Theresa May broke with austerity in rhetoric but not in reality. Boris Johnson has vowed to do both. Has he, uncharacteristically, kept his word?
The Prime Minister can technically claim to have done so. For the first time since 2010, the Conservative manifesto contains no new cuts to public services or social security. In advance of the document’s launch, Chancellor Sajid Javid had already announced a £13.4bn rise in expenditure in 2020-21, the largest increase in public spending for 15 years (including 3.1 per cent for health, 3.3 per cent for education and 6.3 per cent for the Home Office).
But the Tory manifesto dispels any notion that the age of austerity has given way to an age of plenty. The notably slim 59-page document includes a mere £2.9bn of new public spending promises, compared to Labour’s £94.5bn. Johnson’s headline pledge to recruit 50,000 new nurses has already unravelled after the promise was found to include 19,000 “retained” staff (in other words, existing nurses).
Ending austerity is one thing but reversing it is another. Johnson is promising the former – by ending cuts – but not the latter. As Institute for Fiscal Studies director Paul Johnson observed: “Taken at face value today’s manifesto suggests that for most services, in terms of day-to-day spending, that’s it. Health and school spending will continue to rise. Give or take pennies, other public services, and working age benefits, will see the cuts to their day-to-day budgets of the last decade baked in.”
Even by 2023–24, day-to-day spending on public services outside of health will still be almost 15 per cent lower in real terms than it was at the start of the 2010s. Social security claimants will no longer endure benefit cuts but nor will they be compensated for the thousands of pounds they lost during the age of austerity. Johnson may be promising the largest increase in public spending (1.1 per cent of GDP) delivered by any Conservative prime minister since Harold Macmillan. But that merely reflects the public sector’s parlous starting position, rather than a principled embrace of the paternalistic state.
Yet far from the age of “big government” being over, voters now long for its return. The 2018 British Social Attitudes survey found that 60 per cent favour higher taxes and spending (the highest level in 15 years), 33 per cent support present levels and a mere 4 per cent wish to further roll back the state.
Mindful of this, the Tory manifesto includes no major tax cuts, with Johnson abandoning earlier promises to raise the 40p income tax threshold from £50,000 to £80,000 and to cut corporation tax from 19 per cent to 17 per cent. The £6.3bn saved by the latter more than offsets the £3.6bn of tax cuts (including a rise in the National Insurance threshold from £8,628 to £9,500) promised by the document.
Whichever party wins the election, the state will expand and the tax take – already at its highest sustained level since the 1940s – will rise. But though austerity has been formally ended, it will take several years for voters to register any difference.
Brexit, planned cuts to immigration and an ageing population will all intensify spending pressures over the next decade. In the absence of higher tax rises or borrowing, significant parts of the public sector will continue to be deprived of resources. Austerity may have ended but its baleful legacy will long endure.