Sajid Javid speaks at the World Islamic Economic Forum at ExCel on October 30, 2013 in London. Photograph: Getty Images.
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Sajid Javid replaces Maria Miller as Culture Secretary

Osborne ally becomes the first 2010 Tory to enter the cabinet as Nicky Morgan is named women's minister. 

David Cameron took almost all of Westminster by surprise when he announced on Twitter that Sajid Javid, a key ally of George Osborne, would replace Maria Miller as culture secretary (becoming the first of the 2010 Tory intake to enter the cabinet). Most had bet on another woman taking her place, with Esther McVey, Nicky Morgan and Liz Truss among the frontrunners. 

But all become clear minutes later when Cameron announced that Nicky Morgan, currently the Economic Secretary to the Treasury, would take over from Javid as Financial Secretary and serve as minister for women, attending cabinet in that capacity. By promoting Morgan to the cabinet, Cameron has ensured that the number of women doesn't fall below the already lamentable level of five but Javid's ascension to Culture Secretary means there are now just three full members of the cabinet who are female (Theresa May, Justine Greening and Theresa Villiers) and not a single mother.

But in appointing Javid, the PM has wisely rewarded one of the brightest of the 2010 Tory intake (he became a vice president at Chase Manhattan at 25) and gone some way to addressing the Tories' ethnic minority problem. Javid, the son of a Pakistani bus driver, has previously urged Cameron to addresss the toxic legacy of Enoch Powell's "rivers of blood" speech, calling for the PM to say Powell "doesn’t represent what the Conservative Party is today in any way and to set out what the Conservative Party actually is when it comes to race relations, multiculturalism and so forth"

It's also worth noting that Javid has taken over the equalities brief from Miller. Morgan's opposition to equal marriage (she voted against it last year) was almost certainly a factor in the decision not to give her the job. 

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