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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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.