The two-man show

It can be hard to believe <strong>James Purnell</strong> and <strong>Ed Balls</strong> are in the sa

As the recession nights of winter 2008 grow longer, thoughts in Westminster turn to parlour games to bring festive cheer in these dark times. The parts are already being cast, for example, in this year's political pantomime. Who'd have thought Speaker Martin would end up as the stage villain, booed and hissed from all sides of the stalls, or that Peter Mandelson would play Prince Charming, breathing life into the comatose body of new Labour with one kiss? A more cruel game is: "Who'll Survive the New Year Reshuffle?" - one that works for all three major parties. But by far the most distracting winter exercise is to imagine who might replace Gordon Brown as leader of the party, should he take the job he surely deserves as chief financial adviser to the world or, alternatively, disappear with the crack of a stage thunderflash through the trapdoor of Britain's economy.

With Labour's recovery now well embedded and discussion of coups from within the cabinet and insurgencies from the back benches at an end, it may seem odd to return to the subject of the Labour succession. But this is not an entirely fan ciful exercise. Even if he wins the next election (which could be called as early as next spring), Brown will not fight another, and leadership speculation will begin in earnest at that point. What's more, Mandelson's return to the cabinet has been viewed in some circles as an implicit snub to the younger generation of ministers jostling for position. They will need to reassert themselves, at some point.

Since the events of the summer, when David Miliband appeared to offer himself up as a potential leadership candidate, there has been no direct challenge to Brown's position. But despite the bitter experience of Labour conference, where the party singularly failed to shift its loyalty away from Brown, Miliband will remain a strong contender. Meanwhile, he is making a point of concentrating on his Foreign Office duties. The domestic politics of the past ten days have demonstrated that there are now only two other players left in the game: James Purnell and Ed Balls.

Whatever view one takes of Purnell's proposals for reform of the welfare state, they are bold and bear the imprimatur of the politician who conceived them. No other politician in the cabinet, with the exception of Balls himself, can claim to have a vision on domestic policy so thoroughly worked out. This includes Gordon Brown. Whether you call it social liberalism, über-Blairism or True New Labour, Purnell has a set of arguments that place him to the right of most people in the cabinet, let alone the party. He would argue that his policies fulfil the true promise of 1997. If Tony Blair expressed regret that he didn't listen to himself more on public-service reform, Purnell is the nearest thing to the keeper of the Blairite flame.

It is a sign of Purnell's increased stature within the government that he was allowed to push through such a challenging set of proposals. The principle of cutting benefits for people who fail to demonstrate that they are actively seeking work is anathema to large sections of the Labour Party, as is the abolition of income support. The increase in private- sector involvement to help deliver the new arrangements is also deeply unpopular. Anti-poverty groups, trade unions and the centre-left campaign group Compass have already expressed hostility to the proposals contained in the Queen's Speech (and outlined in the earlier welfare green paper No One Written Off).

Labour can ill afford to alienate still further its core support, but the government has gambled, as it once did as a matter of course, that it can afford to alienate the left as long as its policy gains the support of the media and the wider public. Labour could well do without another backbench rebellion and, for this reason, it was assumed that the welfare reform package would be kicked into the long grass.

Purnell's victory in getting his legislation into the Queen's Speech shows that the Brown government has regained confidence, but it also demonstrates that the market philosophy that drove much of Labour's reform agenda did not die with Blair. It is impossible to overstate Purnell's personal investment in this welfare package. He has not simply tweaked policies inherited from Peter Hain, his predecessor in the job. Hain would never have countenanced such sweeping reform, especially its punitive measures.

So, to our second candidate for the succession. This week marks the first anniversary of the government's Children's Plan, designed by Ed Balls as a blueprint for the next ten years of education in this country. As with Purnell's welfare reform proposals, this is very much Balls's personal vision. But it is very different both in style and substance. Where Purnell represents continuity, Balls marks a distinct break with Blair ism. Where the early Labour reforms were designed to reinforce a testing and inspection regime that would guarantee standards to parents of children at schools, Balls focused on the learning experience of the school student and, in the words of the Schools Secretary, "put the needs of families, children and young people at the centre of everything we do". To its critics, the Children's Plan is a return to "child-centred learning", a concept ditched in the early Blair years.

The Children's Plan also marked a shift towards renewed faith in state-driven solutions to social problems. The target-driven culture of early new Labour education policy and initiatives such as the literacy and numeracy hour demonstrated that Blair was never shy of using centralised solutions when it suited him. But Balls took this a stage further by introducing state intervention into every aspect of family life - parent support advisers in school, an increase of Children's Centres in schools to bring in advice on health and parenting issues, government guidance on the effect of video games and the influence of advertising on children. The proposals even contained plans for a National Play Strategy, to give guidance on the ways in which young children learn best from playing.

Balls will use the Children's Plan anniversary to raise his already high profile. He has not always been the most assured media performer, but the Schools Secretary notably took the lead in defending the Prime Minister in the broadcast media at the height of the criticism of his premiership during the summer. His reputation has also been enhanced by his handling of the Baby P case and the inquiry that followed. Despite early Tory criticism, Balls acted swiftly and decisively to deal with the failings within Haringey children's services.

Such is the distinctness of their individual visions of the future politics of the left that it is sometimes difficult to believe James Purnell and Ed Balls are in the same party. Indeed, if there were a proportional electoral system in Britain they almost certainly would not be. Asked by the New Statesman to outline how the two world-views could be accommodated as part of the same new Labour ideology, one Downing Street adviser simply said: "Fairness." This is about as useful as saying that both men believe in being nice to small animals. Their divisions are no mere intellectual decoration. They run deep within the Labour family. When it comes to the next election, Labour will not be able to fight on its economic record alone (or perhaps not at all). So it will have to develop a coherent package of proposals on domestic policy to put before the British people. The Energy Secretary, Ed Miliband, remains in charge of the manifesto and happens to be much closer ideologically to Balls than to Purnell. But Miliband's old job at the Cabinet Office was taken by Liam Byrne, who has been given the job of driving public-service reform. Byrne is far more sympathetic to the Purnell side of the argument.

A Balls or Purnell leadership challenge is some way off as yet. They both have serious disadvantages when it comes to a genuine challenge, not least that many backbenchers see them as party apparatchiks parachuted into senior jobs. Neither man has a strong base in the party and both are seen as the creatures of their mentors: Gordon Brown in Balls's case and Tony Blair in Purnell's. Yet both candidates are beginning to develop the bearing of politicians who demand to be taken seriously. If the Prime Minister takes time off to go to a panto over Christmas, he might want to heed that traditional warning: "They're behind you."

This article first appeared in the 15 December 2008 issue of the New Statesman, The power of speech

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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