Rachel Reeves' tenure as Chancellor reportedly ended following a contentious phone call with Andy Burnham last September, in which she demanded he retract comments concerning Britain's reliance on bond markets.
Burnham, then positioning himself for a leadership bid, had called for Britain to cease being "in hock to the bond markets." According to a source close to Burnham, Reeves was “screaming and shouting down the phone,” insisting he “walk back on your comments, now.” The Chancellor's panic was reportedly due to the market's negative reaction, which saw a rise in gilt yields and pushed long-term borrowing to a 27-year high.
Despite Reeves' efforts to align with Burnham's policy agenda, including exploring rent freezes and pressuring supermarkets to cap food prices, she was ultimately replaced by John Healey. Her attempts to signal her willingness to implement Burnham-aligned policies included a March Mais Lecture where she announced plans to work with mayors on fiscal devolution, aiming to give regional leaders control of a share of national taxes.
Reeves' approach to economic policy, particularly her engagement with populist left-wing demands, was seen by some as a strategic shift to maintain her position. However, her attempts to influence future appointments, notably by signaling opposition to Ed Miliband as her successor, may have played a role in her eventual dismissal.
Sources indicate that Reeves' efforts to secure her position were palpable in the months leading up to her departure. This included less conventional briefings from the Treasury and her conspicuous absence from Sir Keir Starmer's resignation speech, contrasted with her subsequent public appearance with Burnham celebrating his return to Parliament. Although offered the education brief after her dismissal, it is suggested she declined it as a demotion.
Allies of Reeves maintain she left her role "with her head held high," having ensured her successor would not "trash her legacy on stabilisation" of the economy, a coded reference to preventing Ed Miliband's appointment. Her Mansion House speech on July 15 was interpreted as a coded warning against selecting Miliband, emphasizing economic stability.
Despite her departure from the Chancellorship, allies believe Reeves is not finished with frontline politics. Her sister, Ellie Reeves, was promoted to Attorney General by Burnham, a move that could strain their relationship given past familial tensions over political allegiances.
Reeves' legacy includes initiatives such as ending the two-child benefit cap. While debate continues on her strategic decisions, many believe she possesses significant talent and potential for a future political comeback.