect, and led to them laying off staff. “There was so much goodwill, but it was genuinely staggering – it just went in a few weeks,” they said.
Image source, House of Commons/UK Parliament/PA WireReeves credited her decisions as the first female chancellor with creating a “rock of stability and trust”, but acknowledged there had been tough moments in office.
She said the worst had been when she was seen in tears in the House of Commons during a session of Prime Minister’s Questions in July last year. Reeves said: “Don’t cry on national television. That was probably my toughest moment, or perhaps even tougher, seeing the photos of me crying on national television on the front page of pretty much every newspaper the following day.”
Asked if she was disappointed that Burnham has been planning his time as PM for a year, as a Labour MP admitted this week, she said: “I think it is perfectly reasonable for people to have ambition. Andy has never shied away from the fact that he wanted at some point to lead the Labour Party. And I want him to be ready for that, because I want it to be a success and I am sure he will be.”
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