The word "austerity" has largely disappeared from political discourse since the Labour government's election in 2024. Ministers speak of "investment" and "rebuilding." Whether the fiscal reality has changed as substantially as the language is a question that requires going beyond headlines to examine departmental budgets.
The Aggregate Picture
Total managed public expenditure as a share of GDP is higher than at any point in recent peacetime history, pushed up by pandemic spending commitments and debt interest costs. On this measure, the state is bigger than it was in 2010.
But aggregate spending figures obscure enormous variation between departments and services. NHS England's budget has grown substantially in cash terms. Local government has not.
Local Councils: Still Under Pressure
English local authorities have lost approximately 40% of their core government grant funding in real terms since 2010. Total spending on local services has been maintained only through council tax increases, asset sales, and the use of reserves.
The practical consequences are visible: reduced bin collection frequency, closed libraries, scaled-back social care, diminished parks maintenance. These services lack the political salience of the NHS, and their deterioration has proceeded with relatively little national attention.
Justice and the Courts
The criminal justice system — prisons, probation, courts — has been particularly affected. Prison overcrowding has reached crisis levels. The courts backlog, which stood at 41,000 cases before the pandemic, now exceeds 68,000 cases. Justice delayed is not austerity in the abstract — it is real harm to real victims.
