Morning Call: pick of the papers

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

1. Osborne’s got his story – and he’s sticking to it (Independent)

Balls will recognise Osborne’s strengths, writes John Rentoul. He shares two of the most important of them.

2. Things could get gloomier for Britain (Financial Times)

Osborne should veer towards caution – the recovery is liable to be snuffed out by events abroad, writes Janan Ganesh.

3. Who’s keeping tabs on the undercover cops? (Daily Telegraph)

The family of Stephen Lawrence are not the only ones concerned about their activities, says Philip Johnston. 

4. Sri Lanka summit taints Commonwealth (Financial Times)

Leaders should feel sick about accepting hospitality from a government with so grim a rights record, says Gideon Rachman.

5. Osborne's comprehensive spending review puts society in intensive care (Guardian)

As Osborne plans ever deeper cuts, Labour has to resist, says Polly Toynbee. The deficit can be shrunk by means that don't hammer the poor

6. The NHS must treat patients, not statistics (Times)

The last thing the health service needs is another big shake-up, writes Rachel Sylvester. Instead it must rediscover its heart.

7. The countryside’s children are being betrayed (Independent)

While the government's drive to improve education has transformed schools in London's inner-city, young people in rural areas are largely missed out, writes Terence Blacker.

8. Don't be fooled by Richard Branson's defence of Virgin trains (Guardian)

Richard Branson didn't like my column about his rail company – but he can't deny that taxpayers are piling up debts to subsidise his profits, writes Aditya Chakrabortty.

9. We’ve got to be less secretive about secrets (Times)

The real lesson of the Snowden affair is that the public need to be told what sort of surveillance is going on, says Hugo Rifkind.

10. Marriage vows (Daily Telegraph)

If Cameron is convinced that promoting marriage in the tax system is worthwhile, he should have the courage of his convictions, says a Telegraph editorial. 

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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