Andy Burnham has made the surprise appointment of John Healey as his chancellor, as he ruthlessly purged the cabinet after entering Downing Street, promising a “circuit-breaker” moment for Britain.
It follows weeks of speculation that Mr Burnham was planning to give the job to Ed Miliband or Shabana Mahmood, but there were fears either choice would be divisive within the Labour Party. Mr Miliband will instead be foreign secretary and Ms Mahmood will remain as home secretary.
In a post on X, Ms Mahmood said she would continue with immigration reform. “It is an honour to remain as home secretary in Andy Burnham’s cabinet. I may be biased, but it’s the best job in the business,” she said.
Louise Haigh, who managed Mr Burnham’s Makerfield campaign, will be first secretary of state, chancellor of the Duchy of Lancaster and minister for the Cabinet Office.
Mr Healey, who resigned from Sir Keir Starmer's government in a row over defence spending, gained respect in the party after a strong run as defence secretary – and his appointment shows Mr Burnham's commitment to bolstering Britain's military capabilities.
Meanwhile, Angela Rayner has returned to her role as housing secretary, after being forced to resign over her tax affairs last September, while former health secretary Wes Streeting has taken the demanding defence role.
Mr Burnham used his first speech as prime minister to vow to end decades of failure by eradicating rough sleeping and overhauling social care, promising his arrival in Downing Street will be a “circuit-breaker” moment for Britain.
After meeting King Charles at Buckingham Palace, the new PM admitted politicians “needed to raise their game” and be better, insisting he would “make Britain believe and hope again” by winning over fed-up voters.
He reiterated his promise to move power outside of Westminster and said he would set out a 10-year plan later this year, adding: “Britain needs to show the world that we can regain our stability once again.”
In a sign of change, he purged Starmer loyalists including former chancellor Rachel Reeves and deputy PM David Lammy.
In a short speech delivered without a lectern, Mr Burnham said: “I am acutely conscious that I am the sixth person in the last 10 years to walk up this street, the seventh prime minister since 2016, making this a moment for reflection and new resolution.
“It requires my generation of politicians to raise our game and rise to the new challenge.”
In his first promise as prime minister, he said he would “end rough sleeping in our country”, having visited the homelessness charity The Passage in London’s Victoria earlier on Monday.
He also declared he would reduce Britain’s welfare bill by helping more young people into work, building more council homes and creating what he described as a “preventative state”, investing in people’s success rather than paying for failure.
This, he said, “is the fair and sustainable way to bring the welfare bill down, to meet our fiscal rules, and to honour our commitments on defence to our international partners”.
He made it clear that his first priority would be to tackle the cost of living crisis, teasing an announcement in the next 24 hours to address issues such as bus fare or rent freezes, or a reduction in energy bills.
Earlier, Sir Keir gave his goodbye speech in Downing Street before visiting Buckingham Palace.
He said he had offered Mr Burnham his “full support” and he was leaving “with good grace and a smile”.
However, some of the other cabinet ministers to lose their jobs were less generous.
In a barbed remark, Steve Reed, who was ousted as communities secretary, wrote: “Keir Starmer showed me loyalty by appointing me to his cabinet. I make no apology for returning that loyalty. It’s what is expected of functioning teams, and I hope those who did not show loyalty to Keir will now show it to you.
“I’m proud I acted with integrity at every step over the turbulent last few months.”
Mr Lammy noted: “I would have been proud to continue serving in cabinet. But a new prime minister is entitled to build his own team.”
Speaking to journalists in the Downing Street rose garden, Mr Burnham made it clear that as well as ending rough sleeping, he wanted to ensure that he dealt with the social care crisis before his time in Downing Street came to an end.
The issue is unfinished business for Mr Burnham, who failed to get cross-party consensus in 2009 when he was health secretary, when his proposal for a levy was attacked by the Tories as “a death tax”.
Mr Burnham has made it clear that it is more personal to him now, with his father suffering from Alzheimer’s, making him unaware that his son is now PM.
He said: “I think the country needs to step back here and say, 'How have we let a situation kind of just roll on, where we know it's a major issue, and yet no one's got the courage to fix it?'
“I just think that's quite damning, really, of my generation of politicians. Has no one got the ability anymore to say: 'Right, it is a difficult thing, but we're going to do it'?
“If I look at the National Health Service right now, what I hear from people is that corridor care is becoming the norm all year round, not just in winter time, and the standards in relation to A&E are just not achievable in terms of the 90-plus per cent of people coming through in four hours.”
He will also look at the way people are being made to pay more income tax through thresholds being frozen, an issue he said was the biggest complaint from voters in Makerfield during the recent by-election campaign which brought him back into parliament.
Mr Burnham however insisted that he is “prudent” and will stick to the former chancellor’s fiscal rules on borrowing, which she set as chancellor before being sacked.
After his speech, Mr Burnham received hugs, applause and a kiss from his wife Marie-France van Heel, before the pair entered the black door of No 10 to be greeted by cabinet secretary Dame Antonia Romeo and clapped in by staff.
