Prime Minister Andy Burnham has appointed former Defence Secretary John Healey as the UK's new chancellor, entrusting him with steering the economy while finding billions of pounds
for defence and other government priorities.
Healey's appointment comes only weeks after he resigned from Sir Keir Starmer's government, accusing the Treasury of failing to provide adequate funding for Britain's armed forces. At the time, he criticised what he described as the department's entrenched culture and warned that "our adversaries do not follow timetables set by the Treasury".
The 66-year-old now takes charge of the public finances with a demanding brief. He must support economic growth, increase investment in areas including defence, reduce welfare spending and remain within Mr Burnham's commitment to maintain the UK's fiscal rules.
His selection is also being seen as a sign that Mr Burnham intends to reform the Treasury's approach to economic policy. Earlier this month, Healey criticised what he called "Treasury orthodoxy", arguing it had acted as a "dead hand on dynamic government".
Labour MPs welcomed the appointment, saying it would reassure both US President Donald Trump and NATO allies that Britain remained committed to strengthening defence spending. Some opposition politicians have also renewed calls for the government to consider issuing dedicated "defence bonds" to help finance military investment.
Although Healey was not widely tipped for the role, he brings previous Treasury experience, having served as a junior Treasury minister under former Chancellor Gordon Brown between 2002 and 2007. He has also held senior positions under successive Labour leaders, earning a reputation as one of the party's most experienced ministers.
People familiar with the appointment said Healey and Mr Burnham share similar views on maintaining financial stability while boosting economic growth through greater regional devolution, tackling the cost of living and rebuilding Britain's industrial base.
Earlier this month, Healey told the BBC that increased defence investment could help drive Britain's wider industrial revival and support manufacturing across the country.
Financial markets reacted cautiously. Sterling edged higher after his appointment, recovering from earlier losses triggered by Mr Burnham's comments suggesting there could be some flexibility in the government's fiscal rules.
Richard Carter, head of fixed interest research at Quilter Cheviot, said Healey's appointment suggested the new prime minister would seek to maintain market confidence.
"Healey brings Treasury experience and is a sign that Burnham will respect the bond markets as a check on his radicalism, rather than push through major fiscal changes that could unsettle public finances," he said.
Healey nevertheless faces significant challenges. As defence secretary, he repeatedly argued for a roadmap to raise defence spending to 3% of GDP by 2030, compared with the previous government's planned level of 2.68%.
His resignation in June, after years as one of Sir Keir Starmer's closest allies, dealt a major political blow to the former prime minister, who stepped down less than two weeks later.
Healey has also served as local government minister and has long advocated giving greater financial powers to regional authorities — a key element of Mr Burnham's programme for decentralising decision-making and boosting economic growth outside London. Photo Foreign, Commonwealth & Development Office, Wikimedia commons.
