Reshufflitis breaks out in Westminster

The prospect, however slim, of a cabinet vacancy releases a predictable surge of stored up speculati

So the Crown Prosecution has announced it will declare tomorrow morning whether or not Chris Huhne, Energy Secretary, will be charged in relation to allegations - steadfastly denied - that he persuaded his ex-wife to take speeding points on his behalf.

Huhne's statements on this have been unambiguous and robust, so if it turns out the CPS thinks there is a case to pursue he will be in trouble. A prosecution doesn't necessarily mean the man is guilty - he has the right to remain innocent until proven otherwise.

But the noises coming out of Downing Street and Lib Dem high command suggest a sword would quickly be offered for the Energy Secretary to fall upon. He could always use the old line of not wanting the whole business to be a distraction for the government, a position wholly consistent with protestations of innocence.

And indeed the CPS might well say there is insufficient evidence and Huhne can get on with his business (although there is no doubt he has been politically damaged by the accusations either way).

One reason why tomorrow's announcement is anticipated with inordinate excitement in Westminster is the high levels of pent up reshuffle energy. David Cameron has famously avoided swapping ministers between portfolios in the restless way that was Tony Blair's preferred management style. There were some movements and promotions when Liam Fox resigned last year but it was hardly a great re-ordering of the pack. There are good reasons why Cameron hates reshuffles. He wants ministers to actually master their briefs, which takes time. And he heads a coalition, which means a delicate balance of Lib Dems and Tories has to be maintained.

If Huhne has to go - and this is, I hasten to add, veering off a little prematurely into the realms of speculation - a vacancy would be created for David Laws to return to the cabinet, although it is uncertain he would want the Energy portfolio. There has been a fair amonunt of speculation that a lower ranking Lib Dem might up up for elevation. Edward Davey at the Business Department is often tipped for promotion.

But there is a feeling around government that it might, at last, be time for a more ambitious round of musical chairs. Crucially, anxiety about the passage and presentation of health reforms in Downing Street is approaching the status of panic. There is very little confidence left in Andrew Lansley, the Health Secretary, to explain to people what exactly it is he means to do to the NHS, let alone persuade them it is a good idea. Might a forced reshuffle provide an opportunity to put the Department of Health portfolio into a pair of hands somewhat safer than Lansley's have proved to be?

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR