Miliband promises to keep Cameron's EU referendum lock

Labour leader says he would not reverse measure previously denounced by his party as a "dog's breakfast" and a "political gesture".

Appearing on the Today programme this morning, Ed Miliband was asked the question that will be put to him repeatedly between now and the general election: will you offer the British people a referendum on the EU? He responded by saying that an in/out referendum now would be damaging to the UK's interests but went on to note that the coalition's European Union Bill meant a public vote would be triggered whenever there was a transfer of powers to Brussels. Significantly, for the first time, he said that Labour did not propose "repealing" the legislation. When the bill was debated by parliament in 2011, Labour denounced it as "unnecessary", a "dog's breakfast" and a "political gesture" to appease Tory backbenchers (it subsequently abstained from voting). But Miliband has now accepted that his party is in no position to oppose the measure, designed to safeguard UK sovereignty.

After David Cameron yesterday accused Labour of planning to take Britain into the single currency, Miliband also gave his clearest statement yet on euro membership. "Britain's not going to be joining the euro, it won't be joining the euro if I'm Prime Minister," he said. As Cameron is fond of pointing out, the Labour leader once previously remarked that whether or not the UK joined the euro would depend on "how long I'm Prime Minister for".

Repeatedly asked whether he favoured a "looser European Union", Miliband struggled to offer a satisfactory answer. He said that we were moving to a "more flexible" EU but argued that this was not the same thing as "a looser one". For now, Miliband rightly emphasises that the priority is to move Europe away from austerity and towards growth, but he will need a much more detailed answer before the election.

Intriguingly, then, Miliband said that he was willing to consider restricting benefits for EU immigrants. He told Jim Naughtie: "Of course that's an issue that should be looked at, the length of entitlement to benefits and how quickly can get them. All of these issues should be on the table."

The Tories will hope to use this to begin a political arms race that only one side can win.

 
Labour leader Ed Miliband said that an in/out referendum on the EU would cause dangerous uncertainty. 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