What is austerity – and why is Rachel Reeves accused of reintroducing it?

Rachel Reeves promised at the Labour Party conference in Brighton that there would be “no return to austerity”, responding to critics who compared her to previous Conservative governments.

At the party's first conference in 14 years, Reeves said: “Conservative austerity has been a destructive decision for our public services – and also for investment and growth.”

“We have to confront the Tories' legacy and that means tough choices. But we will not allow that to cloud our ambitions for Britain.”

Last week, critics within the Labour Party accused the Chancellor of allegedly using “reheated” tactics for 2010. One union insider said: That I that a “return to austerity” would not be welcome.

Much of the criticism is directed against the government's decision to cut heating subsidies for millions of pensioners in winter, despite fierce opposition.

Ms Reeves' latest speech could be seen as a direct response to the critics, but it is unlikely to put an end to the comparisons. Here's everything you need to know about austerity and the criticism Labour is facing:

What is austerity?

Following its election victory in 2010, the Conservative government embarked on a series of drastic spending cuts and tax increases. The measures, initiated by Prime Minister David Cameron and his Chancellor of the Exchequer George Osbourne, will see ministers cut spending on welfare, the NHS, schools and other public services to the limit over the next decade.

The austerity programme was launched after Cameron told Conservative MPs shortly before his election victory: “The age of irresponsibility is giving way to an age of austerity.” This phrase would later be used to describe his government's approach to public spending.

The Tory government of the day justified these austerity measures by saying they were necessary to reduce the national debt that Labour had accumulated under short-lived Prime Minister Gordon Brown. Experts point out that the economic crash of 2008 – which was not caused by the Labour government – was far more to blame.

In 2019, then Conservative Chancellor of the Exchequer Sajid Javid announced “the end of austerity” and announced an increase in spending in all ministries.

However, a decade of cuts cannot be reversed overnight. The respected think tank Institute for Fiscal Studies (IFS) wrote at the time that public spending was still three percent below the level of ten years ago and more than nine percent lower per capita. The human cost was also high: the number of people using food banks rose from 41,000 in 2009/10 to 3.1 million in 2023/24.

Five years later, in 2024, public spending will be back at 44.5 per cent, two per cent less than in 2009, the last year of the previous Labour government. This is largely due to a sharp increase from 39.6 to 53.1 per cent due to the Covid pandemic, and will gradually fall over the next few years, according to the OBR forecast.

Is Rachel Reeves reversing austerity measures?

Labour has ruled out a “return” to the austerity of the 2010s, which was felt long after. But critics within the party continue to accuse Ms Reeves of doing just that, arguing that her rhetoric and policies are all too similar.

It is not difficult to understand the case. In her first speech in the House of Commons at the end of July, Ms Reeves revealed the £22 billion “black hole” in government spending and blamed the previous government for the cuts it would require.

“Mr. Speaker, the scale of this additional spending is unsustainable,” she said, “doing nothing is simply not an option.”

The similarity to Osbourne's inaugural speech was obvious, in which he blamed the impending drastic cuts on “thirteen years of fiscal irresponsibility.”

And since Labour came to power, its messaging has only gotten darker. In August, Sir Keir Starmer said the party's first budget would be “painful” but necessary to “fix the decay” left by the Tories.

The measures announced at the event follow several that have already been heavily criticised, including the controversial cut to winter heating allowances for pensioners, the refusal to remove the cap on the two-child allowance and a multi-departmental spending review aimed at making £5.5 billion in savings.

However, Ms Reeves and her team point out several key differences from the austerity measures of 2010. In an interview with The new statesmanThey highlighted several measures to increase public spending, to which commitments have already been made.

This includes a public sector pay rise of £9.4 billion in real terms, as well as the promised increase in spending on the National Health Service (NHS) and schools, funded by the Government's policy on non-domestic and private schools.

Crucially, the austerity measures of the 2010s were not pursued solely for the purpose of balancing the public purse. The Conservative government was keen to create a 'small state' in which more power was given to businesses and entrepreneurs, for example through lower corporate taxes and greater private sector involvement in the delivery of public services.

Labour has pledged to work effectively with business leaders on government projects, but has also reiterated its desire for state-led projects, including the state-owned energy company Great British Energy and the ambitious plan to renationalise the railways.

It would be too easy to brand Labour's economic policies as “austerity 2.0” – and far too early in her time as Prime Minister. But while just a few months ago the party was promising “change” and sending a message of more painful consequences, many voters are probably wondering whether they have been duped today just as they were in 2010.