Defeat of Ed Balls gives Tories their 'Portillo moment'

The Conservatives have waited almost 20 years for their own “Portillo moment”. With Ed Balls’s defeat in his Morley and Outwood seat, they got it.

Plenty of Westminster big beasts lost their seats in the 2015 election: Vince Cable, David Laws, the two Alexanders – Douglas and Danny. But the scalp of the man who was Gordon Brown’s closest adviser and who would have been chancellor in an Ed Miliband government was the biggest of the lot.
Earlier this week Balls was thinking about the measures to put in an emergency Labour budget that he wanted to deliver before the summer recess. Now he will be hoping that promotion for his beloved Norwich FC will provide solace for a crushing and very personal defeat.
In some ways, the loss of Balls should not have come as that much of a shock. He was defending a small majority of 1,101 in his Yorkshire seat. He is a divisive character. And he has been the champion of a Labour economic strategy that has not convinced the voters.
Conservative defence minister Michael Portillo, left, seems at loss as Labour’s Stephen Twigg makes his victory speech in 1997. Photograph: Kevin Lamarque/Reuters
But the loss of the shadow chancellor is a profound blow to Labour. Balls was an FT leader writer when he was hand-picked by the then shadow chancellor, Gordon Brown, to join his team, and for more than two decades has been crafting Labour’s economic policy. He was the architect of many of Brown’s key policies: an independent Bank of England; tax credits to top up the incomes of the working poor; and the decision to keep Britain out of the euro.
Balls, even more than fellow economic adviser Miliband, was the man Brown relied on. Treasury officials knew that without the support of Balls for a project it would gather dust. Brown rarely if ever took a big decision without the approval of his economic adviser. With some justification, Balls was dubbed the deputy chancellor.
Like Brown, Balls was deeply tribal. He was loyal to Labour and loyal to Brown, so much so that his behind-the-scenes briefings often infuriated Tony Blair. He made enemies, both among the Conservatives and on his own side.
When Labour lost in 2010, Balls was originally overlooked by Miliband as shadow chancellor and only took on the role to which he was well suited after the departure of Alan Johnson. Balls made his mark by criticising George Osborne’s austerity strategy, saying – rightly – that it would lead to slower growth and a higher deficit.
But Osborne always suspected that Balls’s record under Brown could be exploited. In part, Balls was minister responsible for the City when Labour adopted a hands-off approach to financial regulation. More importantly, he was not prepared to accept that it had been Labour overspending that had caused Britain’s record peacetime deficit in 2010. The former governor of the Bank of England Lord King and the current permanent secretary to the Treasury, Sir Nicholas Macpherson, both agree with this analysis, but the reputation that Balls was a “deficit denier” stuck.
Unlike the relationship between Brown and Blair, that between the two Eds has not been marked by in-fighting. And while Balls might have preferred a more emollient approach to business, there were no serious policy rifts.
At 48, Balls is still a relatively young and now has to decide what to do with the rest of his career. One option would be to take a job in academia, perhaps in the US, where he has plenty of contacts. Another would be to run a thinktank, seeking to influence Labour policy from the sidelines. Another would be to make a swift return to Westminster in a byelection in a safe Labour seat. One thing is certain: if Balls decides to retire from frontline politics, he will be missed.