The cost of austerity

New Statesman​

21-05-2025

Photo by In Pictures Ltd./Corbis via Getty Images
One of the most revealing statistics about the UK economy is that young people in their early twenties are more likely to be out of work due to ill health than people in their early forties. This phenomenon, reported by the Resolution Foundation, is a new one. Previously, 20-somethings have been among the healthiest and most energetic workers in the labour market. The young people now struggling to make a start at work endured the disruption of school, university and their first jobs by a global pandemic, but they are also a generation that came of age in an era when economic growth, wages and quality of life were on hold. The young adults of the 2020s were the children of austerity.
The choices a government makes when a person is a small child are evident in their health and happiness as they grow. As Gordon Brown writes, introducing his New Statesman guest edit on the theme of child poverty, 'decisions taken ten years ago by past Conservative ministers still cast a long shadow'.
Austerity's effects were evident from the early years of the coalition government. In 2012, Unicef found that across 30 European countries, 44 per cent of children living in conditions of severe material deprivation lived in three nations. One was Romania, which had been badly hit by the 2008 crisis and was bailed out by the International Monetary Fund. The others were G7 economies – Italy and the UK – which had pursued aggressive programmes of cuts to welfare and public services to reduce the deficits incurred by the 2008 bailout.
In Britain, a social safety net had been provided for the young by local government, in the form of children's social care, sports and culture facilities, public health services, social housing and other services such as Sure Start. These services were needed most in the poorest areas. But it was also the poorest areas that relied most upon funding from central government grants, and therefore experienced the deepest cuts.
Given the correlation between wealth and voting intention, this also meant the councils that experienced the deepest cuts were more than four times as likely to be under Labour control. During the 2010s around 800 libraries in Britain closed, along with hundreds of swimming pools and leisure centres, more than 700 local football pitches and 1,342 children's centres. In pursuit of the Conservative project, the children of austerity were excluded from the municipal Britain their parents had known.
In 2018 the UN special rapporteur's analysis of poverty in the UK reported that 'drastic changes in government economic policy beginning in 2010' had started to unravel decades of progress on child poverty, which it predicted would continue to rise, creating 'a social calamity and an economic disaster'.
That disaster is now becoming evident. Between 2016 and 2023, the number of people aged 18-24 claiming the personal independence payment disability benefit for psychiatric conditions almost trebled. This trend is concentrated in more deprived areas – in which, as the Child Welfare Inequalities Project reported in 2020, children are ten times as likely to be separated from their families as those in the wealthiest areas.
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The underlying logic of austerity is flawed. While spending cuts can appear fiscally prudent in the short term, they take from those who can least afford it. The problems of those most in need do not go away when the government decides not to pay for them; they only become more complex and, in the long run, more expensive.
Investments in areas such as education and health, on the other hand, can generate exceptional returns. Public health interventions such as tobacco control in children can save the state £15 for every £1 invested. The long and variable results of public spending are carefully modelled when the government wishes to justify an infrastructure investment such as a new airport runway. When it comes to cutting disability benefits or maintaining the two-child limit on Universal Credit, however, there is an admission that some people will lose out, but no real picture of the greater costs this implies in the long term.
Keir Starmer's government has inherited the unenviable result of more than a decade of political opportunism. It must now decide if the children of Conservative austerity are also to become Labour's legacy.
[See also: What's the point of a Labour government that allows child poverty?]
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