On Tuesday I wrote an article highlighting moves over the Labour leadership involving Peter Mandelson and South Shields MP and foreign secretary, David Miliband.

Last night, while all us politico’s were glued to Nick Griffin on Question Time, The First Post “Mole” published a very interesting story that will only add to the leadership speculation. He revealed that Peter Mandelson will be in South Shields this weekend to give the annual “South Shields Lecture.”

Something tells me that they won’t just be talking about how nice the beach is. As Rachel Sylvestor in the Times wrote “It would be fascinating to hear their private conversation.”

Labour realists can see that the recent polls carry one obvious message: Labour cannot win a general election while Gordon Brown remains leader.

There is also a realisation that if there is to be change, then it must be generational, this limits the choice of leader to three – Ed Balls and the Brothers Miliband.

Balls is seen as too ambitious, too much of a bruiser, and too closely associated with Brown. These traits are not surprising when you consider the fact that he learned his craft at the knee of Gordon Brown.

So we are left with Ed and David Miliband. Clearly neither of them can become leader without a little help so enter, stage left, the puppet master in chief Peter Mandelson.

The Business Secretary has been having a rather good time at the minute, despite the Postal Strike, and if he were to withdrawal his support it would be terminal for Brown.

Clearly any new leader of the Labour party would not be able to get away without calling an election, this has always been one of the argument used internally within Labour against a change. But as the “Mole” point out, if the change were to happen at the end of this year or early next then they may be able to get away with sticking to the May/June election time scale.

“if the changeover were to be left to Christmas/New Year, and the new leader in place by, say, the end of January, then they would probably get away with holding on for a May election, on the grounds that that’s what everyone’s been expecting, as long as they immediately confirmed the May/June date.”

From at strategic point of view this makes a lot of sense as it would allow the new leader put a Cabinet in place, to outline their plans and to ride the wake of an expected bump in the polls that is normally associated with a new leader.

If Ed Balls is ruled out of the leadership, as I think he will be, the question arises which Miliband brother will stand.

With the speculation in today’s papers around David Miliband been tipped as a leading candidate to become the European Foreign Minister, many think that this makes Ed the favourite. While David’s pro-european stance and his good standing in Brussels undoubtedly makes him a leading contender, to think that because of this he will rule himself out of the Labour leadership is too simplistic.

If he can get reassurances from Mandelson over his leadership bid then he will turn down any European position. This I believe is key and makes Milibands response the think to watch out for.

If Miliband is cool on the prospect of becoming European Foreign Minister then I think we can be sure that Mandelson is warming to David being leader. If he rejects the job out of hand, then I think its safe to say that he’s received the full support from Business Secretary for him leadership bid.

This obviously does not answer the question of what to do about Ed. The brother’s will be wary of doing a Blair/Brown type deal over the leadership. Having watched as that deal poisoned the relationship between the two men and how this infected the whole of government, they will be keen to avoid this at all costs. What I think we may see is one being the leader and the other being Chancellor.