Ed Miliband speaks at the Scottish Labour conference on March 21, 2014 in Perth. Photograph: Getty Images.
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Miliband makes hay of Cameron's "utter humiliation" over Europe

The Labour leader routed the PM in the Commons as he derided "a masterclass in how to alienate your allies".

After another bad weekend for Labour, marked by Jon Cruddas's attack on the party's "dead hand", Ed Miliband has just lifted his MPs' spirits with one of his strongest Commons performances to date. Responding to David Cameron's statement on last week's EU summit, he brutally assailed the PM's failure to block Jean-Claude Juncker's nomination as commission president.

Cameron, he noted, started by claiming that he had the support of Germany and others to block the former Luxembourg PM, but his "threats, insults and disengagement turned out to be a masterclass in how to alienate your allies and lose the argument for Britain". He insisted that the EU was not unreformable - "it's just that he can't do it". It is unlikely that Labour would have been able to block Juncker (whose candidacy it also opposed),  but this did nothing to dull the force of his performance.

The strategy of threatening EU withdrawal, he declared, "was put to the test and failed".  If the PM couldn't get three countries (Germany, the Netherlands and Sweden) to oppose Juncker, how could he hope to get 27 to support his renegotiation plan? It is a question that Downing Street itself is asking after Angela Merkel (the pivotal figure in Cameron's strategy) failed to deliver on her promise to line up against Juncker. For some Tories, this is cause for celebration as the UK drifts towards the EU exit. But as Miliband reminded MPs, Cameron has been and remains a supporter of British membership - this was not an outcome he ever intended. The PM, he concluded, had been "outwitted, outmanoeuvred, and outvoted" with his renegotiation strategy "in tatters".

Cameron replied by comparing Miliband's lengthy response to Neil Kinnock ("endless wind, endless rhetoric"), a jibe that went down predictably well with the Tory benches, and declared that he wouldn't take lectures from the people who gave away the national veto over the commission presidency. He went on to ask where Miliband was when the European Socialists  voted to support Juncker. But he had no adequate response to the charge that his renegotiation strategy was now fatally flawed.

The one card that Cameron can still play is that he will allow the British people to determine the UK's future in Europe. Labour's refusal to match Cameron's guarantee of an in/out referendum sits uneasily with its new emphasis on "people power" and devolving decision-making. Should the Lib Dems change their stance and promise a vote, it will be even harder for Miliband to defend his position (despite it being the correct one). But for now, he can savour a victory over a PM, who, as he said, "is not in splendid insolation, but in utter humilitation".

George Eaton is political editor of the New Statesman.

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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