Balls role split in shake-up of Brown's inner circle

The Treasury yesterday unveiled a shake-up of Gordon Brown's inner circle following the resignation of Ed Balls, his chief economic adviser.

The Treasury yesterday unveiled a shake-up of Gordon Brown's inner circle following the resignation of Ed Balls, his chief economic adviser.

Mr Balls quit after being selected on Wednesday night to fight the safe Labour seat of Normanton, West Yorkshire at the next general election. He will not be replaced directly but his responsibilities will be split between two Treasury mandarins.

Michael Ellam, the head of the performance and efficiency team, will become director of policy and planning with responsibility for short to medium term co-ordination of economic policy.

Responsibility for long-term strategic planning passes to Ed Milliband, the chairman of the council of economic advisers.

Mr Balls had been an economic adviser to Mr Brown since 1994 when he quit a career in journalism to join the opposition treasury team. For the past five years he has served as chief economic adviser to the Chancellor and has been dubbed the most powerful unelected politician in Britain. Mr Brown paid tribute to his former lieutenant, describing him as playing a "central and decisive role" in developing policies on economic stability, employment, public services and poverty. "I know he has a great contribution to make in the future," he said.

Mr Balls returned the compliment by using his first interview as a prospective MP to quell speculation that Mr Brown is at odds with the Prime Minister, saying the two had a "strong" relationship. "It's all hype, it's spin, it's designed to destabilise the Government," Mr Balls told BBC Radio. "They know the future of the Labour Party depends on that relationship."

Political observers say Mr Brown will miss the close relationship of trust and loyalty that the two men built up over the last decade.

Sir Alan Budd, a former chief economic adviser at the Treasury, said: "For as long as he was an adviser he has been supremely important as a creator of ideas and as a filter of ideas. He was a very important intermediary between Gordon Brown and the rest of the Treasury."