The Balls Ultimatum

By Peter Hoskin
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Tension between the Labour leader and the man he’s put in charge of his party’s economic policy? Who’s ever heard of such a thing?!

But, despite there being absolutely no precedent for it whatsoever, it appears that such tension may exist — at least judging by Kevin Maguire’s article for the latest issue of the New Statesman. With rumours swirling that Ed Miliband might be prepared to offer his brother the Shadow Chancellorship, friends of the incumbent Ed Balls have been speaking to Mr Maguire:

“Allies of the Shadow Chancellor whisper that he'd take his bat and balls away and retire to the backbenches rather than swallow demotion.”

If Mr Miliband is considering triggering Mr Balls’s displeasure, you can understand why. Labour consistently lag behind the Tories when it comes to polling on economic competence, despite their hefty poll leads overall. And there’s a sense that the Shadow Chancellor is not having the impact he might, nor making all the right calls, including during the ongoing row over benefits.

But I’d still be fairly surprised if Balls were demoted. Not only, as the Maguire story suggests, could it trigger the sort of Labour in-fighting that Mr Miliband is probably keen to avoid, but it would also be interpreted as an admission that Labour’s economic and fiscal policy has been insufficient. The Labour leader would have to be sure of some fairly major upsides to risk such downsides.

Much could depend on whether Ed Miliband decides to firm up Labour’s economic offering — and whether Ed Balls goes along with him. David Miliband has this week suggested that he backs the Government’s “spending envelope” for benefits and tax credits, just not all of the cuts that are being made within in. Could Ed Balls say something similar? Indeed, could he back Mr Osborne’s overall spending envelope, if that’s what it came to?