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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Tony Blair suggests second EU referendum: "Remain voters are not an elite"

The former Labour PM said the facts of Brexit may change minds. 

Tony Blair has floated the idea of a second EU referendum after the terms of the Brexit deal has become clear.

The former Labour Prime Minister told the BBC "you can't just dimiss the 16m people" who voted Remain.

He said: "If it becomes clear that this is either a deal that doesn't make it worth our while leaving, or alternatively a deal that's going to be so serious in its implications people may decide they don't want to go, there's got to be some way, either through Parliament, or an election, or possibly through another referendum, in which people express their view."

Asked whether he was telling the 17m voters who wanted to leave the EU that they were wrong, he said: "You can't just dismiss the 16m people either and say their views are of no account. 

"And by the way, that 16m don't represent an elite, they represent people who genuinely believe that in the 21st century for Britain to leave the biggest political union and the biggest commercial market right on our doorstep is a serious mistake."

There is no way the Brexit decision can be reversed "unless it becomes clear that once people see the facts they change their mind," he said.

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