The responsible thing to do would be to use it for deficit reduction. We can expect, Darling who has said that his “number one priority is to get the borrowing down”, to take this position. But we can expect the more party politically minded members of the government to want to use this money for extra public spending. For example, one can easily imagine them wanting to use the money to help meet their target of ‘eradicating’ child poverty by 2020. They would relish putting the Tories in a position where they could not support using the money raised from the bankers bonus tax to address child poverty. Or, it could be used to fund another guarantee similar to the one that will supposedly see cancer patient seen within two weeks.
Which faction of Labour party wins this argument will tell us a lot about the kind of campaign that Labour wants to run. If Labour do choose to go down the spending route, it will be a real test of the Tories ability to make Labour pay a political price for its fiscal irresponsibility