Hutton faces a battle in 'the job nobody wants'

Mr Hutton, 50, seen as one of the Blairite "ultras", has the task of cutting the soaring cost of incapacity benefit. Last week Mr Blunkett angrily clashed with the Prime Minister's officials who had accused him of not going far enough with the reforms in forcing people back into work.

One senior minister said: "Hutton should have got a very clear job description before taking the job. It is the job nobody wants."

His other priority will be the report on radical reform of the state pension by Adair Turner, a vice-chairman at Merrill Lynch & Co, to plug a multibillion-pound hole in retirement savings. Mr Blunkett made it clear that people would have to work beyond the age of 65, pay more tax or put away more money for retirement in order to tackle the savings gap.

The Turner report could also spark a row with trade union leaders who want the Government to compel companies to provide for their employees' retirement. Mr Turner said in September that he would oppose compulsion on the basis that it would be likely to reduce wages paid to employees.

Mr Hutton is regarded as a keen moderniser, and is often described as a "Milburn clone" - a reference to Alan Milburn, a former health secretary, who has acted as an outrider for the Blairites to drive forward more reforms. He is a close friend of Mr Milburn, who was his best man when he married for the second time. Quietly spoken but widely respected, Mr Hutton was Mr Milburn's junior health minister but was promoted to the Cabinet on his 50th birthday after the 2005 general election to become Minister for the Cabinet Office - a job Mr Milburn has also held. His main role was to help drive forward public service reform, but it came with the honorary title of Chancellor of the Duchy of Lancaster, a historic post that included acting for the Queen in the county.

Mr Hutton was educated at Westcliffe High School and Magdalen College, Oxford. He was a senior law lecturer at the University of Northumbria before his election as MP for Barrow and Furness in 1992. From 1994 to 1997, he served on the Select Committee for Home Affairs. He has three sons and a daughter.