The Saturday Profile: Ed Balls, Treasury Adviser - Chancellor's golden boy

NEXT WEEK brings Gordon Brown's third full Budget since May 1997. But the Budget is not just, not even mostly, the Chancellor's work. Like the first two, it is the creation of Brown's 32-year-old special adviser, Ed Balls.

Treasury officials are stern in their judgements of their political masters and even sterner about ministers' political appointees. So there could be no higher praise for Balls, Gordon Brown's one-man economic think- tank, than a favourable Treasury verdict. The tall, solid, confident adviser lacks Whitehall polish - he has no patience for the protocol of meetings and minute-taking. But the clever high-flyers who greeted Balls in May 1997 expecting him to be nothing but a nuisance now see him, in the words of one of them, as "a bit of a godsend".

They admire his intellect, his breathtaking work load, his ability to organise a famously disorganised Chancellor. Most of all they like the fact that he is a direct and influential channel to Brown. Persuade the adviser, and you have persuaded the minister too. In short, he is a real power in the land, a magnet for mandarins.

Next week's Budget is Balls's - and Gordon Brown's - third, but the first without Charlie Whelan. The tight-knit family of Gordon, Ed, Charlie and Geoffrey Robinson, formed in the bunker of opposition and cemented over beer and pizzas in Robinson's suite at the Grosvenor House Hotel, was scattered by the Mandelson loan episode at Christmas. But those emotionally cataclysmic events show little sign of derailing the types of policy that the Chancellor will announce in the House of Commons on Tuesday.

The same intellectual stamp has characterised all of Labour's economic plans, from announcing the independence of the Bank of England in the first week of government onwards. And Ed Balls is its originator. He has now spent half his life in the Labour Party, having joined at the age of 16 in the ward in Nottingham chaired by his father. Mr Balls senior is an academic zoologist, an environmentalist and a specialist in testing the toxicity of drugs. He also taught at Nottingham University. The young Ed was born in Norwich (he still supports that city's football team), and went to Nottingham High School. At this fee-paying boys' school he excelled at his lessons, shone on the playing field and dominated the politics and debating societies. He followed in his father's footsteps to Keble College, Oxford, where he read philosophy, politics and economics.

At Oxford he joined all three of the main political parties' university societies, having read a novel in which one of the characters does precisely this in order to meet more people. In short, his was a background of committed Labour morality without being one of traditional Labour culture. He could be socially at ease with Tories even though he did not agree with them. This non-tribalism made Balls in some ways natural New Labour material, rather than a later convert to the transformation of the party in the Nineties.

Indeed, he proved to be an important architect of New Labour, thanks to a key intellectual and political influence, aside from his own family background. This was Lawrence Summers, a former Harvard economics professor who is now the US deputy Treasury secretary.

After Oxford, Balls won a Kennedy scholarship to spend two years at the elite Ivy League university, where he studied economics with Summers in 1989-1990. The two men still speak and see each other as often as holding busy and powerful policy jobs on opposite sides of the Atlantic allows.

Balls introduced the Chancellor, while in opposition, to Summers and also to Robert Reich, another former professor who had become labour secretary in the first Clinton administration. A meeting with Alan Greenspan at the same time persuaded Brown of one of his young adviser's key beliefs - the desirability of an independent central bank.

There remains another nexus of connections between the two Treasuries. Stephanie Flanders, a colleague from the Financial Times, where Balls once worked, is a speechwriter for Summers. UK officials now regularly look to the US for models for the policies they are drawing up for Britain. It is hard to overstate the influence that the American experience has had on Balls, and therefore on the Labour opposition's strategies before the election and the Labour Government's policies to shape the British economy. Many of the measures announced in Brown's Budgets have their origins in US equivalents.

In a nutshell, the Summers approach combines clarity about the aims of policy with an aggressive pragmatism about the means. He taught Balls to rely on evidence, not prejudice, in designing policy. Equally important, Summers demonstrated the necessity of getting the politics right in order to be able to implement the right economic policies. Policies cannot be drawn up in a vacuum.

It is ironic, therefore, that Balls will never shed the notoriety of having written the pointy-head phrase "post-neoclassical endogenous growth theory" into a pre-election speech by Gordon Brown. It was meant as a joke, but ended up giving Michael Heseltine a fairly good quip of his own ("It's not Brown's, it's Balls'").

It was politics that shaped Labour's election pledge not to raise income tax rates. The policy aims - making low-paid work more attractive and raising the level of income in poor families - do not need higher tax rates. And the Tory victory in 1992 was blamed on the "bombshell" of Labour's income tax plans.

Some acquaintances would argue that, after the initial shock of finding himself in the dirty old game of Westminster politics, Balls became far too political and far too concerned about the saleability of the policies rather than their intrinsic merit. Certainly, he has slipped comfortably into some of the spin doctoring of lobby journalists previously in the domain of Charlie Whelan. A more sympathetic interpretation is that it is a matter of pragmatism; that there is no point in adopting a policy that cannot be sold.

The forthcoming Budget will, in many ways, complete the policy framework Balls has been creating for the past six years. The big changes he has wanted to make will be in place - an independent Bank of England, strict rules limiting government borrowing, and an outline welfare-to-work framework intended to tackle the trap of low income and dependency on benefits.

The new approach has enthused many Treasury civil servants, especially those on the policy side. It has been turbulent at times, however. Both the Chancellor and his adviser have quite a knack for rubbing some people up the wrong way. Although both can be utterly charming, neither hides his disdain for stupidity and neither really likes to be disagreed with.

In 20 months, the Treasury saw the departure of its permanent secretary and its official senior press officer after clashes with Balls, the loss of Whelan and Robinson, and a certain amount of turnover among the junior ministers. But now, for the first time in many years, economic research is back at the heart of what the department does. The machine is starting to work smoothly and eagerly with the Labour team, after a rocky start.

Colleagues and outsiders alike are, almost universally, deeply impressed by Balls's abilities, whatever their initial doubts about his youth and inexperience. His partner in his intellectual and political project has been his wife, Yvette Cooper, a miner's granddaughter who is MP for Pontefract and Castleford. Their romance, which they kept rather quiet at first, came as a bit of a blow to other hopefuls. Former colleagues say that a fair number of women could not resist Balls's good looks and deliciously flirtatious manner.

However, he married a woman who is, in the ways important for a successful long-term relationship, very similar to him, a match for his intellect and his beliefs. Cooper, too, spent some time at Harvard and worked with the Democrats in the 1992 US campaign. Like him, she learnt her allegiance to the Labour Party when very young and was an activist from an early age. Like him, she worked for a while as a journalist - he at the Financial Times on his return from the US, she at The Independent before the general election campaign of 1997.

New Labour's golden couple married early last year. It was 1998's most fashionable political wedding, taking place in a relaxed seaside hotel where excited children swarmed around and hundreds of guests danced late into the night. A television set in the corner of the bar was tuned to a football match.

The bride, in a brilliant blue dress by Vivienne Westwood, utterly outshone the groom, just as she should on her wedding day. The newly elected MP gave a rousing speech from the ballroom balcony that could be heard by every last guest. Her new husband mumbled slightly into his grey suit. Cooper is now expecting their first baby. Appropriately for a career politician, she is due to give birth just ahead of Parliament's summer recess.

Close friends say that Balls has no ambition - at least for the foreseeable future - to become an MP himself. They dismiss as pure gossip speculation that he will try to get the seat next to Cooper's in Yorkshire at the next election, although some ponder about what he can do after this job. It will certainly be hard to find anything that gives him the same degree of power and sheer intellectual interest.

It will not be easy for the two to combine high-powered dual careers with new parenthood. Balls will find he has even less time than he gets now for passions such as football (both playing and watching).

The couple plan to move to Lambeth, closer to the House of Commons than their current Islington flat. He will work from home in the evenings, with a secure computer link to the Treasury, while she attends the House. They travel up to Castleford at weekends, where there is another electronic connection to Whitehall. If any couple can manage to balance family life with two demanding, high-profile jobs, it will be this one.

Nobody who knows them doubts their determination, their ambition or their commitment to their political beliefs and the Labour Government. Tuesday's Budget will be a testament to all of these qualities. The two of them, still at such an early stage in their careers, will also continue to have a decisive influence over the future of New Labour and its remodelling of the British economy. Those in the party who harbour any hopes that it may yet return to an old-fashioned, left-wing economic policy will first have to contend with two of its brightest stars.

Life Story

Origins: Born 27 February 1967, in Norwich.

Vital statistics: Aged 32. Married Yvette Cooper MP in 1998. Expecting first child in June.

Educated: Nottingham High School, Keble College, Oxford (first in PPE), Kennedy Memorial scholarship to Harvard University.

Passions: Norwich City FC, cooking, English choral music.

Influences: Harvard economists Larry Summers and Larry Katz.

Career: Financial Times leader-writer, adviser to Gordon Brown in opposition and at the Treasury.

Critics say: "It's not Brown's, it's Balls'." (Michael Heseltine on Gordon Brown's use of the expression "post-neoclassical endogenous growth theory")

Admirers say: "Ed is concerned with making life better for ordinary people." (LSE economist Richard Layard)

Rumoured next job: MP for a northern constituency, near his wife's in Pontefract and Castleford