Ed Balls and Yvette Cooper in the running for shadow chancellor job

She’s behind you: Ed Balls and his wife Yvette Cooper, circled, leaving the Labour conference today before the closing speeches
12 April 2012

Ed Miliband was facing his first major challenge as Labour leader today amid fears that Yvette Cooper may turn down the key post of shadow chancellor.

His allies are keen to offer the plum job to Ms Cooper rather than her husband Ed Balls in an attempt to reset the party's economic policy.

But his aides were worried that the shadow work and pensions secretary could reject the offer because of the hurt it would cause Mr Balls, who has long wanted the Treasury post.

Other contenders being touted as shadow chancellor include Andy Burnham and Douglas Alexander.

Mr Balls, a former City minister, this week staked a strong claim to the job with a speech in which he warned about the dangers of Government spending cuts that were "too fast and too deep" for the fragile recovery.

Repeating the pitch he made during his own bid for the Labour leadership, he said the lesson of the Thirties and Eighties was that public spending was vital in helping the economy to pull out of recession until the private sector took over the burden of job-creation.

Mr Balls carries the weight of coming third in the leadership contest but Ms Cooper is expected to top the shadow cabinet poll next week.

She was chosen as a parliamentary candidate in April 1997 and comfortably won the Pontefract and Castleford seat. She was immediately selected for the Education and Employment Select Committee and then rose rapidly.

Ms Cooper decided not to run for the Treasury job this year but is highly rated by Mr Miliband's team. She is said to have made impressive contributions to the "spending versus cuts" debate in the Cabinet in the dying months of Gordon Brown's regime.

The new leader is being urged not to pick Mr Balls because of his links to Mr Brown's economic policy and because of the signal his appointment would send about the new leadership.

Mr Balls is instead being touted for the post of shadow business secretary, an economic brief that would allow him to challenge Vince Cable while maintaining a role on industrial and financial issues such as bank regulation.

Mr Miliband, who yesterday imposed his authority by stopping Nick Brown from becoming chief whip, is also struggling to balance his team to ensure supporters of his brother David are given suitable posts.

Alan Johnson, who is said to be pushing for shadow constitutional affairs, could instead be offered shadow foreign secretary. The shadow chancellor post is crucial to the new direction of Mr Miliband's party.

Some 49 MPs submitted their nominations for the shadow cabinet elections last night. The winners will be decided on Friday next week, less than a fortnight before Chancellor George Osborne's spending review.

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