John Healey has been appointed Chancellor in one of the biggest surprises of Prime Minister Andy Burnham's first Cabinet reshuffle, confounding weeks of speculation that the Treasury job would go to either Shabana Mahmood or Ed Miliband. The former Defence Secretary, who resigned from government last month amid a row over defence spending, now takes charge of the nation's finances in a move that signals Burnham's determination to blend economic credibility with a renewed focus on public investment. Healey replaces Rachel Reeves, who left the Cabinet after declining an alternative ministerial role.

Ed Miliband, meanwhile, has been appointed Foreign Secretary in what many Westminster observers are already describing as a consolation prize after missing out on the Treasury. The former Energy Secretary will now oversee Britain's diplomatic agenda, while Shabana Mahmood remains Home Secretary as Burnham seeks to balance continuity with change across his top team. The appointments complete a dramatic opening to Burnham's premiership, with the new Prime Minister using his first day in office to stamp his authority on government and chart a distinct course from his predecessor.