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Morning Call: pick of the papers

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

1. Economics is too important to leave to the experts (Guardian)

Ordinary citizens may be able to see the world more clearly than the narrow-focused economics professionals, writes Ha-Joon Chang. 

2. Ukip voters aren’t racist. They’re in despair (Times)

The way to stop the rise of Nigel Farage’s party is to start understanding its voters rather than hurling insults at them, says Tim Montgomerie. 

3. Asian states must stem intolerance (Financial Times)

Bigoted interests are gaining ground under the noses of leaders who profess to uphold openness, writes David Pilling. 

4. Newark has flushed out the real meaning of Nigel Farage (Guardian)

In dodging the Newark by-election, the Ukip leader has opted to lead an anti-politics party, says Martin Kettle. It is a far-reaching decision.

5. London turned Johnson into a leader (Financial Times)

The mayor would make a much more effective minister thanks to City Hall, says Ben Rogers.

6. Nigel Farage will pay the price for taking the British public for fools (Daily Telegraph)

By announcing that he won't be running in Newark, Nigel Farage hasn’t just bottled it – he’s blown it., says Dan Hodges. 

7. A City boom will bring gloom for exporters (Times)

If British manufacturing is ever to recover we need an even weaker pound, not one buoyed up by banking’s resurgence, writes Ed Conway. 

8. It's not Russia that's pushed Ukraine to the brink of war (Guardian)

The attempt to lever Kiev into the western camp by ousting an elected leader made conflict certain, writes Seumas Milne. It could be a threat to us all.

9. People power drives the fight to cure cancer (Daily Telegraph)

There has been an amazing response to the Medical Innovation Bill, which would allow doctors to innovate, writes Maurice Saatchi. 

10. Why can't the slippery David Steel admit he was wrong about Cyril Smith? (Daily Mail)

Steel, and doubtless other senior Liberals, foolishly ignored serious allegations made against the Rochdale MP, says Stephen Glover. 

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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