Morning Call: pick of the papers

The ten must-read comment pieces from this morning's papers.

1. Like Tammy Wynette, Lib Dems must stand by their man (Guardian)

Coalition has been tough for the party and for Nick Clegg, yet his brave choices deserve our continued support, says Menzies Campbell.

2. British foreign policy should be realist (Financial Times)

Emotion draws the country across the Atlantic but hard calculation pulls it back to Europe, writes Philip Stephens.

3. Nick Clegg still has time to make a gracious exit as Liberal Democrat leader - with head held high (Independent)

The Lib Dem leader has made too many unforced errors for his own good, writes Mary Ann Sieghart.

4. Forget Mr Has-Been. The prize is power (Times) (£)

The future for the Lib Dems can only be as the third party of government, not as a left-wing alternative to Labour, says Philip Collins.

5. James Murdoch: a fit and proper pasting (Guardian)

Ofcom did not mince its words in damning a hereditary magnate who "repeatedly fell short of the conduct expected of him", says a Guardian editorial.

6. Our politics is bursting with life – it’s the parties that are dying (Daily Telegraph)

There is no shortage of support for the right causes, but our leaders do not address them, writes Fraser Nelson.

7. Puzzle of falling UK labour productivity (Financial Times)

Labour hoarding, substitution of labour for capital and failings in finance are only part of the answer, says Martin Wolf.

8. Hospital death rates we can't ignore (Independent)

This is a level of risk that would be alarming in the developing world, never mind 21st-century Britain, says an Independent leader.

9. Planning free-for-all is a blueprint for discord (Daily Mail)

To deny homeowners the right to object to dramatic changes is the exact opposite of the localism the Tories claim to preach, says a Daily Mail editorial.

10. History as fantasy is no substitute for rigorous truth (Guardian)

Whether it's Richard III's corpse, Jesus's wife or King Arthur's castle, to be seduced by myth is to flirt with fanaticism, writes Simon Jenkins.

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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