Morning Call: pick of the comment

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

1.This is no ripping yarn, but a murder to fan more conflict (Guardian)

Seumas Milne attacks the "craven" response of the British government to the Hamas leader's killing in Dubai. The assassination was a scandal that has put British citizens at greater risk by association with Mossad death squads, he writes.

2. Whoever you vote for, painful cuts will come (Times)

Anatole Kaletsky says that the important differences between Labour and the Tories are not over the size or timing of cuts, but over whether voters and the markets believe the new government will have the strength to implement them.

3. The false promise of romantic ideas (Independent)

One of the main divisions within the Labour Party is that between romantic and practical politicians, writes Steve Richards. Romantics such as James Purnell may appear bold, but they avoid the tough task of implementing policy, which demands more courage.

4. Cameron will transform Britain, if the Tories can win the political game (Daily Telegraph)

David Cameron should personally avoid negative campaigning, but he ought to find others to do it for him, says Bruce Anderson. A more robust campaign would dispel some of the growing anxiety at Tory HQ.

5. America is in need of a pep talk from its president (Financial Times)

Robert Shiller says Barack Obama should remember the role that Franklin D Roosevelt's personal addresses played in the success of his economic plans. Through moral rhetoric, leaders can boost economic confidence.

6. We need judges to investigate our spies, not spies to berate our judges (Guardian)

Timothy Garton Ash argues that the criticism of judges over the Binyam Mohamed case is entirely unwarranted. And he calls for a judicial inquiry into the past conduct of MI5.

7. The hand extended to Syria is also intended as a blow to Iran (Independent)

The renewed US engagement with Syria is part of a huge diplomatic push to isolate and roll back Iran, says Andrew Tabler.

8. Don't panic about inflation -- that can wait (Daily Telegraph)

Edmund Conway argues that now is not the time to panic about inflation. Far more worrying are the recessionary forces still damaging the economy.

9. Give me Tory dinosaurs any day over rude upstarts who seem to hate their own party (Daily Mail)

Stephen Glover criticises the Tory candidate Joanne Cash for mocking her party's grass roots as "dinosaurs". As Conservatives, Cash and Cameron should cherish the wisdom and experience of the old guard.

10. Reject ad hoc, national financial reforms (Financial Times)

Dominic Strauss-Kahn, head of the IMF, says the world's leading economies must remember that co-ordinated action works better than unilateralism.

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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