Ed Balls: 'The next few years are critical. We must renew new Labour and then the country'

The Monday Interview: Labour MP and former Treasury advisor

Balls remains close to Brown and is acutely aware that his comments are viewed from the perspective of their mutually admiring relationship. Still, from his vantage point as a newly arrived MP, he reflects more openly than the Chancellor on what both regard as the challenges of a third and fourth term.

"The next few years will be critical. They will be about the renewal of the country in the face of new economic and social challenges. They will also be about the renewal of new Labour."

There has been some speculation that Brown and his allies seek to bury new Labour. This does not seem to be the case. They seek to revive it, but in a new context. "We need to show once more the discipline and rigour it took to create new Labour in the first place. We must analyse our weaknesses and strengths in the way that we did in the 1990s. If we do that, we can renew new Labour in this parliament and then go on to renew the country."

Note the emphasis on the need for renewal of the party in this parliament as almost a pre-condition to renewing the country in the next. These are big tasks spanning a third and fourth term. The implicit question seems to be this: is Blair best placed to embark on the renewal for the next few years when he will not be around for a fourth term?

"The Labour Party has got to decide what we need to do in relation to long-term policy decisions. That is the issue, not individual ambition or legacies. That is to belittle the challenges and the changes to the party required to meet those challenges." In other words, Balls does not believe that Blair should spend the next few years in Downing Street worrying over his legacy. The future is what matters now.

Is Balls pleased that Tessa Jowell, a Blairite cabinet minister, has stated publicly that Brown would be the next leader, quite possibly without a challenge? Balls is wary. I get the impression that those close to Brown are suspicious of the sudden endorsements.

"The issue is going to be decided by the Labour Party and is not going to be decided by MPs, however junior, and cabinet ministers, however senior. But the party must focus also on how we meet the challenges for the longer term."

I put it to him again that he is implying that only the successor to Blair would be in a position to do that. "After the election, Tony Blair came to the Parliamentary Labour Party to say that he would come forward with proposals for an orderly transition. People were heartened by that." He pauses and reflects carefully on the follow-up sentence. "It must happen in a way that is unifying and allows us to focus on the challenges ahead."

Balls wants the transition to be seen through the framework of policy and the renewal of new Labour. In terms of the party, he also looks ahead. "There is no point in endless internal debates about expectations achieved or dashed. The issue is the future. If we need to go further in some policy areas let us work out how we get there."

Labour has had an easy time of it since the election, with the opposition parties in disarray, he notes. The election of a new Conservative leader will focus more minds in his party. "The ineffectiveness of the Tories cannot go on forever. The challenge of renewal is making sure that we are ready for an end to that. We have nothing to fear, but we must be prepared. At the next election, we will be defending a smaller majority and quite a few seats with smaller majorities."

Balls still spends a lot of time with the Chancellor even though he is no longer based at the Treasury. At the end of last week they flew to Washington together. Brown has asked Balls to help prepare a report for the G8 finance ministers on ways in which the richer countries can improve the infrastructure of Israel-Palestine. Balls held meetings with the Palestinian Finance Minister and representatives from the IMF and the World Bank. Balls arrived back in London on Saturday to look after his three young children while his wife, Yvette Cooper, the Housing minister, headed for Brighton. He joined her the next day.

Having emphasised the need for a long-term view, he takes a deep breath and outlines what he considers to be the key questions in government.

"We have not made enough progress in developing adult skills. More widely the inherited problem of the country's infrastructure was huge when we came to power. There is still a long way to go to establish a world-class infrastructure. No one can be satisfied with the number of kids from state schools going to university. China and India place great emphasis on skills and science. We must meet that challenge, [which] is partly a challenge to our cohesion as a society. On the environment, we are meeting our international commitments but nobody can feel we were making the necessary progress. We must decide what we are going to do with pensions. We must do more in order to meet our pledge to abolish child poverty. This is a big policy agenda."

There are also some thorny choices. How to invest more in the country's infrastructure when the demands for public spending are already immense? How to abolish child poverty without redistributing income overtly? Are people willing to save more and work longer for their pensions and should the state pension be targeted even more ruthlessly on the poor?

Like the Chancellor, Balls cites the need for a progressive consensus in order to come up with the answers. "There is no point in saying, 'we are right even if the people disagree'. That is the mindset of opposition. We must ask how you build a progressive consensus for our goals and then get support for the policies to meet them. That is what we did when we put the case for increasing taxes to pay for the NHS."

The more recent model is the support for Make Poverty History. "People were willing to debate in small halls and take part in large marches. Here was an example of a powerful moral agenda, collective action brought about by a strong sense of community linked to a set of detailed policies that commanded wide support."

Balls suggests that the model can be applied to the domestic agenda but the Government must do much more to show that it is playing a role in giving people in Britain new opportunities. In doing so he is implicitly critical of the Blairite presentation of the rights-and- responsibilities theme. "We need a better balance when we talk about rights and responsibilities. We must talk about the rights and opportunities as well. If we don't do this, people will disconnect from government."

He is looking ahead again, beyond the coming months. I note that in virtually every answer there are references to the future and the long term. Is it not the case that, in effect, Brown is looking ahead to his period as prime minister and pointing to the need to get on with it as soon as possible?

"Ever since I have worked with Gordon, we've always been thinking long term. Part of his strength is to continue looking forward to the next set of challenges. That's what he is doing now as he has done in every year of government. He is not sitting around waiting for some moment, but he is thinking about how we, as a party and a government, rise to long-term challenges."

Balls has a busy week in Brighton. It began yesterday when he took part in a pre-conference football match. He is a competitive footballer and plays to win. On the political field, Balls and his friend in the Treasury are being more restrained for the moment. But in highlighting the long-term challenges at a conference where Blair's short-term future is the subject of frenzied speculation, they are also playing to win.

Ed Balls will be taking part in 'The Independent' fringe meeting at the conference this evening on how Labour can renew itself in power. He will be joined by the cabinet ministers David Miliband and Ruth Kelly

The CV

BORN: 25 February 1967

FAMILY: Married to Yvette Cooper, a junior minister in the Office of the Deputy Prime Minister, and MP for Pontefract and Castleford since 1997. She was also educated at Oxford and Harvard University.

They have two children.

EDUCATION: Nottingham High School, then Oxford University, where he read PPE, and the John F Kennedy School of Government at Harvard University, where he studied economics (as a Kennedy Scholar).

CAREER:

1990: lead economic writer at the Financial Times

1994: appointed as an economic adviser to the then Shadow Chancellor, Gordon Brown

1999: promoted to chief economic adviser

2004: stood as Labour and Co-Operative candidate for Normanton in Yorkshire, a Labour stronghold.

He was elected in 2005 with a majority of 10,000