Andy Burnham becomes UK prime minister after meeting King Charles

New prime minister says his political and economic model will bring ‘biggest changes in 40 years’

Andy Burnham has said his arrival in power will be a “circuit breaker” moment for Britain, pledging that his government will restore hope to millions of people, as he addressed the country for the first time from Downing Street.

After taking over from Keir Starmer , the new prime minister said he would set out a 10-year plan later this year to transform the UK from “where we are now to where I believe we all want Britain to be”.

Acknowledging the cost of living pressures across the country, he said he would start announcing measures on Tuesday to give people “some breathing space now”.

In a surprise appointment, Burnham announced John Healey as his choice to replace Rachel Reeves as chancellor, a crucial role that will set the direction of travel for his government. The former defence secretary, whose resignation pushed Starmer to the brink, emerged as the compromise candidate after Ed Miliband and Shabana Mahmood were tipped for the role.

Burnham’s team had wanted an experienced figure to take charge of his vision for the UK economy, combining fiscal responsibility with a focus on re-industrialisation, devolution, the cost of living and driving growth.

In other senior appointments, Miliband moves from his energy and net zero brief to become foreign secretary, and Mahmood stays at the Home Office. Louise Haigh, Burnham’s right-hand woman, was made first secretary of state and chancellor of the duchy of Lancaster, running a beefed up Cabinet Office that will be the “political engine room” driving the PM’s agenda.

A series of senior figures disclosed that they were leaving the cabinet – some saying openly that Burnham had told them they were no longer needed – including Reeves; David Lammy, who was deputy PM and justice secretary; Darren Jones, who was in Haigh’s role; and Steve Reed, the housing secretary.

In his first call with a foreign leader, Burnham spoke to Donald Trump – who previously suggested he was just the mayor of “some town” – and invited him to Manchester for next year’s G20 summit. He also telephoned Ukraine’s leader, Volodymyr Zelenskyy, and the European Commission president, Ursula von der Leyen.

After his speech, Burnham told reporters he was looking at cutting energy bills and bus fares as part of a fully funded cost of living support package that could eventually include more radical plans, such as freezing private sector rents.

“We are looking at measures that could make a difference this year … We just want to do some things that people will feel and feel quite quickly,” he said. “It won’t solve everything, it won’t take all of the pressure off, but it just shows the direction of travel and that we’re serious about helping them out.”

In his speech, Burnham announced that his first instruction in power would be to end rough sleeping , after a visit to homeless people in central London on Monday. He made a similar pledge when he became Greater Manchester mayor but oversaw four years of rising street homelessness.

Burnham formally took over from Starmer after meeting King Charles at Buckingham Palace, becoming the sixth UK prime minister in a decade, a speed of turnover that he acknowledged had resulted in many people becoming “fed up” with politics.

Speaking without notes, and watched by his wife, Marie-France van Heel, he said: “I am acutely conscious that I am the sixth person in the last 10 years to walk up this street, the seventh prime minister since 2016, making this a moment for reflection and new resolution.

“It requires my generation of politicians to raise our game and rise to the new challenge. Britain needs to show the world that we can regain our stability once again, and that is our challenge to make politics work, to make it work better.

“I know people at home are fed up with politics. I hear you and I want to be honest with you. We have not been good enough and we need to be better. We will be.”

Burnham, who took over from Starmer as the leader of the Labour party on Friday , has put transforming the UK’s economic system at the heart of his plans, despite limited room for manoeuvre before the next election given his commitment to the fiscal rules.

“We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years. A new political model and a new economic model,” he said.

Referring to the era of Margaret Thatcher’s Conservative government, he added: “In the 1980s, Britain took some wrong turns. Political power was centralised, economic power privatised, large parts of the country deindustrialised and they still haven’t recovered.

“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. And we will take power out of here and carry it into every postcode in the land so that they can do more.”

Speaking to reporters, Burnham said he would look at “any flexibility” within the government’s existing fiscal rules to help borrow billions more to invest in infrastructure – but that he would take a “very prudent” approach to the economy.

“I’ve said we’ll stick to the fiscal rules and by that I mean the existing fiscal rules and use, obviously, any flexibility within them. But we will stick to the existing rules,” he said. “So none of this is about taking risks with the economy. I’ve never done that in any role that I’ve had. I’ve always taken a very prudent approach.”

Burnham suggested he could cut income tax for lower earners in the budget. This could involve raising the tax-free personal allowance, which has been frozen for the last five years at £12,570 a year.

But the new prime minister refused to rule out bringing back the 50p top rate of tax – introduced by Gordon Brown’s government in 2010 – saying it would be “premature” to make such decisions when he had just arrived at No 10.

“All of this will be looked at though at the budget, and obviously it’s difficult given the financial circumstances in which we find ourselves. But I wanted to recognise the point because it’s challenging for people and it’s people on the lowest incomes perhaps who’ve most been affected by that,” he said.

“So I’m just kind of showing I have a visibility of the issue and the impact it’s had on the different groups that I’ve mentioned, but it’s difficult because changing the threshold is not without significant consequences. But I’m looking at it.”

Burnham said his government would put “the right values and the right standards” at its heart. “I will put the care of people at the heart of everything I do. I will give this my all, and I ask you all to pull with me,” he told the assembled crowd, which included his close ally Steve Rotheram, the Liverpool city region mayor, and the former Everton footballer Peter Reid.

“Let’s build a new national sense of unity, of common purpose, and positivity. Let us make this the moment when Britain starts to believe again, the moment we bring back hope.”