Cable and Hammond fight on as Osborne swings his axe again

Six more departments agree to cuts but Defence, Business, Education, Work and Pensions and Transport are yet to settle.

George Osborne's unusual running commentary on the Spending Review continues. In addition to the seven departments previously named as agreeing to cuts of "up to" 10 per cent, the Treasury has announced that Osborne has reached settlements with the Home Office (with counter-terrorism policing protected), DEFRA, DCMS, the Scotland Office, the Wales Office and the Law Officers Department (incorporating the Crown Prosecution Service, the Treasury Solicitor's Department and the Serious Fraud Office), all of which will be cut by an average of 8 per cent. The seven to settle last month were Justice, Energy, Communities, the Foreign Office, the Cabinet Office, the Treasury and the Northern Ireland Office.

But while the majority of departments have now agreed to further cuts, the absence of some of the biggest spenders from the list (Education and the DWP, as well as Transport and Business) means that, with just 12 days to go, the Treasury still has less than a third (£3.6bn) of the £11.5bn of cuts sought by Osborne. 

Health, International Development and the schools section of the Education budget are all officially protected but the rest still face the Chancellor's axe. Although Theresa May, one of the ring-leaders of the famed National Union of Ministers (NUM) has settled, Vince Cable (Business) and Philip Hammond (Defence) are fighting on. After the head of the army Sir Peter Wall warned that further cuts could damage the force's "professional competence" and "become quite dangerous, quite quickly", the latter is under particular pressure to prevent significant reductions. But Alexander made it clear that he was in no mood to offer special treatment. "In a department where there are more horses than tanks there is room for efficiency savings," he told Sky News. As for Cable, he has previously warned that "further significant cuts will do enormous damage to the things that really do matter like science, skills, innovation and universities", a message that was echoed by the CBI in its Spending Review submission this week. It suggested that £700m of medical research funding currently paid for by the Business Department could be transferred to Health, a move that would break the spirit, if not the letter, of the NHS ring-fence. 

Alexander also signalled that while there would be no further welfare cuts (after £3.6bn were announced in last year's Autumn Statement), this did not mean the Department for Work and Pensions was protected. He pointed out that welfare spending is classified as "annually managed expenditure", rather than departmental spending, adding that "there are lots of areas where the DWP has the capacity to make savings". 

Defence Secretary Philip Hammond stands in front of a Rapier System ground-to-air missile launcher during a visit to RAF Waddington near Lincoln. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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