New Times,
New Thinking.

  1. Politics
  2. Brexit
4 July 2017updated 05 Jul 2017 7:53am

The UK has endured “real austerity”

The level of spending cuts imposed since 2010 cannot be dismissed as trivial by Conservatives. 

By George Eaton

The eradication of the Conservatives’ majority was a symptom of Britain’s discontent with austerity. After seven years of public spending cuts, voters were unenthused by the prospect of yet more. But rather than halting austerity, some Tories have argued that the government should reaffirm it, or even that the UK has experienced nothing of the sort. 

Former chancellor Norman Lamont yesterday told Radio 4’s Today programme: “Austerity is just another word for living within one’s means … It is not really austerity.” Yet, by any measure, Britain has endured austerity. Deficit hawks like to point out that total government expenditure rose from £694.4bn in 2010-11 to £772.8bn in 2016-17 (as if inflation doesn’t exist) and, it’s true, an ageing population and debt interest payments have limited the fall in overall spending. But this does not amount to a reprieve from austerity. 

Departmental budgets have been cut by an average of more than 20 per cent since 2010 (the Department for Communities and Local Government by more than 50 per cent) and more than £20bn of welfare cuts have been imposed (child benefit, for instance, is worth less than it was 17 years ago).

The consequences are visible to all in unaffordable housing, overcrowded schools, unrepaired roads, uncollected bins and closed libraries, gyms and children’s centres. 

Nor is the end in sight. Over the next five years, day-to-day departmental spending is set to fall by 5.7 per cent per capita (though the election result may force a revision). Public spending as a share of GDP will tumble from 40 per cent to 37.9 per cent, well below the EU average and close to the US’s 36 per cent. As Paul Johnson of the Institute for Fiscal Studies has correctly noted, such cuts are “unprecedented” in recent history. 

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.

Though the NHS has received modest real-terms increases, demographic pressures, the increase in chronic conditions and the rising cost of drugs and technology mean that the service is struggling. Since 1950, health expenditure has grown at an average annual rate of 4 per cent but over the last parliament it rose by an average of just 0.5 per cent. As NHS chief executive Simon Stevens warned in January: “In 2018-19, real-terms NHS spending per person in England is going to go down, ten years after Lehman Brothers and austerity began. We all understand why that is, but let’s not pretend that’s not placing huge pressure on the service.”

Health workers and others have endured pay austerity since 2010 (a freeze followed by a 1 per cent cap). “Private sector pay has declined in real terms,” noted Lamont yesterday. “Public sector pay is on average higher than in the private sector.” But rather than an argument for lower public pay, this is merely one for higher private pay (the stagnation of which has led to the worst decade for earnings since the Napoleonic wars).

The technical economic definition of austerity is deficit reduction. Though George Osborne missed his aim of eliminating the deficit by 2015 (partly due to growth-suppressing cuts) borrowing has been reduced from £153bn in 2009-10 to £46.6bn in 2016-17. “[The Conservatives] had considerable success in reducing the deficit,” Lamont remarked (a dubious assertion). But if so, it has not been achieved without cost. 

There was no imperative for the UK to pursue austerity at the pace it did, or to split the balance so unequally between cuts and tax rises. With its own currency and a lender of last resort (the Bank of England), Britain has long enjoyed low borrowing costs, leaving room for public investment: the best long-term means of debt reduction. The latter is a far better measure of fiscal health than the deficit (in only 12 years since 1948 has the UK run a budget surplus). Though Brexit could yet imperil Britain’s economy, that is all the more reason to avoid the “hard” exit that austerians so often advocate. Not only the political but, increasingly, the social limits of spending cuts have been reached. 

Lamont, nevertheless, insisted: “People are talking about austerity as if it were an issue of too many repeats on television, or they’ve got tired of watching Poldark and wanted a better programme.” There, in one sentence, was the indifference that has left the Conservatives once again majorityless. 

Content from our partners
The power of place in tackling climate change
Tackling the UK's biggest health challenges
"Heat or eat": how to help millions in fuel poverty – with British Gas Energy Trust