Angela Rayner returns to Cabinet just ten months after quitting in shame over tax scandal – as Andy Burnham hands Red Ed 'consolation prize' of Foreign Secretary after snubbing him as Chancellor

Angela Rayner made a stunning return to Cabinet last night as part of Andy Burnham's top team.

The former deputy Labour leader is back in her former role as Housing, Communities and Local Government Secretary under the new Prime Minister.

It comes little more than ten months after Ms Rayner quit Keir Starmer's administration following her tearful admission that she failed to pay correct stamp duty on a new flat. 

Her return came as Mr Burnham's Cabinet appointments stretched across a number of hours on last night.

He began the process of assembling his top team by naming John Healey as his Chancellor in a shock snub to Ed Miliband and the Labour Left.

The new Labour premier – who was also fielding phone calls from fellow world leaders – installed the former defence secretary in the key post despite weeks of speculation that either Mr Miliband or Shabana Mahmood would get the job.

Mr Miliband was instead made Foreign Secretary, while Ms Mahmood remains Home Secretary.

Rumours had been swirling that Mr Healey was set for a comeback under Mr Burnham after he dramatically quit Sir Keir's Cabinet last month, but few expected him to get the nod for No11. 

Andy Burnham shakes hands with his new Chancellor of the Exchequer John Healey at Downing Street

Ed Miliband and Shabana Mahmood – who had been widely regarded as rivals for the key role of Chancellor – walked into No10 arm-in-arm last night

Mr Burnham began his Cabinet reshuffle after making his first speech as PM yesterday 

David Lammy and Rachel Reeves were early casualties in the reshuffle, hours after they watched Keir Starmer's farewell speech outside No10 

Mr Burnham and his wife Marie-France van Heel waved to supporters as they entered No10

Mr Burnham shunned a lectern in his first speech after being officially installed as PM

Sir Keir gave a farewell address outside the famous black door of No10, just two years after winning an extraordinary election landslide 

Yvette Cooper has been appointed as Health Secretary after being moved from the Foreign Office to make way for Mr Miliband.

Louise Haigh has become Chancellor of the Duchy of Lancaster and First Secretary of State, effectively making her the second most powerful person in Cabinet.

Jonathan Reynolds has returned to his old role as Business Secretary – but with added responsibilities for science and innovation in a beefed-up department – while Anneliese Midgley takes over from him as Chief Whip.

Lucy Powell, a key Burnham ally and Labour's deputy leader, replaces Bridget Phillipson as Education Secretary. But Ms Phillipson is allowed to remain in Cabinet in her role as women and equalities minister. 

Mr Burnham has now also appointed Wes Streeting as Defence Secretary. The former health secretary resigned from his post in Sir Keir's government after telling him he had lost confidence in his leadership.

However, after it was clear the momentum was with Mr Burnham – he chose not to launch a leadership bid.  

The Cabinet appointments followed a purge of Sir Keir's senior team, with Rachel Reeves leading a string of departures from the Government.

Following talks in Downing Street with Mr Burnham, Ms Rayner said she was 'delighted' to return to the Ministry for Housing, Communities and Local Government.

She posted on social media: 'Andy Burnham's vision of good growth in every postcode demands we build on the foundations we have already laid to bring the change we have promised.

'I look forward to returning to government with renewed drive and determination to put power back in people’s hands – and hope back in our hearts.'

Ms Reeves earlier acknowledged defeat in her battle to cling on to the Treasury under Mr Burnham. She is understood to have turned down another job in Government. 

Starmer loyalists David Lammy, Steve Reed, Peter Kyle, Liz Kendall, Baroness Chapman and Attorney General Lord Hermer have also been ousted so far. Darren Jones announced he had been fired by phone, and Northern Ireland Secretary Hilary Benn is leaving.

Mr Reed said he was 'disappointed' to be going from his Housing Secretary role, and swiped that he 'hoped those who did not show loyalty to Keir will now show it to you'. Outgoing deputy PM Mr Lammy bemoaned that he 'would have been proud to continue serving in Cabinet'. 

The Left has been pushing hard for Mr Miliband to be Chancellor, despite alarm from businesses and moderates. But after the Net Zero Secretary walked into Downing Street arm-in-arm with Ms Mahmood, it was announced that Mr Healey would be taking over at the Treasury. 

No10 sources said Mr Burnham wanted an 'experienced, trusted' figure and Mr Healey shared the PM's outlook 'on the need to maintain economic stability and the current fiscal rules'. They also agree on 'reindustrialisation, devolution, helping people with the cost-of-living crisis and backing British jobs and British industry to drive growth across the country'. 

One Labour veteran told the Daily Mail it was a 'smart' move, and Mr Burnham could now tell Mr Healey: 'You wanted the money for defence? Great. Go find it.' 

Mr Healey served as a Treasury minister under Tony Blair, and is known to have long harboured ambitions to be Chancellor. 

He said the new Government led by Mr Burnham 'will meet our commitments on defence to our international allies'.

'Fiscal control is the first duty of any chancellor. It is mine,' Mr Healey told broadcasters yesterday. 'And fiscal credibility is the bedrock for economic stability and for national security.

'You heard the Prime Minister this afternoon say, in this more dangerous world, we will meet our commitments on defence to our international allies.'

Mr Miliband dropped a broad hint that he will be leaving the Department for Energy and Net Zero in a speech to staff this morning – although he insisted he did not know what decisions Mr Burnham had made.

The reshuffle began after Mr Burnham used his Downing Street debut to hint at a lurch to the Left.

Watched by an adoring crowd of aides and supporters, Mr Burnham said he wanted to put services under 'stronger public control' and 'reindustrialise' with a 'ten-year plan'. He repeated his view that Britain has been heading in the wrong direction since Margaret Thatcher was PM. 

He made clear his first instruction to officials would be to end rough sleeping, and revealed there would be some help on the cost of living announced on Tuesday. 

Speaking to reporters afterwards, Mr Burnham suggested that could include rent controls and curbs to energy bills. Landlords warned that artificially capping rents would just force properties off the market. 

He also signalled he intends to bring back his 'death tax' inheritance raid to fund social care reforms. And he confusingly left the door open to introducing a 50p top rate of tax, even though he has committed to the Labour manifesto that ruled the move out. 

On another momentous day in UK politics:

• Government borrowing costs lifted and the Pound weakened after Mr Burnham insisted he would use 'any flexibility' in the fiscal rules to borrow more;
• The EU has led international welcomes to Mr Burnham, who has previously backed rejoining the bloc; 
• The new premier has had his first call with Donald Trump, inviting him to visit Manchester; 
• Mr Burnham has revealed his Alzheimer's-hit father does not know he is becoming PM;
• Eco-tycoon Dale Vince was spotted in Downing Street, amid confusion over whether the Government will allow more drilling in the North Sea; 
• The new PM has hinted at an earlier end to the freeze on the basic rate tax threshold, without saying how it would be funded; 
• Mr Burnham will become the first openly Catholic PM, with work-arounds put in place to protect the Church of England; 
• Loudspeakers have been banned near Downing Street on Monday after protesters blighted Sir Keir's speech announcing his resignation.

Allies of Mr Miliband had been talking up the idea of Foreign Secretary, suggesting it could be sold to him as a platform for pushing Net Zero measures on the world stage. 

Mr Burnham was invited to form a Government at an audience with the King in Buckingham Palace – where he was unusually accompanied by wife Marie-France van Heel, known as Frankie.

In his seven-minute speech afterwards, delivered without notes, Mr Burnham said: 'Later this year I will bring forward a new plan for Britain, a ten-year plan laying out a path from where we are now to where I believe we all want Britain to be, wherever we're coming from, whatever party we support.

'But I can do something to give people some breathing space now, some help with the cost of living.

'And I will set out some of those measures starting tomorrow, including how we pay for them.'

Mr Burnham said he was aiming for the 'biggest changes in the last 40 years', with a 'new political model and a new economic model'.

'In the 1980s, Britain took some wrong turns. Political power was centralised, economic power privatised, large parts of the country de-industrialised, and they still haven't recovered,' he said.

'Many feel as though they're still in decline, and they don't have the ability to turn things around.

'And that's why we will change politics, to make it more collaborative, more about problem solving than point scoring.

'We will take power out of here and carry it into every postcode in the land so that they can do more.

'And in doing more, build a new economy where we put life's essentials back under stronger public control to make them affordable to you again.

'Reindustrialising Britain, using public procurement to back British industry.'

Speaking to reporters afterwards, Mr Burnham was asked whether bus fares, energy bills or rent freezes would be part of his package of help.

He said 'we're looking at all of those things' but stressed no final decisions had been made.

He said: 'We're looking at measures that could make a difference this year. So we are looking at all of those things, but we'll make more announcements tomorrow.

'We're just finalising the details, so it's premature to say it will be any one of those particular things.

'We just want to do some things that people will feel and feel quite quickly.

'It won't solve everything. It won't take all of the pressure off, but it just shows a direction of travel and that we're serious about helping them out.'

The constitutional changeover came after Sir Keir used a farewell address outside No10 to insist he has not been a failure – despite only surviving two years following a huge election victory.

Sir Keir said he was 'closing the book on my time', saying 'my work is done' and the country is 'stronger'. He insisted Mr Burnham – who orchestrated a coup to secure the leadership – would have his 'full support'.

'I go with good grace, I go with a smile and I go proud of everything we have achieved,' he said, thanking wife Victoria and his family. 

Close Cabinet allies including David Lammy and Rachel Reeves had gathered with hundreds of aides in a sunny Downing Street to watch Sir Keir say goodbye. London Mayor Sadiq Khan was also present for the emotional moment. 

In his valedictory statement, Sir Keir said: 'I am about to visit His Majesty The King to offer my resignation and close the book on my time as Prime Minister.

'My work is done. In six and a half years, I took our party from a historic defeat in 2019, changed it so it was fit to face the country and won a landslide general election victory in 2024.

'Since then, it has been the privilege of my life to serve you and this great country as Prime Minister, and I am confident that Britain is now stronger and fairer than it was two years ago.

'Our economy is stronger. Our public services are on the up, with the biggest fall in waiting times for 17 years. Children are being lifted out of poverty every single day.

'Immigration is down significantly. Our defence and security are on a far stronger footing and our international reputation is greatly enhanced.'

The handover came barely a month after Mr Burnham returned to Westminster following his victory in the Makerfield by-election.

He was installed by Labour MPs as party leader in a 'coronation', without a formal vote by activists – or having to spell out any policies.

Mr Miliband was given the news by Mr Burnham in Downing Street on Monday evening

Louise Haigh has become Chancellor of the Duchy of Lancaster and First Secretary of State, effectively making her the second most powerful person in Cabinet

The fate of Yvette Cooper has yet to be decided, after Ed Miliband took her job as Foreign Secretary 

Lisa Nandy and Pat McFadden did the walk into No10 in front of the cameras 

Ms Reeves said the economy is 'stronger, fairer and more resilient' after her time in No11 

Mr Lammy said Mr Burnham was 'entitled to build his own team'

The new residents of Downing Street were applauded into the building by staff

Andy Burnham was officially installed as PM by the King on Monday after Keir Starmer bowed out 

Among the vague commitments laid out by the incoming PM so far are devolving power away from Westminster.

He has announced he will scrap Sir Keir's flagship digital ID programme to focus money and attention on the cost of living.

In an interview with The Times, Mr Burnham said he had already spoken to the Treasury about his planned announcements and stressed the importance of making people 'feel better'.

Adding that complaints about frozen tax thresholds had been 'lodged in his mind' since the Makerfield contest, he said: 'So when people, they're just characterising me as a tax raiser, well again, it's never that simplistic is it? The breathing space point is a really serious one.'

The comments raise more questions about how Mr Burnham will pay for giveaways, after he backed a 'land tax' and harked back to the 1970s condemning Thatcherite reforms.

But the weekend was dominated by bungled briefing over whether the new Government will allow new oil and gas drilling in the North Sea.

The leader's team has now confirmed he will stick to Labour's 2024 manifesto, which promised not to issue new licences.

Instead he could merely allow expanded drilling at the Rosebank and Jackdaw sites – something that was being considered by Sir Keir's administration.

That could bode badly for Mr Burnham's relations with Donald Trump, who yesterday jubilantly hailed more drilling as a way of stopping Britain being a 'poverty stricken disaster'.

Mr Burnham also faces a decision on whether to temporarily nationalise Thames Water as the firm struggles with a £20billion debt pile.

He has already expressed support for greater public control of essential services, and Thames Water's main creditors have said they are willing to discuss the issue with his new ministers in an effort to agree a rescue deal and avoid the business falling into a so-called 'special administration regime'.

Keir Starmer's resignation was accepted by the King at an audience in Buckingham Palace 

Close Cabinet allies including David Lammy and Rachel Reeves had gathered with hundreds of aides in a sunny Downing Street to watch Sir Keir say goodbye

Sir Keir and Lady Victoria got into a car to be driven to Buckingham Palace after his speech

Kemi Badenoch warned Mr Burnham he will have to cut spending instead of increasing taxes

Kemi Badenoch has written to Mr Burnham, saying her party will work with him to cut the welfare bill and calling for him to rule out tax rises and back new oil and gas drilling.

Mrs Badenoch told Mr Burnham she would 'never shirk' from holding him to account, adding: 'You will enter office without having set out a clear plan on any of the issues facing our country.

'You have refused calls to come to Parliament for questions from MPs, and you have not submitted yourself to serious media scrutiny. This is not a promising start.'