Labour civil war looms as Andy Burnham risks left-wing MPs’ fury over Ed Miliband snub

The Energy Secretary is reportedly ;furious' about the ongoing speculation

Labour appears to be hurtling towards civil war as speculation mounts that Ed Miliband will be passed over for the Chancellor role in Andy Burnham's incoming Cabinet.

The current Home Secretary, Shabana Mahmood has reportedly moved into pole position to succeed Rachel Reeves at the Treasury when Mr Burnham enters Downing Street on Monday.

Despite sources connected to Ms Mahmood, Mr Miliband and the incoming Prime Minister all maintaining that nothing has been decided, the Energy Secretary is said to be "furious" about the swirling rumours.

The potential snub has sparked what one Labour source described as a "civil war" within the party, with senior figures turning on each other as the battle for No11 intensifies.

Financial markets rallied on Wednesday afternoon as reports of Ms Mahmood's potential appointment emerged, highlighting City concerns about Mr Miliband's candidacy.

Mr Miliband's frustration stems from his extensive involvement in shaping Mr Burnham's economic approach over the past year.

One Cabinet source told The Daily Mail: "Ed's spent the best part of a year talking to Andy about his economic strategy. In the past fortnight he's been the main person in with him and James [Purnell, Mr Burnham's Chief of Staff] over putting together a package to reassure the markets."

The source added: "It's not that he was specifically promised the job. But he basically assumed he was nailed on. So the reports he's been ditched have made him pretty angry."

Another insider revealed that preparations had already begun for the transition: "His office has been preparing to make the move to the Treasury and all the briefing has been that he's been lined up for the job. If he loses out now he's going to be really p***ed."

Supporters of Mr Miliband point to his credentials, including his economics background, Treasury experience under Gordon Brown, and his chairmanship of the Council of Economic Advisers.

The opposition to Mr Miliband's appointment has come from multiple directions.

City bosses have expressed concern that he would fail to win the confidence of financial markets, with a Bloomberg poll identifying him as the least market-friendly candidate.

Trade unions have also voiced reservations, particularly over his stance on North Sea oil and gas.

Unite's Sharon Graham warned in March that he should not "let go of one rope before having hold of another," arguing the UK will require oil and gas for decades to come.

Labour MPs have personally lobbied Mr Burnham against the appointment, fearing Mr Miliband would block development of the Jackdaw and Rosebank oil fields.

One veteran Labour MP on the party's left told The Daily Mail: "I don't think Miliband will get No11. He would be too big a risk."

Mr Burnham's team has firmly rejected suggestions that a decision has been made, with a source stating: "The choice genuinely hasn't been made yet. Andy isn't going to be bounced into anything. Nothing is going to be finalised until he's inside No10."

However, the delay has created a power vacuum that is unsettling Labour MPs.

One backbencher warned: "He is allowing a vacuum to emerge and there is a civil war going on. I don't think this bodes well for his premiership. You need a firm hand."

For those on the party's soft left, failure to promote Mr Miliband as planned would represent a troubling signal about Mr Burnham's political direction.

The Morning Star reported that such a move "could be seen on the left as a further negative indication" regarding the incoming Prime Minister's intentions. Some MPs fear they may be backing another indecisive leader.

One Green Party source told The House: "The Labour briefings on the chancellor are a gift to us. Openly highlighting they don’t want change, briefing that the bankers don’t want Miliband, surreal levels of hitting the ball over the bar."

Leader Zack Polanski said: "We don’t know what the cabinet will be yet, but the mood music is ominous. A Labour Party subservient to the City of London and harking back to the Blair years would be catastrophic for this country.