PMQs review: a win for Miliband as Leveson looms

The Labour leader exposed the coalition's failure on the Work Programme.

Ahead of the release of the Leveson report tomorrow, today's PMQs was a nervy, ill-tempered affair. Ed Miliband devoted all six of his questions to the government's troubled Work Programme, declaring that David Cameron "got rid of a Labour programme that was working [the Future Jobs Fund] and replaced it with a Tory one that isn't". The facts were on Miliband's side. As he pointed out, just 2.3 per cent of those referred found a job for six months or more in the first year of the scheme. While the Future Jobs Fund helped 120,000 people into work, the Work Programme has helped just 3,000 people. And, since June 2011, long-term unemployment has risen by 96 per cent, a stat that Cameron, unable to refute, simply ignored.

But this wasn't quite the resounding victory that it should have been for Miliband. In a reference to yesterday's tempestuous cabinet meeting, he declared that ministers were "at each other like rats in a sack", to which Cameron artfully replied, "he worked in a government where the Prime Minister and the Chancellor couldn't even be in the same room as each other." The Labour leader's stop-start delivery (pausing to tell Tory MPs to "calm down" at one point) meant his final question lacked force. But Cameron's boilerplate response - "we're putting the country back to work, their party wrecked it" - suggested a man who had given up winning the argument.

In response to questions on Leveson (most of which came from Tory MPs concerned about press freedom), Cameron, who received a copy of the report today, emphasised the need for an "independent regulatory system in which the public can have confidence" but said nothing to suggest that he favours statutory regulation. He later added that "whatever the changes we make, we want a robust and a free press in this country". Miliband echoed Cameron's hope of reaching an all-party consensus, speaking of a "once in a generation opportunity for real change". But while Labour won't receive a copy of the report until tomorrow, Nick Clegg, like Cameron, already has one. In the event that consensus proves elusive, Clegg has approached the Speaker about the possibility of a separate Commons statement tomorrow.

Labour leader Ed Miliband said Cameron "got rid of a Labour programme that was working and replaced it with a Tory one that isn't". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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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