Ed Miliband would make a “good” chancellor to Andy Burnham, Labour’s deputy leader, Lucy Powell, has said, ahead of the likely next prime minister’s first major speech on the economy since he returned to Westminster.

Powell, who served as Miliband’s chief of staff in opposition and is close to the former party leader, appeared to endorse him to run the Treasury – although some in Burnham’s camp acknowledge such a move could be politically risky.

But with ministers jostling for Burnham’s ear, Powell added that speculation around cabinet posts in a future government was “unedifying” and the focus should be on creating and securing jobs across the country instead.

Asked whether she thought Miliband would be good at running the Treasury, she told the BBC: “Yes I do actually, but actually I think this is a slightly distracting conversation, because I think we’ve all got a really important job to do.”

Miliband remains the frontrunner for the role of chancellor, with a view in Burnham’s team that he has what it takes to smash through Treasury orthodoxy to pursue a more radical economy. But they also acknowledge that Burnham would expend some political capital by appointing him.

Some inside Labour are concerned that putting Miliband in the Treasury could unsettle the markets, while big business is sceptical and several of the big unions are opposed, as a result of his position on the North Sea and relentless focus on the net zero agenda.

In his first big policy speech since Keir Starmer’s resignation as prime minister, Burnham is expected on Monday to announce radical plans to devolve powers and money from Whitehall to England’s regions – but also to do more to reassure the markets.

Sources said the new Makerfield MP would lean heavily into his commitment to sticking to the fiscal rules and Labour’s tax pledges. “Andy has repeatedly said he will do so, but he needs to stress that again because it needs to really land,” they added.

One ally suggested that Burnham’s focus on fiscal responsibility could indicate which way he was planning to go with his chancellor – with his team saying he had not yet made a final decision. “The more boring the speech is, the more likely it is that Ed will be chancellor,” they said.

Others have mooted Shabana Mahmood for the role – although she is understood to be keen to stay at the Home Office – or the former health secretary Wes Streeting. The senior Labour MPs Yvette Cooper and John Healey have also been touted.

If the energy secretary does make it to the Treasury, Labour insiders suggested he might have to make an early move – perhaps on the North Sea or welfare spending – to prove to his detractors he was serious about fiscal responsibility.

“Ed would also have to do some things we are already doing much louder, make a show of ditching a few unpopular things, and pick a few that are new, one of which has to be a cost of living intervention,” one source said.

In her interview with the BBC, Powell said the cost of living should be her party’s focus and not “tittle-tattle” about Cabinet positions.

Also appearing on the BBC programme, the communities and local government secretary, Steve Reed, said Burnham would stick to the fundamentals of Labour’s 2024 manifesto, including the fiscal rules, but there would be a “shift in emphasis and focus”.

Reed, previously a Starmer loyalist but who has now said he would back Burnham, said the putative prime minister would “want to change some things”, including on devolution and handing more power to communities.

Both Reed and Powell ruled out holding a general election now, even though Labour’s deputy leader had called for one when Liz Truss was instated as prime minister under the Tories.

“What people need to see now is us getting on with the job, delivering on the manifesto we were elected on only two years ago,” Powell said, adding that she had called for one after Truss because that was a “particular time”.

“We live in a parliamentary democracy where the prime minister is chosen by MPs,” she said.

Reed said there was no need for an election because the UK did not have a presidential system and the public “want us to get on with the job”. He warned his colleagues to stick together behind Burnham. “Fundamentally, we all hang together, or we all hang separately,” he added.