Outgoing Chancellor Rachel Reeves has issued a direct warning to incoming Prime Minister Andy Burnham, stressing the critical need for a “worked-through plan” to govern effectively. Speaking exclusively to the BBC’s Laura Kuenssberg in what is anticipated to be her final major interview as Chancellor, Reeves emphasized that governing Britain is inherently difficult and fraught with challenges.
Reeves, who is expected to depart No 11 Downing Street in just over a week alongside outgoing Prime Minister Sir Keir Starmer, urged Burnham and his team to be “really clear about what they want to achieve.” She advised him to “stay laser-focused on those things that have always motivated him, have always driven him” as he prepares to enter Downing Street.
Reflecting on Sir Keir Starmer’s impending departure, Reeves acknowledged public sentiment, stating, “People are impatient for change – I’m impatient for change and I totally get that people want to see their lives changed faster.” She also expressed her personal ambition, reiterating that being Chancellor has always been her “dream job.” The interview took place in one of the lavish 17th Century state rooms upstairs in No 11, the same room where she gave her first full interview as chancellor in July 2024.
During her two years in office, Reeves claimed to have restored “stability and trust” to the economy. She asserted that Andy Burnham would inherit an economy “much stronger than the one I inherited from the Conservatives just two years ago.” Reeves highlighted key economic improvements, including reduced government borrowing costs, a significant drop in inflation from its peak, increased investment in infrastructure like roads and railways, and an economy growing faster than the UK’s closest competitors.
However, the economic landscape still presents significant hurdles. Inflation remains above target and is projected to rise, while growth has been sluggish. Just this week, the Bank of England cautioned that interest rates might need to increase again.
Reeves’ tenure has also faced criticism. One former senior minister suggested she “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.” This source added that by the time she realized the reality of “tight public finances, mushrooming welfare, and the economy stuck in a low-growth trap,” she had exhausted her political capital, hindering her ability to win key arguments on welfare reform.
Another senior Labour figure criticized Reeves for underestimating “the desire for radical change” and lacking “political nous on key decisions like winter fuel.” Sir Keir Starmer himself previously identified the decision to remove the winter fuel allowance from millions of pensioners, later partially reversed, as a significant government error. Reeves, however, did not acknowledge this as a specific problem, nor did she concede that her relationship with businesses had deteriorated after increasing National Insurance tax for employers. A City source confirmed the immediate negative impact, noting that “goodwill… just went in a few weeks” due to increasing costs leading to staff layoffs.
Despite the challenges, Reeves, a close political ally of Starmer who became shadow chancellor in 2021 before Labour’s landslide victory two years ago, credited her decisions as the first female chancellor with establishing a “rock of stability and trust.” She did, however, recall a particularly tough moment when she was seen crying in the House of Commons during Prime Minister’s Questions in July last year. “Don’t cry on national television,” she reflected, describing seeing photos of herself crying on newspaper front pages the next day as “probably my toughest moment, or perhaps even tougher.”
Addressing reports that Burnham has been planning his time as Prime Minister for a year, a fact admitted by a Labour MP this week, Reeves stated, “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.” She concluded by reiterating her support, saying, “And I want him to be ready for that, because I want it to be a success and I am sure he will be.”
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.
