The stunning decision to make John Healey chancellor is the first big shock of Andy Burnham’s government – but reveals the new prime minister’s real priorities and desire to end factionalism.
In the run-up to Mr Burnham entering Downing Street, a number of names had been linked to the crucial job in government.
Keir Starmer’s home secretary Shabana Mahmood appeared to have been a lock for the role, even as she walked up Downing Street on Monday afternoon to hear what post she was getting.
But Mr Burnham appears to have listened to concerns from MPs on the left, who were the main cheerleaders for him to take over as prime minister and were not happy about Ms Mahmood running economic policy.
As revealed over the weekend by The Independent, there were serious concerns on the left over Ms Mahmood supporting both tax and welfare cuts, as well as her hardline measures on immigration.
The previous frontrunner had been Ed Miliband, from the left of the party, but he was rejected because the markets might get spooked. There were also worries about his hardline views in favour of net zero and his former time as leader.
Instead, Mr Burnham has turned to the highly respected Mr Healey as a compromise candidate in a sign that he is not interested in continuing with the factionalism that bedevilled the Starmer government.
Mr Miliband instead gets the job of reforming the Foreign Office, as already revealed by The Independent, including a roadmap to restore international aid. Meanwhile, in a shock move which will make a number of Labour MPs unhappy, Ms Mahmood stays at the Home Office with the green light to continue to be tough on immigration.
But it is the choice of chancellor which will most shape this government.
Mr Healey has genuine Treasury experience in past Labour governments but quit as defence secretary in a move which forced Sir Keir Starmer out because he was angry over the £13bn shortfall in defence spending.
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His appointment can perhaps be seen as a sign that defence spending will be a priority of this new Burnham government.
Mr Healey was a severe critic of the Treasury after he resigned and complained that they did not recognise defence as a driver of growth.
He said: “The Treasury’s a paradox: you have some of the very best and brightest officials in the Treasury, but you have, too often, a Treasury orthodoxy that's a dead hand on dynamic government.”
He also complained: “The Treasury with defence really was in denial about the commitment that the UK has rightly made to Nato and to our people: it is still planning, was still planning on 3 per cent, but not until 2034-35.
“The Treasury still often sees defence as a drain on public spending and not the driver of economic growth that we've demonstrated in two years.”
According to a Downing Street source, the prime minister has made clear he wants to make the economy work better for working people, and he wants an experienced, trusted figure to deliver his ambition.
They said that Mr Burnham and Mr Healey “have the same outlook – not only on the need to maintain economic stability and the current fiscal rules, but on reindustrialisation, devolution, helping people with the cost-of-living crisis and backing British jobs and British industry to drive growth across the country.”
Mr Healey was economic secretary to the Treasury and financial secretary to the Treasury under Gordon Brown for five years.
The prime minister has said he wants to deliver more council homes across the country. As a former housing minister, Mr Healey has long-standing experience in this area. And, as defence secretary, he brought housing for the Armed Forces back into public ownership and drove investment in housing for armed forces families.
He is also well-respected on the international stage and has built links with key economic allies in Europe, the Middle East and the United States.
It’s a choice that wasn’t expected – but it’s one that truly signals the path of Burnham’s government.
