Why Ed Miliband went for Alan Johnson

Johnson, the affable former postie, stands in marked contrast to George Osborne.

Until late this morning, Alan Johnson had never been mentioned as a possible shadow chancellor. The widspread assumption was that the post would go to either Yvette Cooper or Ed Balls, Labour's two most economically literate figures, who finished first and third respectively in the shadow cabinet elections. Miliband's decision to hand the post to Johnson, a Labour veteran whose time many felt had passed, has taken almost everyone by surprise.

But Johnson, who the Tories have often described as the Labour politician they fear the most, may yet prove a canny appointment. From a Labour perspective, the affable former postie provides the perfect contrast with the man formally known as Gideon George Osborne. And the appointment of a key David Miliband ally will do much to bolster the Labour leader's pluralist credentials. Derided by some as a left-wing factionalist, Ed Miliband has shown that he can reach out to his brother's supporters.

The appointment also suggests that Miliband's position on the deficit may be closer to the original Darling plan than previously thought. Johnson has consistently defended the election pledge to halve the deficit by 2014 and has warned against an overtly anti-cuts strategy. It's notable that since his election as leader, Miliband has emphasised his desire to "do more from taxation", rather than any dramatic slowing of the deficit reduction plan.

The risk of a Balls appointment was always that the Tories would seize yet another opportunity to exploit divisions between a Labour leader and his (shadow) chancellor. And beyond the economics, Balls and Miliband's personal relationship is notoriously poor, as was demonstrated at the New Statesman Labour leadership hustings in June. After one particularly verbose answer from Balls, Miliband quipped, "It's like being back in the Treasury." (Both were advisers to Brown in his days as chancellor.) To which Balls humorlessly replied, "Tell us the answer then, Ed, like you normally do."

In any case, Balls should relish the opportunity to shadow the Home Office. Like David Davis in the past, Labour's toughest streetfighter now has the chance to claim a series of ministerial scalps from a notoriously vulnerable department.

I can't help but feel that Yvette Cooper -- articulate, cerebral, popular -- was the woman for the job, but time is on her side. Miliband's surprise appointment will have Tory strategists scurrying back to the drawing board tonight.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.