Does Ed Miliband think Ed Balls is expendable?

Both Miliband and Balls neither like nor trust each other.

Both Miliband and Balls neither like nor trust each other. Photograph: Getty Images.

Does Ed Miliband think Ed Balls is expendable? Several months ago the question would have invited ridicule. The shadow chancellor’s prediction of a double-dip recession had proved politically prescient; his warnings on the ill-judged pace and scope of the government’s cuts had been vindicated.

Then came the LIBOR scandal and all of a sudden it was Balls who had questions to answer. Fortunately, the Tories – or more specifically their Chancellor, George Osborne – made a hash of asking them. Caught trying to frame his opposite number, in effect, for encouraging Bob Diamond and Barclays to depress their estimated borrowing rate artificially, Osborne was forced into a premature, Clouseau-like abandonment of his inquiries.

But not before people had been treated to an untimely reminder of the days when Labour was only too happy to see vintage Bollinger flowing into the bowls of City fat cats. It was not welcomed inside the leader’s office.

Tension between the two Eds manifested itself in a debate over whether to keep up the pressure for a Leveson-style banking inquiry or support a select committee investigation once the parliamentary vote on a wider investigation was lost. Miliband’s instincts were to keep pushing for a judge-led inquiry, but Balls, who I understand wanted the issue quickly diffused, prevailed.

Yet the tensions remain. Miliband is said to have three main problems with his shadow chancellor. The first is that both men neither like nor trust each other, a hangover from their time in government and the legacy of Miliband’s appointment, after the leadership election, of Alan Johnson – and not Balls – as shadow chancellor.

The second is that Miliband has embarked on his bid to detoxify the Labour brand, which will identify Gordon Brown as one of the more obdurate stains on the party’s recent past. Brown was singled out as the target of some of Miliband’s more pointed jokes at a Press Gallery lunch in Westminster this past week, and there is a concerted effort under way to put clear red water between the Labour leader and
his former mentor.

Some around Miliband believe their task is not made easier by the sight of Brown’s most trusted former lieutenant sitting next to their man every Wednesday lunchtime at Prime Minister’s Questions. As one of the leader’s supporters said, “Don’t underestimate Ed [Miliband’s] ability to make a clean break with the past, even if it’s his own.”

Third, there is the macro-politics. Miliband acknowledges that Balls has so far been proved right on the big economic issues. But he knows, too, that the key to success at the next election will be to make it a referendum on the coalition’s economic record. Again, Balls’s association with what went wrong for Labour in government worries some of Miliband’s lieutenants.

Psychodrama

Balls’s defenders point out that his loyalty to Brown long after it had ceased to be in his interest undermines the calculating stereotype so beloved of his critics. And focus groups indicate that Tory attempts to portray Balls as Brown’s malign henchman have failed to resonate. But the LIBOR debacle reminds us that not all of Labour’s psychodramas have been consigned to the past.