After announcing the largest package of government cuts since 2015 on Tuesday, Rachel Reeves was likely prepared to rebut accusations that Labour is returning Britain to a programme of austerity.Around £4.8 billion is set to be slashed from welfare spending over the next five years, the chancellor confirmed in her spring statement, with the changes set to plunge at least 250,000 into poverty. At least 50,000 of these will be children, figures from the government’s own analysis finds.Her announcement has led several economists to draw a comparison to the austerity measures pursued by Conservative governments in the 2010s, which saw a series of swingeing cuts to public services made to balance Treasury books.But “this is a far cry from what we saw in the Conservative years,” the chancellor said in an interview with ITV News.”The austerity period, particularly 2010 to 2015, when Cameron and Osborne were prime minister and chancellor, there were cuts every year in spending, and there were cuts to capital spending as well. So we’re increasing spending in every year now,” she added.But the exact definition of the term is a bit of a grey area, and not everyone seems as convinced as the chancellor that UK has seen the back of austerity. Least of all the British public, recent polling would suggest. According to a new poll from think tank More in Common, just over half of Britons say they think the country is either returning to austerity or never left it.Here, we look at the numbers behind the claims, and assess whether the UK is really seeing a ‘new austerity’:What is austerity?Austerity is a fiscal policy approach used to reduce government debts, through a combination of reducing government spending and increasing tax revenues. In the fallout from Covid and the energy crisis, the UK’s national debt reached its highest levels since the 1960s.Since the beginning of this century, government debt has increased from 33 per cent of GDP to nearly 100 per cent of GDP, according to the Office for Budget Responsibility (OBR). As a result, Chancellor Rachel Reeves is making cutting government debt a key focus, saying in one of her first addresses to Parliament in July: “If we cannot afford it, we cannot do it”. The new set of cuts and changes to Britain’s welfare will be seen as a form of austerity to some – albeit more staggered and smaller than those under the coalition government. But despite the cuts, the welfare budget overall is still forecasted to increase in cash-terms until 2029/30, so in net terms, the sector will not see losses.What cuts has the Labour government made? The Chancellor said yesterday that welfare spending will go down as a proportion of GDP over the forecast period. The OBR has estimated that changes to incapacity and disability benefits will reduce spending by £6.4 billion by 2029/30, while the overall changes to the welfare package will cut £4.8 billion.Meanwhile, the IFS projects that the cuts to working-age benefits specifically will save £4.2 billion by the end of this Parliament, in today’s prices.It will become harder to be eligible for Personal Independence Payments (PIP), which will impact around 800,000 people, according to the government’s own assessment of the new benefits cuts.Some 370,000 of these people affected are already receiving PIP, and could lose an average of £4,500 a year.The Universal Credit health rate is also set to be slashed by 50 per cent, while the basic UC rate will increase by more than expected, to £106 a week by 2029. The government has also floated an age restriction to the UC health benefit, which would make under-22s ineligible to claim.How does this stack up against Tory cuts?The cuts to welfare announced in yesterday’s Spring Statement are the fifth largest since 2010, according to research from the Institute for Fiscal Studies (IFS).The first two budgets introduced by David Cameron’s coalition government in June and November of 2010, amounted to a combined £17 billion in welfare savings (in 2025/6 prices) from cutting working-age benefits.Meanwhile in 2015, then-chancellor George Osborne announced a second Budget after Conservatives won the summer election, which contained the single highest cuts to welfare in this century (£15.9 billion).By comparison, the current government’s cuts, at £4.2 billion in net savings by 2029/30 from working age benefits, are just a small fraction (less than a third) of the 2015 cuts, and a quarter of those in the coalition’s first year.Over the whole decade of Tory leadership before Covid, 2010-19, these savings from cutting working-age welfare added up to £44.6 billion, according to the IFS.So far, the government has not announced cuts to day-to-day spending in other departments. But this spending is set to increase by an average of just 1.3 per cent above inflation overall.With higher spending boosts needed in defence and the NHS, other unprotected areas like schools and prisons are likely to feel the squeeze come June’s spending review. It is unclear how these inevitable cuts to public services, which have not yet been announced, will map up against the previous government.Over the coalition and Conservative governments, day-to-day spending on public services decreased until 2018-19, according to the IFS. ( More
