John McTernan: Labour's two Eds need to be knocked together fast

WILL Balls and Miliband be the new Blair and Brown? That is the question exercising Westminster insiders. For all the pages devoted to Andy Coulson's departure from No 10, in the end a staffer is a staffer. The most significant political event of last week was the promotion of Ed Balls to shadow chancellor.

A new generation has now fully taken over at the head of the Labour Party. For better or for worse they will be with us for a generation. Anyone who cares about democracy knows the crucial role that a competent opposition plays in providing challenge and scrutiny. So, whether you like Ed Miliband and Ed Balls or not, how good they are does matter because it impacts on how good the coalition is as a government.

One thing is clear - Balls has a distinctive political personality. At a dinner party at the weekend when I said "Ed thinks…" no-one was in any doubt that I meant Balls, not Miliband. There's obviously a danger here for Labour. If the shadow chancellor has a more fully formed analysis and policy prescription than the leader, then he may overshadow him. But politics is a contact sport. Labour have suffered in the public's mind because they have not contested the coalition's economic narrative. Tory and Liberal Democrat ministers have made some headway with the argument that the deficit caused the economic problems rather than the other way around.

Balls won't give the coalition an easy ride. He's often called a bruiser, but he's actually an intellectual, albeit one who can deliver a very effective rabbit punch as well.

His politics derive from a deeply informed economic analysis. That gives him depth and confidence - but it also gives him swagger. And for sure Labour's front-bench could do with a bit of that. It is a harsh thing to say, but currently few people who follow politics can name Labour's shadow cabinet members and their responsibilities. Ed M and Ed B - yes. But the rest of them? Some names might possibly be produced, but rarely their portfolios.

The Tories see the threat from Balls, but have settled on a mistaken strategy. First, they accuse him of being a "deficit denier". For my part, the badge of "denier" should be kept for the neo-Nazis who deny the Holocaust. Stretching the term to climate change and now to fiscal policy is to devalue it. Disagreement is the heart of democratic debate. Calling someone a denier is designed to smear and silence rather than answer. Second, they aim to pin the sins of the father on Balls.Because he worked for Gordon Brown as an adviser and as a cabinet minister, he can be blamed for all of GB's real or perceived mistakes.

What, though, of the fear of a renewed bout of the TB-GBs, with Ed and Ed being condemned to repeat history because they have not learnt from it. Balls is ambitious. You don't get to the top in politics by saying "no, you go first…" And, as Tony Blair used to say of Gordon's desire to be Prime Minister - "It's not an ignoble ambition." What do we really want in the highest ranks of public life? People who say they're not up to the top jobs?

The truth about politics was well expressed by Michael Heseltine when asked by a student for what advice he would give to "someone thinking of becoming an MP?" His swift response - "Don't do it if you're only thinking about it. You need to want it."

Balls has the hunger that you need to combine with talent to perform at the very top. Will he focus that on the coalition or on his own colleagues? In one sense this is simply put. If he and Ed Miliband have learnt from the damage that the conflict between Blair and Brown inflicted on a Labour government then it will be fine. If, however, they haven't, then it doesn't matter what jobs they occupy - Labour will be fatally wounded.

Some talk of Balls using the dark arts in previous roles. He is still asked by some interviewers about this. The reality is that everyone who has operated at the highest levels of politics and advising has done things that would not look pretty if exposed to the light of scrutiny. That, at times, is the nature of the business. For me, the general election campaign and the leadership election showed Balls developing a political breadth and generosity to complement his intellect and ambition.

The brutal struggle against the BNP in his constituency was a huge moment for him. The challenge was real, and the reach of an extremist party deep into Labour's heartland was appalling. Balls learned a lot.

In the end, however, Balls and Miliband have no choice but to become Brown and Blair. Not the late phase, dysfunctional couple - but the pair who re-thought Labour's economic and social policy from scratch in the 80s. It is insufficiently understood that Labour face a similar Year Zero challenge now. The coalition will last until 2015. They will eliminate the deficit. In doing so they will fundamentally reshape the welfare state. At the next general election, Labour will not be able to offer to reverse a handful of symbolic cuts. They will have to accept the new settlement or transform it. The latter option requires a rethinking on the scale done by TB and GB while they were in opposition.

The two Eds are capable of doing it - but they can only do it together. And they will only have the space to present their case if Labour has won the argument on the economy. Unless there is a double dip recession, which is highly unlikely, the coalition will claim success.That claim can only be challenged by a combination of brains and brawn. Ed Balls' task is to redefine the national conversation about the economy, from the deficit to jobs - particularly youth unemployment and growth - especially in manufacturing.

The next five years will define British politics for the next 25. Thatcher and Blair were the bookends of a particular political period. This is a new era whose politics have not been formed. For Clegg and Cameron, the prize is a marginalised Labour movement. For Ed and Ed, it is a new progressive consensus. Fasten your safety belts.