Labour's response to Spending Review could set tone for General Election

Ed Miliband and Ed Balls listen to the Chancellor's Spending Review announcement on Wednesday. Photo: PA

In the end, what was most surprising about today's spending review was how little controversy it generated.

Some government departments are now looking at total cumulative cuts of about a third to their 2010 budgets by the time this process is complete and it is startling that Labour appears ready to accept them.

In that sense, Ed Miliband and Ed Balls have really changed the game in the last month or so.

It makes it much easier to sketch out the shape of the next election, which is likely to be dominated by the £23bn worth of cuts that have been pencilled into the budget red book for the course of the next parliament, but not yet identified by any of the parties.

The Tories' strategy is clear enough. They will insist that the economic repair job is yet to be finished and that they will look to take most of the further savings out of the welfare budget.

We can expect to see a lot of "tax bombshell" adverts as they try to suggest that Labour will almost certainly instead choose to raise our taxes.

The Liberal Democrats are likely to openly admit they will introduce new taxes (on mansions, for example) and perhaps increase others, whilst cutting back on benefits for the better off.

But Labour's strategy is as yet a little unclear, even to some members of the Shadow Cabinet.

If they are accepting these cuts and proposing to borrow more to fund a VAT cut and further capital spending, then logic suggests they probably will have to give us some idea how they are going to fill the £23bn black hole.

Their answer is likely to determine who wins.