Morning Call: pick of the papers

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

1. My plan to save the NHS – in the nick of time (Guardian)

All is not lost, says David Owen. We can still shield our health service from the ravages of a full-blooded external market.

2. A big play from Osborne could stop Labour hijacking his legacy (Daily Telegraph)

There is just about time between the March Budget and election day to make a difference, says Benedict Brogan. 

3. Rising populism is worthy of Nixonland (Financial Times)

At a time when elites are popularly resented, a silent majority is there for the taking, writes Janan Ganesh.

4. Why the ‘ethnicity effect’ terrifies Tories (Times) (£)

The statistics are inescapable and the implications huge: black and Asian voters are wary of voting Conservative, writes Rachel Sylvester.

5. HS2 shows that investment is not such a dirty word after all (Independent)

When the coalition first came to power, nothing much happened on high-speed rail, writes Steve Richards. So this sudden burst of energy is welcome, even if the impact remains years away.

6. A conspiracy of reasonable people (Financial Times)

If China stops playing by Davos rules, the golden years of the WEF will be over, says Gideon Rachman

7. When the rich are born to rule, the results can be fatal (Guardian)

I was schooled in a system that separated me from ordinary people's lives, writes George Monbiot. The same fate has befallen the global elite.

8. This bold vision will keep Britain on track (Daily Telegraph)

High-Speed 2 is a long overdue declaration that Britain still has ambition, says a Daily Telegraph leader.

9. High-speed rail is not the best way to spend £32bn (Independent)

With so much uncertainty as to both the costs and the benefits, this is no time for vanity projects like HS2, argues an Independent leader.

10. A welcome U-turn over secret courts (Daily Mail)

Ken Clarke’s U-turn over some of the more sinister provisions of his plan for secret court hearings shows he has heeded crucial objections, says a Daily Mail editorial. 

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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.