Ed Balls: Brown's 'lieutenant' finally gets the job he craved

The former Treasury Minister is one of the most polarising figures in politics and, although strongly tipped for the position when Ed Miliband was elected Labour leader last September, he lost out to Alan Johnson, an experienced former Cabinet Minister with the popular touch.

But Mr Johnson's lack of economics know-how was exposed in some high profile gaffes, notably appearing not to know the rate of National Insurance paid by employers, a mistake Mr Balls would not have made.

The aggressive Shadow Minister is, however, also the MP most closely associated with the economic policies of the Gordon Brown years – an Achilles heel his opponents were quick to exploit last night.

Conservative deputy chairman Michael Fallon said: "Alan Johnson is a good man and I wish him well. But what really beggars belief is the appointment of Ed Balls – he was Gordon Brown's first lieutenant. They brought the government to the brink of bankruptcy."

Mr Balls is also known to have strong views of his own which might not necessarily match Mr Miliband's. The Morley and Outwood MP suggested last year that Labour's deficit reduction strategy should be less aggressive than that inherited from Alistair Darling and advanced by Mr Miliband and Mr Johnson.

Stephen Williams, co-chair of the Lib Dem Parliamentary Treasury Committee, accused Mr Balls of being a "deficit enthusiast".

"The decision to appoint Ed Balls as Shadow Chancellor shows that the Labour Party is now determined to carry on with the Gordon Brown economic plan that caused so much trouble for this country," he said. "Ed Balls isn't just a deficit denier, he's a deficit enthusiast."

Despite the historical baggage providing an obvious target, the 43-year-old is lauded in Labour circles for landing many of his own blows on the Tories and his exchanges with Chancellor George Osborne are likely to be brutal.

Mr Balls said: "It is a great honour to be appointed to this post, and to succeed my friend and colleague Alan Johnson whose commitment to social justice and service to the Labour Party is second to none."

The frontbench team reshuffle has seen Mr Balls replaced as Shadow Home Secretary by his wife Yvette Cooper; Douglas Alexander becomes Shadow Foreign Secretary and Liam Byrne is made Shadow Work and Pensions Secretary.