Balls takes on rivals as he fights to avoid a 'Portillo moment'

Having to debate immigration with a BNP candidate in front of an animated crowd in a West Yorkshire town was probably not where Ed Balls had planned to be on the Friday before polling day.

But there is an expectation in Westminster that the Prime Minister's protégé, and closest Cabinet colleague, will jockey to replace him as Labour's next leader, if Gordon Brown stands down after the general election. Yesterday he declined to rule himself out of the running.

But to get there Mr Balls has a more prosaic challenge: avoid defeat to the Tories, who seek to "decapitate" Labour by removing him in what would be the 2010 election's "Portillo moment". He insists he is not having sleepless nights and that he has been prepared all along for a photo finish. "There was a different situation with Michael Portillo," he insisted. "Everybody thought he was going to win his seat back in the 1997 election, including, I believe, Michael himself. So it was a surprise that he did not.

"I knew when the boundary changes were announced, that it was going to be a fight, so there is no complacency."

He would have been left without any doubt about the scale of the battle after yesterday's high-profile public hustings in the new and marginal seat of Morley and Outwood – the most spirited fixture so far on The Independent's soapbox debate tour of Britain.

The Yorkshire market town of Morley, with a population of 50,000, is said by locals to have been built on seven hills, like Rome. An at-times-choleric crowd of about 250 people participated in a heated exchange between the five parliamentary candidates, with television satellite trucks and foreign newspaper reporters in attendance.

There were banners demanding jobs for British workers and also a vocal contingent of far-right activists supporting the British National Party candidate, Chris Beverley, who was born in the town and is already a Leeds City councillor.

Mr Balls acknowledged the concerns about immigration voiced by a certain Rochdale pensioner to Gordon Brown this week, and went so far as to say: "I have seen the film and I have read the transcript and I think that Gillian Duffy was quite right in what she was saying."

He said immigration was a valid concern: "Immigration is an issue here in Morley but it is never good to see the BNP out on the streets. They are a scar on the community." There were claps and cheers in support, while others booed and held aloft BNP posters.

"I see your BNP signs," said Mr Balls. "The idea that you said, as the BNP do in their extremism, that if you are British, if you were born in our country, if you fought abroad in our armed forces, if you've got a part colour of skin, if you're black, you're second class and you shouldn't be able to be in the queue for housing, or you shouldn't be able to play football for England abroad in the World Cup – I think that racism and intolerance is extreme, it is foul and not British at all."

Mr Balls's Tory rival for Parliament, Antony Calvert, whose campaign has been bolstered by the visits of David Cameron, said: "We [in Morley] don't have BNP councillors because people are racist but because they have lost faith in the system."

Earlier in the campaign Mr Calvert spoke of his hope of "castrating" Labour by removing Mr Balls, and the two men's antagonism boiled over when Mr Balls attempted to unsettle his fellow candidate while he was speaking, leaning over and whispering "shameful, shameful" into his ear.

Mr Calvert turned on him: "Simply raising the question is not shameful."

Mr Balls was also seen to whisper "you need to calm down, you're doing yourself no favours", after the Tory candidate delivered a particularly impassioned answer. Mr Calvert muttered back: "Calm down? I'm trying to win an election, mate." He later brushed off the incident: "I have played cricket, I can handle a little sledging."

As dissent swelled, one angry voter leant over and offered Mr Balls a £10 note, saying: "Just take it now, it would be easier."

The candidates, who also included the Liberal Democrats' James Monaghan and Ukip's David Daniel, said it was the area's first public husting in 20 years. Mr Balls's old Normanton seat was abolished and he defends a notional majority of 8,669 in Morley and Outwood. The Tories require a 10.47 per cent swing from Labour to win.

In an interview with The Independent afterwards, Mr Balls was asked if he would rule himself out of a Labour leadership contest after the election. He replied: "I have always said that if I said I was ruling myself out, people would not believe me, and if I said I was ruling myself in, people would not believe me either. It is not my burning passion, I care about winning the election."