Reeves backs Burnham to become next prime minister

Rachel Reeves has backed Andy Burnham to be the next prime minister, despite reports he could demote her to a junior cabinet position if he becomes the Labour Party leader.

Burnham, who was sworn in as the MP for Makerfield on Monday following his historic by-election victory, is expected to replace Reeves as chancellor if he enters No 10.

Reeves told the British Chambers of Commerce (BCC) annual conference on Thursday that she did not want to pre-empt his choice of chancellor and urged her potential successor to stick to her fiscal rules.

But she said she was proud of her record and that there was "unfinished business in fiscal devolution" - an area she said Burnham was also committed to.

Reeves added that Burnham backed her rules - ensuring day-to-day spending is funded through tax revenue by the end of the Parliament, only borrowing for capital investment and reducing debt as a proportion of GDP.

"Andy has been really explicit - he backs those fiscal rules," she told the BCC conference.

In an earlier interview with the BBC, Reeves said: "The last government lost control of the public finances.

"It sent inflation through the roof and interest rates through the roof. So control of the public finances has a real impact on families today."

While Reeves said she had improved the flexibility in the government's budget by increasing its financial headroom, she added the public must be left in no doubt about the party's commitment to fiscal discipline.

"Because if you lose control of the public finances, it is ordinary working people and businesses who pay the price with higher inflation, higher taxes and indeed higher interest rates," she added.

She told the BCC conference she and Burnham were also aligned on fiscal devolution - transferring financial powers like tax and spending from Westminster to local authorities - including, for example, on possible visitor levies on hotel bookings.

Burnham is so far the only contender to replace Sir Keir Starmer, who announced his resignation earlier this week following a slew of senior cabinet resignations.