When in a hole, prime ministers often go for a reshuffle as an answer to all their problems. I know from when I worked for Tony Blair at No 10 that reshuffles can often cause more harm than good.

On some occasions they are a mixture of comedy and farce, like the time when we phoned up the wrong MP who suddenly thought he had been plucked from obscurity. Unfortunately for him there were two backbenchers with the same surname and Mr Blair had to “pick his brains on a matter of national importance” for the next half-hour as a way of letting him save face.

On another occasion an MP was sacked for doing nothing wrong. It was merely that when she was replaced in her current job, someone forgot to pencil her in for a new one. The mistake was only realised once the reshuffle had been completed. Mr Blair had to come out with the implausible sounding football manager's response, telling the shell-shocked MP that he “was playing a rotation system, and she would soon return to government”.

Most of the time reshuffles end up with a lot of disgruntled ex-ministers knowing they will never again sit in a chauffeur-driven car, miffed MPs wondering how much more sucking up they need to do, and quite a few baffled ministers pondering which part of their CV made them “perfect for the job of agriculture secretary”. So reshuffles are seldom the solution. And Gordon Brown would be wise to steer clear of them.

However, there is one change that is essential and could signal the start of a more confident Brown premiership. David Miliband should be made Chancellor.

A prime minister needs his strongest minister as chancellor, and Mr Miliband is currently the strongest minister. He has a feel for economic policy as well as wide experience of all policy development as a former head of the No 10 policy unit. He would be skilful, has spent time thinking through what a post-Blair agenda looks like more than most, and combines an appeal to middle and lower-income voters.

I'm sure Mr Miliband himself would rather continue as Foreign Secretary, but moving him to the Treasury would show something else: that Mr Brown has the confidence to trust someone with the job, who is not in his inner circle, someone with an independent streak, who would not be pushed around. Mr Miliband would have the opportunity to take the fight back to the Tories, put David Cameron and George Osborne on the back foot and push forward a powerful agenda around his key theme of empowerment, giving people greater control over their lives.

A strong double act between prime minister and chancellor is often the engine of a successful government. Prime ministers benefit from having a strong chancellor, especially when times are tough. John Major benefited from Ken Clarke, Wilson from Jenkins, Callaghan from Healey, Thatcher from Howe and Lawson. Likewise prime ministers with weak chancellors - Tony Barber to Edward Heath, for example - result in much weaker government.

Mr Brown never needed a safety-first premiership. Rather, he had to perform an extraordinary act of renewal. He needed a chancellor to stand up in his first Budget and set out an agenda for both economic stability and reform. What Gordon Brown needed was a Gordon Brown as chancellor (minus the aggro). It may well be too late. But at least putting the right chancellor in place would provide a glimmer of hope. For there is nothing more important if Labour is to recover than to convince the public that the good times will return.

True, there are many reasons for Labour's problems: a resurgent Tory party, the inevitable sense that “it is time for a change”, media that never give the Government the benefit of the doubt, disunity among Labour MPs, the Prime Minister's own mixed performance.

But the thing that is causing the most damage is undoubtedly the economy. I know from the polling data I saw when working for Mr Blair that it was the strength of the economy and the public's optimism about their own financial wellbeing that kept Labour's support so buoyant during the difficult times. In a sense it saved Mr Blair during Iraq.

If it wasn't for people making a rounded judgment in 2005 and thinking: “We've had this terrible and unnecessary war, but at least we feel better off.” Labour would have been wiped out in 2005. Economic gloom has now combined with all the other problems to create electoral gloom.

Some would say Mr Miliband should be prime minister, not chancellor. That's not going to happen at this point. He won't challenge Mr Brown and I would be amazed if Mr Brown walks away from the job. Instead the Prime Minister needs to form a strong team with Mr Miliband, using him to explain the current economic uncertainties and to provide the policies and reassurance to get people through it. Mr Miliband would also provide greater clarity and fresh thinking on domestic policy.

Making David Miliband chancellor would show that Gordon Brown was serious about learning from the recent election defeats.

Peter Hyman worked for Tony Blair for ten years, including roles as chief speechwriter and strategist

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