Balls goes on attack, but Brown and Miliband now in 'cold war'

Minister defends aggressive campaign as PM's relations with Foreign Secretary hit a new low

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Tensions in the Cabinet continue to dominate Labour's election campaign today as Ed Balls defends himself against the charge that he is waging a "class war" against the Tories.

Days after senior cabinet ministers demanded that the Secretary of State for Children, Schools and Families be "reined in" by the Prime Minister following last week's attempted coup, Mr Balls argues that the Government is pursuing the right strategy of exposing divisions between Labour "investment" and Tory "cuts".

The unrepentant defence, in an article in The Independent on Sunday today, will be interpreted as a direct response to Alistair Darling's warning that Britain faces its toughest public spending cuts for 20 years.

Mr Balls issues a rallying cry to activists by setting out a wide-ranging vision for how Labour should conduct its campaign – sending a strong message that he will not be inhibited by the cabinet attempt to clip his wings.

The Chancellor was among a group of senior ministers who demanded in face-to-face talks with Gordon Brown that he be more collegiate and widen his circle of influence beyond his closest ally, Mr Balls, to which Mr Brown apparently agreed.

Amid the continuing fallout from last Wednesday's botched coup by Geoff Hoon and Patricia Hewitt, it also emerged that Mr Brown, in Cabinet on Friday, promised and appealed for no recriminations between ministers in the wake of last week's turmoil.

But relations between the Prime Minister and David Miliband are at rock bottom. Supporters of the Foreign Secretary said his ambiguous and long-awaited statement on Wednesday was "honest" and that he could not bring himself to be gushing about Mr Brown.

And the attempt at reconciliation was last night hit by a fresh attack from a former Labour chief, who claimed Mr Brown was not fit to be Prime Minister and backed calls for him to step down. Peter Watt, who resigned as the party's general secretary following the proxy donations row in 2007, claimed Mr Brown lacked the "emotional intelligence" required to lead. His devastating memoirs, being serialised in The Mail on Sunday, lay bare the inside story of Mr Brown's behaviour, and damaging episodes include the "donorgate" scandal and the "election that never was", in late 2007.

Mr Miliband's brother, Ed, is being urged by supporters to run in the next leadership contest despite an understanding that he would give the Foreign Secretary a clear run. Backbencher Jon Cruddas is also increasingly likely to stand as a candidate if an election defeat triggers a succession battle.

Mr Darling and Peter Mandelson have been pressing Mr Brown to soften the strategy of creating dividing lines of "investment vs cuts" between Labour and the Tories. They have warned him against pursuing a "class war" strategy.

But in his article, Mr Balls denies the approach is based on the politics of envy and insists it is entirely legitimate to highlight Conservative policies that favour the richest – such as the inheritance tax cut for £1m estates. He says: "The Conservatives and their friends in the media think that even to talk in these terms about dividing lines between Conservative and Labour is to play old-fashioned politics or even wage class war. But how can prioritising the many, not the few, be class war when it was the cornerstone of Tony Blair's reform of the Labour constitution in 1994: the very foundation of the new Labour vision which led directly to a national minimum wage, tax credits to reward work and tackle poverty and helping a million more people to own their own homes? How can the new Clause 4 be the old class war?"

Mr Balls insists that Labour must continue its policy, embedded in last month's pre-Budget report, to delay cuts in public spending for a year to help to steer Britain out of recession.

In an interview with The Times yesterday, Mr Darling said: "The next spending review will be the toughest we have had for 20 years... to me, cutting the borrowing was never negotiable. Gordon accepts that."

Aides for Mr Balls and Mr Darling will insist that there is no contradiction between their remarks. Yet the article will be seen as an attempt by Mr Balls to shore up his position.

On Friday, the Prime Minister attempted to draw a line under the failed coup by warning there should be no recriminations. But the IoS has established that, while Mr Brown has opened his door for "peace talks" for some ministers, he has not seen the Foreign Secretary since the coup attempt.

One insider refused four times to respond to the question of whether Mr Brown was "happy" with Mr Miliband, insisting it was "not an issue".