Danny Alexander: we won't spend a penny more

Uneasy cabinet minister denies plans for an extra £5bn of capital spending.

With everyone from George Osborne downwards now acknowledging that growth this year will be weaker-than-expected, an argument has restarted in government about how best to stimulate the economy. Last night, the BBC's Nick Robinson reported that some cabinet ministers were agitating for an extra £5bn in capital spending, to be channelled towards the nation's roads, rail and broadband internet.

Naturally, Robinson didn't name names, but I draw your attention to comments made by Chris Huhne at a fringe event at the Lib Dem conference on Monday night. "Remember ... the target that we have is the structural current balance," the Energy Secretary said. "It is current not capital spending. That is an important distinction." In other words, the government could ramp up capital spending without breaching its fiscal mandate: to eliminate the structural deficit (the part of the deficit that remains even once when the economy has returned to normal growth) and to ensure a falling debt-to-GDP ratio by the end of the parliament. Huhne has since insisted that he doesn't recognise the £5bn figure and that there is "no such plan". As the great Claud Cockburn once quipped, "never believe anything until has been officially denied".

Whoever the culprit was (and Vince Cable uttered the s-word - stimulus - several times in his speech), they were swiftly squashed by the Treasury. "We have our spending plans and we are sticking to them," a spokesman said.

Appearing on the Today programme this morning, an uneasy sounding Danny Alexander stuck to the script. The government would "strain every sinew" to promote growth but it would not spend a penny more then the limits set out in the Spending Review. "We have set out plans on capital spending, we're going to stick to those plans across the board on spending," the Chief Secretary to the Treasury said. He added: "I just don't recognise the numbers involved or the process as described."

It was Chris Huhne who previously suggested that the cuts could be scaled back in the event of a serious downturn, and who declared that he was not "lashed to the mast" of deficit reduction. But Alexander certainly is. As growth continues to fall and unemployment continues to rise, this is one argument that will not go away.

George Eaton is political editor of the New Statesman.

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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.