John Healey is the UK’s chancellor: what Burnham’s surprise pick says about his style of government

The UK’s new prime minister, Andy Burnham, has appointed John Healey as chancellor of the exchequer. His pick to fill the UK’s top economic post was something of a surprise: if we were to believe the speculation, the choice was between a minister with strong views on the economy – Ed Miliband – and a pragmatist with solid managerial credentials – Shabana Mahmood.

Healey, however, is an MP with cabinet experience – and more of a pragmatist like Mahmood than an ideologue like Miliband.

The role of chancellor is one of the most consequential government posts in terms of policy. This is especially true in single-party majority governments like Labour’s. Here the finance minister controls the budget, in contrast to the coalition agreements that are typically agreed between parties in multiparty governments.

But in the UK, the chancellor is given the power to steer the government’s economic policy in the drafting of the budget. They also have almost-exclusive control of tax policy. By convention, the chancellor will not disclose or discuss his or her policy intentions prior to budget day to avoid being lobbied.

Their role is to maintain fiscal restraint – in other words, to keep a tight grip on spending and debt – and resist calls by various secretaries to increase spending in their departments. Perhaps Healey’s appointment to the chancellery is particularly surprising since he himself stood down as defence secretary because he felt the Treasury would not give his department the funding it needed.

Ideology and loyalty

In my book, Ideologues, Partisans, and Loyalists: Ministers and Policymaking in Parliamentary Cabinets, I show that cabinet ministers who are appointed for their managerial credentials rather than their policy views are more likely to be loyal to the prime minister. Ideologues are more likely to push for their ideal policies, at the risk of government instability.

Healey was not the person many expected to be Burnham’s pick for chancellor. In the days leading up to the new prime minister’s coronation and cabinet appointments, Mahmood appeared to be the frontrunner. Instead, she continues as home secretary.

In some ways even less is known, economically speaking, about Healey than about Mahmood. She at least is known to have shared many of Burnham’s progressive policy ideas, as she called for a higher top rate of income tax back in 2014.

Keeping Mahmood as home secretary is in many respects a mature decision – she has been very effective in the role. But it is disappointing that Burnham did not replace Rachel Reeves in Number 11 with another woman.

Mahmood would have been only the second woman chancellor of the exchequer in the UK’s history. I have been involved in research on finance ministers across 50 democracies, and according to our data, only around 15% are women.

Women finance ministers can have important differences from their male counterparts. While both men and women come to the role primarily from bureaucracy, higher education and the legal sectors, men are significantly more likely to come from the corporate and banking sectors. Women, on the other hand, are more likely to be drawn from international organisations such as the World Bank.

And if he had chosen Miliband as his chancellor, Burnham would have had a close ally in terms of policy priorities. But the new prime minister has had to strike a balance between ideals and reality. The fact is that he is not free to choose whoever he wants for chancellor – the markets watch the government closely and are looking for appointments that signal economic credibility.

The markets have certainly been watching this appointment extremely closely. In fact, after Healey’s appointment, shares in Britain’s biggest defence companies saw a £4 billion boost amid expectations that he will sign off on higher defence spending.

Unlike the more ideological Miliband, known for his strong and at times divisive views on energy policy, Healey can be described as a more “managerial” choice.

Healey worked as a journalist and a campaign manager before his election to parliament in 1997, so lacks professional experience in finance or economics outside government. But he is known for his effectiveness as defence secretary and has policy experience through junior appointments in the Treasury under Tony Blair.

Cabinet ministers who are not policy experts in their department are seen as easier to control compared to those, like Rishi Sunak for example, who come in with policy expertise.

If Healey is more of a loyalist appointment, he ticks a number of boxes for Burnham. He is likely to be easier to work with, for a start.

But despite this considerable time in the Treasury, very little is known about his views on the economy, and more generally about his economic outlook. Observers will be watching closely for clues as he enters 11 Downing Street.