Balls is ‘de-facto Labour leader’ warn Blairite MPs

Ed Balls is now the de-facto leader of the Labour Party after his promotion to replace Alan Johnson as Shadow Chancellor, according to Blairite Labour MPs who supported Ed Miliband's brother David Miliband for the leadership.

The resignation of Johnson read like the script from an episode of EastEnders. It now appears that Johnson, the 'Dirty Den' of Westminster, was forced to resign as the shadow chancellor over his wife's alleged affair with his own personal protection officer.

But according to Blairite Labour MPs on the Opposition benches, the extraordinary twist in the Westminster soap opera will have repercussions for years.

One leading supporter of David Miliband for the leadership said: "The Brownites have got the total ascendancy now. This will make Ed Miliband very vulnerable because everyone knows how close Ed Balls was to Gordon Brown."

William Hill are offering odds of 1/3 that Ed Miliband will still be Labour leader when the general election takes place, but 9/4 that he will not.

Johnson, who left his first wife Judith, a nursery worker, and three children in 1988 for Laura, told Ed Miliband last Friday about his second wife's affair with his bodyguard.

The Labour leader gave him more time to sort out his private life, but with Sunday newspapers preparing to reveal all this weekend, Johnson knew the game was up.

Johnson - who came in saying he would read an idiot's guide to the economy to get to grips with the subject - knew he was out of his depth in the post, and had privately signalled he wanted to move at the earliest opportunity.

At 60, it is unlikely there is any way back for the former postman to frontline politics, unless it is in a presentational role, say as party chairman, where his ability to "speak human" could help to offset Ed Miliband's geeky image.

Despite the threat it poses to Miliband's stuttering leadership, Steve Richards, the Labour-supporting commentator for the Independent, has welcomed the shift, saying that it has "corrected a mistake" in Ed Miliband's original shadow cabinet reshuffle when he had to give something to the Blairites by making Johnson his Chancellor.

Appointing Johnson then was intended as a signal to show that Ed Miliband was ready to continue the strategy for reducing the deficit started by former Chancellor Alastair Darling, which meant supporting deep cuts in public spending. Now that strategy is likely to be torn up by Balls, whatever Ed Miliband might be saying to the contrary.

The Cameron camp sees it as gift from heaven. The PM has had difficulty in pinning the blame for the cuts in public spending on Brown now that he has gone. But with Balls back in charge of economic strategy, the Brown-Balls connection is so strong Cameron believes he can make the case that the man now in charge of Labour's economic strategy was the man responsible for the recession.

The Tories will also try to make the case that Ed Miliband and Ed Balls do not see eye to eye, raising the the possibility of a sour relationship to equal that which developed between Blair and Brown.

But Cameron is whistling in the wind if he thinks that Ed Miliband is Tony Blair with a funny voice. The truth is Ed Miliband and Ed Balls were both close allies in the Brown camp, and will be as close as Cameron and George Osborne were in Opposition.

Indeed, Balls has let it be known that his team are moving offices into a suite next to Miliband's office to show how closely they will work together, just like Cameron and Osborne.

Balls - a powerful centre-forward in the Nat Lofthouse mould when he played for the MPs XI - may be hated by some at Westminster, but the bruiser will be a far more dangerous adversary for the government than likeable Johnson. Balls will be a bigger hitter, and the Cameron-Clegg coalition will now have to expect some savage blows on the economy, particularly over cuts and rising youth unemployment.

As for Alan Johnson's departure, it is still shrouded in mystery, despite the quickly accepted theory that it's all to do with his wife's affair with his bodyguard.

Some bloggers suggest there was another affair to blame - between Johnson himself and a civil servant. Others have suggested that Balls's camp were responsible for getting out the bodyguard story: a series of gaffes had left Johnson looking weak, and this was the moment to put the knife in.

No doubt the Sunday newspapers will have more to offer on both conspiracy theories.

For the moment, the Mole's conclusion is that Ed Miliband will benefit from having Balls in charge of the Treasury portfolio at such a critical time for the economy. Alan Johnson's departure might have given the struggling Labour leader a lifeline. ·