Morning Call: pick of the papers

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

1. End this masochism in economic policy (Financial Times)

Prolonged stagnation and high unemployment will permanently lower the economy's potential, writes Martin Wolf. But there is an alternative.

2. The welfare reform bill will incentivise people: to turn on David Cameron (Guardian)

David Cameron's cuts have barely got going yet, writes Polly Toynbee. That's the frightening truth about austerity.

3. If Labour ditched David and Ed Miliband, it could actually win an election (Daily Telegraph)

Labour holds all the cards, but its leadership doesn't know how to play them, says Fraser Nelson.

4. Ed shouldn't get too excited about François (Times) (£)

If Hollande wins in France and Obama in the US, it doesn't follow that the Left in Britain would regain power, writes Philip Collins.

5. Red light for bonuses at Network Rail (Daily Mail)

Sir David Higgins and his Network Rail colleagues should waive their bonuses, argues a Daily Mail editorial.

6. An alarming outbreak of constitutional vandalism (Daily Telegraph)

The Conservatives should know better than to tinker with the constitution, says a Daily Telegraph editorial.

7. My solution to the Falklands problem: sell them (Independent)

I doubt we have much stomach for another war in the south Atlantic, writes Philip Hensher. And we need the money.

8. Alain de Botton's atheist temple is a nice idea, but a defunct one (Guardian)

De Botton's atheist temple call does not need to be realised - our existing places of worship can be appreciated by all, argues John Gray.

9. Israel will not pull out of the next Middle East war until Hizbollah is annihilated (Daily Telegraph)

The tension on the Lebanese border is palpable as sworn enemies flex their military muscle, writes Con Coughlin.

10. Egypt's generals will soon hear the final whistle (Independent)

If the British tend to believe in the cock-up theory of history, in the Middle East it's the opposite, says Adrian Hamilton.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.