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It's been a long time coming. The signs were all there. It was inevitable once he decided to run again for mayor. Boris has decided to confront Dave head on.

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This morning the Mayor of London has condemned planned cuts in housing benefit as leading to "Kosovo style social cleansing". He told the ³ÉÈË¿ìÊÖ that:

"You are not going to see, on my watch...thousands of families being evicted from the place where they've been living and where they have put down roots. That is not what Londoners want to see. It's not what we're going to accept."

This just a day after the prime minister said he would not back down from plans to cut housing benefit and two days after his deputy, Nick Clegg, angrily rejected Labour attacks on "cleansing" as "outrageous" and

"deeply offensive to people who have witnessed ethnic cleansing in other parts of the world".

What makes this political battle so potentially explosive is that both Boris and Dave believe that they are speaking up for the people, both are using housing benefit to make a wider political point - Boris is "standing up for London", Dave is "standing up for fairness" - and both will find it very hard to back down.

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When David Cameron picks up the phone to Europe today his position will resemble ). The coalition agreement hammered out by the Eurosceptic Tories and the Euro-enthusiast Lib Dems is summed up by both sides as "not forward, not back". In other words, moving nowhere much at all.

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The problem is that when the prime minister calls Chancellor Merkel and President Sarkozy and President Van Rompuy today he'll be reminded that France and Germany don't want to stand still - they never do. They believe that Europe's institutions need strengthening to protect the EU from a repeat of the eurozone crisis. Germany's constitutional court is demanding that new temporary powers be given permanent status in a new treaty.

What's more, or in the tearooms afterwards, he'll be told by his backbenchers that they too don't want the EU to stand still. They want its budget cut and its powers reduced.

So, what will the push-me-pull-you do? He'll advise his fellow leaders to find ways to strengthen the eurozone without a treaty change which will lead to demands for a referendum here and an unpredictable parliamentary vote. Or, if they insist on a new treaty, he'll insist that it doesn't give Brussels fresh powers over British policy.

He'll also pick a fight over the EU budget, demanding that it be capped. Thus he will seek to convince all parts of his coalition - within Parliament and beyond it - that Britain is not moving closer to, or further from, the heart of Europe.

The moral of the story is, however, that it is only in fairy stories that nothing changes year in,year out. One day the push-me-pull-you will have to go one way or the other and, when he does, there'll be trouble.

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If you were watching the 6 O'Clock News last night, you may have seen a "Troops Out" sign on a large pole being waved behind my head.

I have a confession. After the news was over, I grabbed the sign and ripped it up - apparently you can watch video of my sign rage in full glorious technicolour on the web. I lost my temper and I regret that. However, as I explained afterwards to the protesters who disrupted my broadcast, there are many opportunities to debate whether the troops should be out of Afghanistan without the need to stick a sign on a long pole and wave it in front of a camera.

I am a great believer in free speech but I also care passionately about being able to do my job reporting and analysing one of the most important political stories for years.

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Today the chancellor delivered what is only the opening line of what is set to be a long-running political saga.

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George Osborne set out the story that he is hoping to see unfold - the deficit tamed then eliminated, welfare reformed, waste cut but spending on the NHS, schools, big transport infrastructure projects and overseas aid all protected.

Those who work in the public sector will get paid less and have to pay more for their pension - if, of course, they keep their jobs. And, since we are "all in it together", we will all have to work longer before being entitled to a state pension.

It is not the government, however, which writes the whole of this story.

The next chapter is likely to examine the consequences of unprecedented cuts in welfare spending. The headline saving - £18bn in total - is, remember, the equivalent of 18 million households losing £1,000 each. A significant number of people who now depend on housing benefit, council tax benefit, tax credits and what used to be called "sickness" benefit will receive significantly less or stop receiving benefits altogether.

Turn a page or two and we'll find out which jobs and services councils have to cut to save around a quarter of their budgets.

Keep flicking forward and we'll see how long the relief felt in schools and hospitals lasts given what is still the tightest settlement for them in many, many years.

None of this will determine how this saga ends - that will depend on whether the economy grows enough to absorb the cuts and the consequent job losses or whether it stalls, leaving people to dwell on what many will, undoubtedly, see as the unfairness of it all.

The chancellor's speech suggested a title for the work he began today - "Back from the Brink". He knows that if he's got this wrong he will be accused of pushing Britain "Over the Precipice".

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I'm just beginning to dig thought the detailed briefings supplied by government departments and will post details as I get them.

Here's the first - there'll be 3,000 fewer prisoners in four years time than there are now.

And the second - rail fares up 3% more than RPI inflation from 2012.

And the third - council tax benefit down by 10% and councils able to decide who gets it.

And the fourth - 40% cut in higher education.

And the fifth - flood defences cut by 15%.

And sixthly - Sport England and UK Sport cut by 30%.

That's just spinning through what the government is choosing to highlight but gives an indication of what else will be unearthed in the paperwork in the weeks, months and indeed years to come.

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The chancellor has just announced cuts in council spending by over a quarter over four years. He also announced that he was removing ring-fenced grants. It reminds me of the old Whitehall saying: "Governments with money centralise and claim the credit, those without decentralise and spread the blame".

Update 13:05: A fair cop?

Police budgets are to be cut by 14% over four years but the chancellor says his "aim is to avoid any reduction in the visibility and availability of police on our streets". That will only happen if the police agree to massive changes to cuts in their overtime and radical changes to their working practices.

I note that the chancellor is using annual cuts rather than four-year cumulative figures and that he is refusing to predict implied job losses - except that is for endorsing the document seen in Danny Alexander's car yesterday which repeats the Office of Budget Responsibility forecast of 490,000 public-sector job losses over four years.

Update 13:06: Carry on working

The chancellor's big surprise announcement is that the state pension age will rise for both men and women to 66 starting in 2020. This is actually later that George Osborne proposed in his as shadow chancellor at the Tory conference in 2009 when he proposed that this change would begin in 2016.

This raises no money in this Parliament or this Spending Review. It hits women particularly hard. Perhaps that's why he favoured delay.

Update 13:13: Welfare cuts

The chancellor's announced a series of complex welfare cuts raising £7bn. It's worth remembering that £7bn is equivalent to £1,000 taken from seven million people so it will hurt a lot of people.

Just one example, the 12-month limit to those living on "sickness benefit" who are not deemed incapable of work will, in particular, hit older men who used to be in manual jobs who think they've paid their "stamps" - national insurance contributions - to be on a benefit other than the dole.

Update 13:38: The Department of Communities and Local Government says council "funding" is to be reduced by a quarter, not council "spending" since councils also have funding from council tax. They tell me that spending will fall by about 14% once you add that in.

Update 13:41: The big winner is...

Other than the NHS and overseas aid the big winner of this Spending Review is the schools budget in England.

Having said that "winning" means a departmental cut of "only" 3.4% in real terms over four years and only ensures that "spending per pupil does not fall". My post last Friday pointed out that, nevertheless, some schools may lose whilst others gain.

This was the meant to be the rabbit pulled from the chancellor's hat.

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In the space of 24 hours the government has gone from proposing a plan that would have cut the ³ÉÈË¿ìÊÖ's budget by over a quarter to freezing the licence fee for six years, which, combined with additional costs, amounts to a 16% real terms cut in funding.

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The negotiations began, I'm told, with the ³ÉÈË¿ìÊÖ Trust warning that it would fight "tooth and nail" to resist a proposal that the corporation pay for free TV licences for the over-75s. Trust members argued the move would turn the ³ÉÈË¿ìÊÖ into an arm of the welfare state and undermine its independence.

Discussions ended with all-night consideration of a package that the corporation decided would be tough, but would preserve its size and scope and guarantee its finances until after the next election.

The Treasury believes it forced the ³ÉÈË¿ìÊÖ to adapt to the age of austerity. The ³ÉÈË¿ìÊÖ hopes it has short-circuited a long and potentially painful debate about cutting it down to size and now has the certainty to plan for the future.

Whoever's right, it's a pretty curious way to determine the future of British broadcasting.

I wonder what Rupert Murdoch will have to say about it when he speaks in London on Thursday.

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The ³ÉÈË¿ìÊÖ licence fee is to be frozen for the next six years at £145.50.

The ³ÉÈË¿ìÊÖ will also take over the cost of the World Service and , currently funded by the Foreign Office, and pay the government's contribution to funding the Welsh-language channel .

A formal announcement will be made tomorrow.

The ³ÉÈË¿ìÊÖ is refusing to comment but insiders say that this is a significantly better settlement than the proposal to force the ³ÉÈË¿ìÊÖ to pay the cost of free TV licences for the elderly. It will mean a 16% real-terms cut in the ³ÉÈË¿ìÊÖ's funds over the next six years as against a 25% cut over four.

Some ministers are, I'm told, presenting this settlement as "reining in" the Corporation's costs.

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Test firing of a Trident missile

Aircraft carriers without aircraft (unless the French help out)...

A £3bn ship being built which the government doesn't really want and may sell soon after it's finished...

Trident's renewal postponed - allowing a future (Lab/Lib?) government to re-open the question of the need for a continuous at-sea deterrence again...

Pause for a minute and imagine how the press would have greeted these proposals if Gordon Brown had announced them.

Of course, David Cameron will almost certainly blame his predecessor for the fact they have had to be made at all.

These are extraordinary political times.

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Labour abandoned Prudence a long time ago but today the shadow chancellor attacked her succesor Tina. Those of a certain age - and Alan Johnson keeps reminding us that he is of a certain age - will recall that Tina was an acronym from the Thatcher years for her claim that "There Is No Alternative".

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Johnson did not spell out an alternative policy but sketched out an alternative approach which puts the emphasis on growth, not deficit reduction; warns that Britain is more likely to follow Ireland than Greece; calls for fewer and slower spending cuts and for higher taxes - though not on "ordinary people".

For the moment I see more politics than economics here. Labour have decided not to have an argument about the need for cuts nor to have one about welfare reform but, instead, to position themselves ready to say "I told you so" if growth falters and as defenders of child benefit and critics of bankers bonuses.

Here are a few key extracts from his speech:

"We argue for a slower pace of deficit reduction - to support growth and jobs.
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"We support specific tax rises - protecting crucial investment that will deliver growth for the future.
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"And we recognise that welfare must play its part in bringing spending down - protecting public services.
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"Clearly there is an alternative.
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"The coalition's austerity strategy amounts to a huge risk with growth and jobs.
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"By going hell for leather on cuts, at a time when the private sector cannot be expected to pick up the slack, they run the risk of leaving us with higher unemployment, deprived communities and a diminished society.
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"Taking a slower, less damaging route as we propose provides a credible plan, securing growth and protecting public services.
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"Requiring a greater contribution from the banks. And tough choices on spending and welfare.
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"So there is another way. The Government needs to unlash itself from the mast and take a new direction."

On growth:

"Yes - there must be cuts. Tough choices do have to be made - a point I will return to.
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"But without growth, attempts to cut the deficit will be self defeating.
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"A rising dole queue means a bigger welfare bill. And less tax coming in.
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"In the current circumstances the government should at the very least be re-profiling their deficit reduction plan."

On Tina:

"Having been in semi-retirement since the 1980s TINA has reappeared. THERE IS NO ALTERNATIVE say Cameron and Clegg.
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"Tina is the justification for the U-turn on VAT, on rocketing tuition fees, on means testing child benefit and £6bn of in-years cuts."

On children... and bankers:

"The Government, which claims 'fairness', has put itself in the absurd position of saying that children should play a bigger role in getting the deficit down than the banks.
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"The banking sector is contributing £2.4bn, while child benefit freezes and cuts will raise substantially more.
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"So families take the strain while bankers grab the bonuses. There is no justification for such an unfair sharing of the burden."

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The political and economic argument which will shape not just the next few months but the next few years is highlighted clearly this morning.

The new shadow chancellor Alan Johnson will deliver a speech this morning, claiming that the government has "lashed itself to the mast of a deficit reduction plan that has more to do with the date of the next general election than with the economic cycle". He will argue that there is an alternative to the chancellor's approach which involves greater flexibility in uncertain economic times.

This comes as 35 business leaders ranging from the head of Asda to the chairman of GlaxoSmithKline and the chief executive of Next have written a letter, backing the chancellor's plan to cut debt on the timescale he's already set out as a way to avoid rises in interest rates and taxes.

Gordon Brown used to shout at his colleagues that they could never win a debate between "nice Labour cuts and nasty Tory cuts". That's precisely where the coalition will want the debate to lie - demanding to know what Labour would cut instead.

Ed Miliband has taken a defining political step by ignoring his former boss and trying to portray the Tories as cutting too far too fast as they are driven by a mixture of politics and ideology.

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The ³ÉÈË¿ìÊÖ has learned that ministers agreed the schools budget for England today and are set to claim that schools will be protected from across-the-board spending cuts which will be announced next week. In the past few days other government departments have been asked to make even deeper cuts than they'd already agreed to in order to help fund what the government hopes will be seen as one piece of "good news" to emerge from the Spending Review.

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When the Deputy Prime Minister Nick Clegg announced plans for a "pupil premium" - extra spending on the most deprived children - earlier today it was not clear whether this extra funding would simply be wiped out by other cuts to school budgets. I understand that next week the government will claim that when the pupil premium is added to the rest of the schools budget ministers will say that they have secured a small real terms increase.

The new pupil premium could see the budgets of some schools increase while other schools face a decrease since their funding will depend, in part, on the number of poorer children they educate. Even those schools which receive small spending increases will find their budgets very tight in comparison to the significant spending increases they've seen in the last decade. In addition, school rolls are projected to increase by around 80,000 over the next four years so there will be even less of an increase per pupil.

The protection of the schools budget will not apply to the rest of the education department's budget which will see a significant cut. This will compare with an increase in spending on education of 4.3% on average each year under the last Labour government and 1.5 % under the last Conservative administration.

Politically, however, ministers see a real terms increase in school budgets as a significant political prize allowing them to match and, perhaps, exceed the promise of the last Schools Secretary, Ed Balls, to increase the schools budget by 0.7% in real terms in the next two years.

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Simon Hughes continued to insist yesterday that the increase in tuition fees was not what his party wanted to do. There's one problem with this. It isn't true.

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Don't misunderstand me. I am not accusing the Lib Dems deputy leader of lying. He and many in his party really did want to cut tuition fees and believed that it was possible.

However, the powerful troika at the top of the party did not. Before the election Nick Clegg, Vince Cable and Danny Alexander tried to persuade their colleagues to drop their opposition to fees.

They even drew up proposals which were, I'm told, remarkably similar to those drawn up by Lord Browne - higher fees combined with more generous maintenance for the poorest and a hike in the salary level at which repayment begins.

The troika's regret is not that they are now putting fees up but that, back then, they ever promised not to do so.

Their attitude to raising fees is, in truth, like Tony Blair's to the Iraq War. He used to infuriate opponents of the war by telling them: "It's worse than you think. I really believe it." I suspect that Messrs Clegg, Cable and Alexander will not be so undiplomatic.

In return for taking the political hit for eating his words, Clegg is to be given the chance to unveil plans later this week for the other thing he really believes in - the pupil premium.

Talking of which, Alan Milburn - the social mobility tsar (if that is not a contradiction in terms) - makes an interesting speech today in which he argues that the coalition should go even further in encouraging a schools market to improve failing schools.

He proposes introducing an Education Credit - worth 150% of the cost of a child's education - to allow kids to escape the worst performing schools. Here's an extract of what he will propose:

"I believe that individual parents with children in schools where performance is officially assessed as consistently poor - often in the poorest parts of the country - should be given a new right to choose an alternative state school. Those parents would be given an Education Credit weighted to be worth perhaps 150% of the cost of educating the child in their current school. They could then use the Credit to persuade the better performing school to admit their child. The admitting school would have a positive financial incentive to do so. Indeed, for children holding an Education Credit the alternative school would be free to go above its planned admission numbers - although of course it could decide to cap its expansion at what it considered an appropriate level."

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Confident, focused, unshowy. Ed Miliband made an impressive debut at .

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He showed a determination to stick firmly with his strategy of standing up for those he's dubbed the "squeezed middle" and highlighting the alleged unfairness of the government's plan to cut child benefit for top-rate taxpayers.

Most importantly of all, he resisted the temptation to deploy a carefully prepared soundbite or gag which had been over-practised in the mirror and, instead, simply and untheatrically, demanded answers to questions.

You could almost feel the wave of relief in the Parliamentary Labour Party and sense the Tory benches thinking "this might not prove to be as easy as we had thought".

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Who would have thought it? The Liberal Democrats today tore up their election promise to oppose any increase in tuition fees and the signs are that Vince Cable might actually pull this off.

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No-one in his party stood up to protest. That's not to suggest that his party are happy. Many Lib Dems will vote against his proposals - including former leaders Charles Kennedy and Menzies Campbell. However, they have just missed their first opportunity to fight. It will require a mass revolt of the Lib Dems and the full support of all other parties to see these proposals defeated.

That's why another new development is critical. Labour's new leader Ed Miliband backs a graduate tax but he does not have the backing of his own shadow cabinet. The man he chose to be shadow chancellor, Alan Johnson, has not - contrary, I confess, to what I said on the Today programme earlier - eaten his words on opposing a graduate tax.

In fact, Johnson has let it be known that he will not support a graduate tax even if his new leader does and it becomes party policy. What's more, I'm told, other members of the shadow cabinet took his side at today's first meeting of Labour's new team.

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Up until now the focus of the argument about university finance has been on the poorest. That will soon change.

Lord Browne has clearly put a lot of energy into worrying about those from the poorest families and graduates on lower incomes. So much so, that he claims that one in five graduates will actually pay less under his system.

There'll be a more generous package of grants and loans to cover maintenance costs for those eligible and a significant rise in the level of salary a graduate can earn before paying back any of their student debt (from 15k to 21k).

Critics still say that his package is not progressive enough and could actually result in those earning, say, 30k to 45k paying back more than those on higher incomes. The reason for this is that, under Browne's proposals, graduates will pay 9% of their earnings each year, as they do now. However, unlike now, the debt owed will increase over time as Browne is proposing that graduates start to pay the real rate of interest on their debt. Thus, if Daddy can pay off your debt or if you can pay it back quickly because you're earning a lot, you will end up paying less for education than someone who does it steadily over the years - just like any other debt, in fact.

There are a couple of ways in which Vince Cable may be able to make the system more progressive than Browne proposes. He could:

• Limit the speed student debt can be paid back - in the way mortgages carry a penalty for early repayment

• Increase the rate of interest charged to the richest graduates so that they subsidise those who never re-pay their student debt. Browne proposes that graduates are charged a rate of interest equal to the cost to the government of borrowing money - that's RPI plus 2.2% (still lower than a cost of a loan from a bank). The government is looking at charging RPI + 3%

What I'm told he will not do is propose that the richest should pay back for extra years to subsidise the poor. The reason is practical as well as political. Officials have told ministers that if people are charged more than the cost of their education the system would be regarded as a tax within the national accounts - meaning that the government's liabilities would appear as part of the national debt. What's more, many Tories will not wear the idea of a doctor being overcharged to subsidise someone who did media studies and ends up in a poor-paying job.

Forgive the detail but this argument - rather like the one about the removal of child benefit - will take place at two levels - the principle and the painstaking detail.

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Here's what to remember when you hear politicians trading blows about tuition fees:

• Labour introduced them and commissioned the report proposing that the cap on them be lifted, but now says it wants them abolished

• the Tories originally proposed scrapping them, but now backs almost doubling them

• the Lib Dems said they'd vote against any increase in tuition fees, but are now in charge of the department which will do just that

• if Lib Dem ministers and the Tories stick together, these proposals will get through - even if a large number of Lib Dem MPs rebel against their party line

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He described it as a "deeply distressing development" and a judgement he would "go over in my mind 100 times".

The prime minister looked and sounded profoundly affected by the news that he had to unveil at his Downing Street news conference - that British aid worker Linda Norgrove may have died as a result of a hand grenade detonated by her would-be American rescuers.

Update 1314: The prime minister's news conference was delayed by almost an hour this morning as he was determined to speak to the Norgrove family before answering questions in public about the death of their daughter Linda. The family lives on the isle of Lewis and has no phone. The mobile signal on the island is unreliable. A liaison officer was sent to the island this morning to help arrange the call.

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The Lib Dems fought the election opposed to university tuition fees. The Conservatives oppose a graduate tax. Put them together and what do you get? A coalition which proposes a progressive graduate contribution.

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What, you may wonder, does that less-than-snappy title mean? Well, it looks to me like ministers are heading towards a mixture of higher and variable tuition fees together with a limited form of graduate tax. Fees will increase and be variable; repayments will start at a higher level of income than is the case now; poorer graduates will pay no interest whilst the better-off pay the interest in full (not a subsidized rate as now).

The theory goes that:

• The universities therefore get what they want ie more cash
• The government doesn't have to give what it hasn't got ie more cash
• The Tories have seen off what their activists won't tolerate - a pure graduate tax in which people pay throughout their working lives rather than repaying the actual cost of their education
• The Lib Dems get a system where the poor pay no more than they do now, and some less, while the rich pay significantly more

So, what's the problem?

The title "graduate contribution" will never catch on. Angry Lib Dems will see it as code for higher fees which they promised to vote against. The more help the Tories give Vince Cable to sell the idea to his backbenchers the more it may look like a graduate tax or, as many would put it, "another tax on the middle classes".

Then, as with child benefit, there will be the inevitable alleged "unfairness" of one student being in line to pay zero interest living next to a fellow student who will pay the full whack.

This is going to be a hard sell.

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Whatever reason Ed Miliband had for choosing Alan Johnson - see my last post for the full range of options - he has made a clear policy choice.

Labour will now stick with the Darling plan to cut the deficit in half over four years rejecting persistent advice - offered both before and after the leadership election from Ed Balls or Yvette Cooper - that Miliband should abandon it.

Their advice was that sticking to the Darling plan was dangerous not only economically but politically too.

It would, they argued, allow the coalition to label any cuts it made "Labour cuts" - made necessary by the failures of the last government.

They believe that only by challenging the need to make deep cuts now can Labour escape the questions - "Aren't these cuts your fault?" and "What would you do?"

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I once told Alan Johnson that some in the cabinet were arguing that he should replace Alastair Darling as chancellor. His communication skills, wry good humour and common sense were regarded by many as making him the perfect foil to Gordon Brown and more likely to cheer up the nation up than Darling himself.

I well recall his reaction - he looked like he'd swallowed a wasp. Unlike the other obvious candidate back then - Ed Balls - he had no economic training and was not desperate to do the job.

So, why has Johnson been given the economic portfolio now?

In part because he is not Ed Balls - whose experience, strong views and pugilistic manner made him a frightening as well as an attractive choice for the job.

In part because appointing Yvette Cooper would look too much like an obvious snub to her husband.

In part because - as I wrote earlier - Ed Miliband needs an experienced symbol of his reaching out to the majority of the Labour membership and Parliamentary party who voted for his brother and who don't want to rip up Labour's past.

Though he's a former postie and union leader, no-one will ever accuse Johnson of being "red" like Ed. In what surely will be his last big job in politics, he poses no threat to his young new leader. A loyalist by instinct, he will now be more likely to give his advice in private than in public.

AJ - as he's fondly known - will not come up with an alternative economic policy on his own but he will be able to deploy his wry humour and connection with the real world to portray George Osborne as an out-of-touch rich kid.

His appointment is a sign of Ed Miliband's relative weakness in his party but also of his determination to heal the breach which began when he challenged his brother.

Update, 14:51: Proof that Ed Miliband has played it safe comes in the form of :

"We've got to be very careful how we play this," Johnson says about suggestions from the younger Miliband's camp that Labour should soften AlistairÌýDarling's plans to halve the deficit over four years with £44bn of cuts. "We're coming back up in the polls but all the signs are public are not buying this 'Labour cuts' argument: the deficit was something we just did because we just threw money around rather than the fiscal stimulus to save people's houses. They want to be absolutely clear that we are taking a sensible approach to this. They don't want to see the deficit go on forever."

Johnson says Labour must understand why the coalition is ahead in the polls on the issue of the deficit. "I think the reason why they took to the coalition is they thought, well, here's someone rolling their sleeves up and getting down to the job."

Labour will only be able to attack the coalition's more drastic deficit plans, involving £61bn cuts, if it keeps a credible plan itself. "We have to be sure we've got a valid, logical, argument for how we would tackle this differently, and why it would not have the disastrous consequences that I think 25% cuts [will] have."

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Ed Miliband's already shown that he's politically brave. After all, he fought and defeated the favourite, the establishment's choice and his own brother to become leader; then promptly fired Labour's Chief Whip Nick Brown.

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The question, though, is what is the brave choice today? Is it to appoint Yvette Cooper as shadow chancellor or to give it to the obvious choice - her husband Ed Balls or someone else?

Balls is the more obviously qualified choice, but is more associated with Labour's past and infighting. He is the greatest long term threat to Miliband if his leadership is not a success. Appointing him would, therefore, be brave.

Cooper fits more neatly into Miliband's theme of a "new generation" despite having been Alistair Darling's deputy at the Treasury for a while. Giving it to her might not ease relations round the shadow cabinet table let alone in the Balls/Cooper household, so that too would be brave.

Miliband could avoid them both and go for Alan Johnson who offers experience, working class credentials and would be a gesture to the majority of the shadow cabinet and Parliamentary Labour Party who chose David and not Ed Miliband to be their leader.

As he could fill the role which Willie Whitelaw played for Margaret Thatcher when she became leader against the wishes of party's establishment.

Alan has, however, already publicly distanced himself from his new leader's stance on crime and tuition fees. So that appointment would also be brave.

There is, in short, no easy answer. What's more, as you've no doubt guessed by now, I do not know who he'll plump for. What I do know is that it will tell us quite a lot about his leadership and how brave he really is.

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Meet Britain's new wartime leader.

That - at least - is how David Cameron chose to present himself today.

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He is the first Conservative leader to address his conference as the head of a coalition since Winston Churchill.

Some here believe they're only sharing power because they failed to win the election... BUT the prime minister insisted that he and Nick Clegg had come together in the national interest in a spirit of respect, give and take and trust.

His party loved his passionate attacks on Labour for the state they'd left the country in, they warmly applauded his list of what the government had already achieved but they were almost entirely unmoved when again and again David Cameron tried to evoke the spirit of The Big Society - the big idea which many hoped their leader would quietly drop.

This was not one of those leaders' speeches littered with new pledges and fresh policies.

It was quite simply an appeal for national unity from a prime minister appealing to his country to stand with him as he, they, we face a massive challenge.

PS. In case you think there were no party conferences during the war I am reliably informed that the Tories did have a conference on 14-15 March 1945 which Churchill addressed.

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Evoking Britain's wartime spirit, David Cameron has just declared that "Your Country Needs You".

His call to arms invites the small businessman to get up early to get the economy growing again, public sector workers to become their own boss - turning the Post Office into a version of John Lewis - and parents to demand new and better schools.

I can't help feeling though that what he really wants is to invoke the spirit of another wartime poster - "What did you do to cut the deficit, Daddy?"

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If you ever want to know what a leader's speech is going to be about, read the conference slogan. The Tories' slogan - "Together in the National Interest" - will be David Cameron's theme. He will try to inspire the country to join the coalition government in facing up to the crisis the country faces.

JFK famously declared "ask not what your country can do for you, ask what you can do for your country". Stand by for a Cameron equivalent.

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I've just been talking to the prime minister about the chancellor's pledge to cut child benefit for higher rate taxpayers.

He concedes that it is "very difficult to do this in a way which is fair" but insists that taxing child benefit or introducing a formal means test would be more costly and less fair.

He accepts that he has had to eat his own words.

He repeats his desire to introduce a tax break for married couples in this Parliament and signals that it could be expanded to cover higher rate taxpayers - a change from Tory pre-election plans.

What he doesn't say, but what is absolutely clear, is that David Cameron thinks that well-paid people - not least in the media - are making a lot of fuss about losing £20 or £40 or, sometimes, £60 per week from earnings of £900 a week when the benefit cap George Osborne also announced will cost tens of thousands of claimants, who get less, a great deal more.

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Team Cameron expected its leader to have to fight off charges this morning that cutting child benefit was tough but it clearly wasn't prepared for the accusation that it's unfair.

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The whole point of unveiling the policy at this conference was to back up the argument that the Tories are being "tough but fair" ahead of a spending round which will hurt many people who have no chance of ever being top-rate taxpayers.

Instead of toughing the row out the prime minister said he had plans to introduce a tax break for married couples, allowing papers - like the Mail and the Telegraph - to believe that he would compensate the losers. Those with concerns - like the Tory MP Penny Mourdant - were briefed to that effect.

There are several problems with that though:

• The coalition agreement did not promise a tax break for married couples. It said only that:

"We will also ensure that provision is made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to the coalition agreement."

• The Tories' policy at the election was a tax break but it was that basic-rate taxpayers would be able to transfer £750 of their tax-free personal allowance to their partner in order to reduce their partner's income tax bill. This would save people up to £150 a year per couple but be of no value to those losing child benefit.

• The Treasury team has always been sceptical about the value of this policy and is not in any rush to introduce it.

Listen hard and you might hear the sound of policy being made up on the hoof in response to an unexpected row.

Update 1310: Policy is already being clarified. There will be a tax break for married couples introduced in this Parliament.

Although Tory policy was to limit the proposal to basic-rate tax payers, it has been drawn to my attention that the coalition agreement did not repeat that. The implication is, therefore, that the chancellor might seek to partially compensate some of the stay-at-home mums who feel aggrieved by the child benefit cut.

Watch this space.

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Every little helps when you're a Treasury searching for billions of pounds in savings.

But if you're a politician every little hurts as well.

So, why has the chancellor risked the charge that he's broken his promise to preserve child benefit in order to save just a billion pounds? Why introduce a change which hurts families with a wife who stays at home more than two who go out to work? Why risk alienating the very many people who the party regard as their own?

In part, because George Osborne needs the money. The promised reform of welfare is worth around a billion pounds. Meantime, behind the scenes here, ministers are still sweating and haggling over everything from huge cuts in defence to how much more graduates will have to pay for their university education.

In part, it was to back up the government's claim that it IS being tough but fair... And IS ready to hurt its own traditional supporters.

In part, because this all makes it politically easier for them to tackle a welfare state the chancellor calls financially unaffordable and morally indispensability.

Already some here are counting the cost. Many many more will be doing that in the weeks to come.

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First you hit "the rich"... then you hit "the scroungers". That is how George Osborne believes you prove that spending cuts are "tough but fair".

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So, this morning's pledge to cut child benefit from high rate taxpayers has just been matched by a crowd and tabloid-pleasing promise to cap the amount anyone on benefits can claim. The chancellor says that no family will, in future, receive more in out-of-work benefits than the average household income of those who are in work.

What he did not spell out is how exactly this would be achieved. The stories of people receiving tens of thousands of pounds in benefit all relate to people with large families living in large houses in expensive areas - usually central London. Presumably, they will have to be evicted. If they get a job no-one will complain. If they move, the council who receives them will not be best pleased. If they become homeless, then the council they live in will have to find them accommodation which is how the problem began in the first place.

Update 1246: A government source has just told me that the chancellor's benefits cap is more a "symbol" than a policy whose implications have been fully worked out and will produce real savings.

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Tough-but-fair is how George Osborne likes to describe his cuts. So every time he announces pain for the middle classes, it is usually followed by pain for the less well off - a kind of political twofer (two-for-one, if you're not familiar with the jargon).

the then shadow chancellor promised to cut tax credits for those earning over £50k at the same time as a pay freeze for most public-sector workers.

he announced an increase in capital gains tax at the same time as cuts in the rate of benefit increases.

All that remains to be seen is what today's twofer is - but I think you can rest assured that Mr Osborne does not plan to spoil the first speech of a Tory chancellor in 14 years by only taking money away from the Tory-supporting classes.

This may not be enough to protect him from the mounting anger of those Tories who have noticed that his child benefit proposals hit traditional one-earner families hardest. A family with one worker earning £45,000 with Mum (or Dad) staying at home to care for three children will lose £2,400 whereas a couple with two people earning £40k each will lose nothing.

The losers may be tempted to remind the chancellor of his words in last year's conference speech: .

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The talking is over. The cutting has begun. The chancellor has just announced the scrapping of child benefit for those on higher rate pay ie earning over £44,000 a year.

This on a day when his message from the conference platform is about growth and optimism - designed as a contrast to last year's chilling talk of an "age of austerity". The Tories want this week to focus on reform, not just cuts. In that respect, at least, they may be being rather optimistic.

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Ponder just for a moment David Cameron's promise this morning - a massive programme of welfare reform which produces a system which is simple, traps nobody in poverty, rewards virtue and punishes idleness and in which nobody - that's right, nobody - loses. Oh, yes, and it'll save money too. Wow. Why didn't anyone think of that before?

The answer is that they did. Merging the tax and benefit systems was very voguish in the 70s but politicians decided that whilst the end goal sounded magnificent actually reaching it would prove tricky and costly.

Here's just one example of what I mean. The new scheme is to be introduced over a decade - starting with new claimants, I assume. Surely admin costs will increase as benefit officers have to manage the old and the new systems at the same time. Ah, I hear you say, improved computers will sort that out. Like the ones that led to the passport fiasco or the child support agency debacle or the tax credits mess?

My point is not to deride the promise or the objective. Few could oppose the idea. There's even talk of the party formerly known as New Labour supporting it. However, as someone once said, the devil's in the detail.

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