CommentPlus: pick of the papers

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

1. Cameron's Tories point to isolation (Financial Times)

If the Tories win the election, they will find themselves oddly isolated from mainstream conservatism in both the US and Europe, writes Gideon Rachman. David Cameron's decision to distance his party from the US has left it without any coherent focus for its foreign policy.

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2. Gordon Brown must now tell the voters why they deserve more of him (Daily Telegraph)

It is not enough for Brown to offer a demolition of the opposition's economic policies, writes Mary Riddell; he needs to create a sense of optimism. He should begin by promising not to raise VAT.

3. Thirteen years on, New Labour has come full circle (Times)

Like the Conservatives in 1997, Labour has decided to pursue a strategy of fear, not hope, writes Rachel Sylvester. It is the Tories whose theme will be "Things can only get better".

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4. Hacks and the Yard? We're still asking (Guardian)

Scotland Yard has gone to extraordinary lengths to suppress evidence of the phone-hacking scandal at the News of the World, says Nick Davies. But despite the Yard's attempt to mislead the public and the press, the questions will not go away.

5. Obama's 21st-century world order (Independent)

Barack Obama's instinct in devising foreign policy reflects an unusual ability to see the other side's point of view, writes Mary Dejevsky. By abolishing talk of the "axis of evil" and appealing directly to Iranians, he has made it harder to demonise the US.

6. South Africa will survive the killing of a neofascist -- like in 1994 (Guardian)

The murder of Eugene Terre'Blanche will not be the spark for a race war, writes Gillian Slovo. His Afrikaner Resistance Movement suffered an irreparable defeat at the time of the 1994 election.

7. An amazing Afrikaner -- wrong about everything (Times)

Elsewhere, Hugo Rifkind says that Terre'Blanche may have exploited the language of a segregationist, but he was actually something far worse -- a racial supremacist.

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8. Israel knows apartheid has no future (Financial Times)

After decades of illegally occupying Palestinian land, Israeli leaders are finally acknowledging reality, writes Mustafa Barghouthi.

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9. I wish I'd had the NI policy to call on as a Tory candidate (Independent)

The former Tory MP Michael Brown says that although the party's pledge to reverse Labour's planned National Insurance increase may be dodgy economics, it is also smart politics. The Tories have armed their candidates with the ammunition they will need on the doorstep.

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10. The election for change (Times)

In a special full-length editorial, the Times sets out the changes it wants to see in Britain over the next five years.

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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