Is Labour about to do the unthinkable and pull the UK back into a period of austerity?

Rachel Reeves is reportedly planning to unveil the largest cuts to public spending since the Conservatives introduced austerity 15 years ago.

According to the Guardian, the chancellor will be going much further than expected and reducing some departmental budgets by up 7% over the next four years in her Spring Statement on Wednesday.

It follows a period of much more stagnant growth than Labour had hoped for – gross domestic product even fell by 0.1% in January.

The government has already announced plans to cut the welfare bill by £5 billion, reduced foreign aid to pay for increased defence spending and removed the winter fuel allowance from 10 million pensioners.

All of these cutbacks have been hugely controversial, not least with Labour backbenchers, many of whom feel this goes against the party’s very principles.

The thought of further cuts has therefore sparked uncomfortable comparisons with the Conservatives, who introduced austerity to help the UK recover from the global financial crash.

Theresa May only said that era was officially over in 2018 – is it now back?

While it is hard to know exactly how Reeves’ announcements next week will impact public services, researchers at the Institute for Public Policy Research (IPPR) told HuffPost UK the current cuts are not as deep as those from 2010.

And, as the Guardian claimed, some departmental budgets will actually be going up by 1.1% – rather than the 1.3% a year Labour had set out for them in their October Budget – after 2025-26.

This means overall spending is still higher than it was during David Cameron’s time in office and a real-terms increase – but the government will spend £4 billion less than it promised five months ago.

The public sector is still recovering from the last period of austerity, as well as the shocks from Covid, inflation spikes and the energy crisis driven by the Ukraine war.

IPPR research fellow, Pranesh Narayanan, warned that further cuts are still not the “right option” for the UK and will not boost productivity like Labour hope.

He told HuffPost UK: “The government is in a bind – they face unprecedented challenges due to geopolitical tensions and economic uncertainty unleashed by the Trump administration. More spending is needed on defence, but that needs to come alongside adequate funding to fix public services for the long-term.

“The widely reported rumours of cuts suggest that they won’t be as severe as austerity in the 2010s but that doesn’t mean they are the right option for the UK today.

“It’s vital to improve public sector efficiency but this is rarely achieved through slashing budgets.

“Ministers should acknowledge the unprecedented nature of these times and think seriously about raising revenues through tax.”

While Labour’s cuts are technically not as deep as those driven by the Conservatives, some still believe the government is taking money from the wrong areas.

Hannah Peaker, deputy chief executive of the New Economics Foundation, told HuffPost UK: “No serious person can believe that taking away support from disabled people will fix our economy, nor that they are the reason our economy is in such bad shape.

“That is the fault of austerity, which not only made people poorer and sicker but also did nothing to bring down public debt.

“This government is pursuing the same policy of austerity and hoping for a different outcome.”

Former MP and leader of the Green Party, Caroline Lucas, also reacted to the Guardian report on X by saying that “austerity doesn’t work”, saying more cuts is “economically illiterate and morally indefensible”.

“People didn’t vote Labour to get more Tory austerity,” she added. “Tax extreme wealth, don’t slash public services.”

Suspended Labour MP Zarah Sultana warned on social media: “Austerity with a red rosette is not the ‘change’ people voted for.”

Clips of Labour’s Keir Starmer’s own warning against extreme spending cuts back in 2021 have also resurfaced online as evidence that Labour is going back on its word.

Speaking three years before he was elected to No.10, Starmer said: “Don’t make the mistake we made in 2010 after the financial crash, which was to think that the way through this is to go for austerity and really severe cuts to public services.

“That was a complete mistake in my view.”

While Starmer did not deny the Tory accusations that Reeves’ announcement will effectively be an “emergency budget”, his government has wholeheartedly rejected any claims that it is bringing back austerity.

Chief secretary to the Treasury, Darren Jones, said on Thursday: “It would be incorrect to say we are doing what the Conservatives did in 2010.

“We’ve increased public spending and we’ve increased it by quite a lot.”

Speaking at an event run by the Institute for Government, Jones claimed the government simply has to reform services, but added: “We are not taking the approach where we are just blindly cutting spending because we think we should just reduce spending without a plan.”

He noted: “You can’t just say to public services, ‘you’re going to get less money, good luck’.”

He also denied that any further cuts in the Spring Statement would be an admission that Labour have failed to grow the economy.

The Treasury were approached for further comment.

It remains to be seen how much of a rebellion the government will face over its squeeze on services.

One Labour MP accused the government of “trying to cut its way out of its challenging economic situation, on the back of the most vulnerable”.

They added that Reeves’ fiscal rules are “preventing her from addressing the reality people face.”

Alluding to the welfare cuts, the backbencher added: “We have seen how choking off the economy, public services and people’s lives destroys a society over the last 14 years.

“Now this government seems to want to go further at great cost to disabled people.”