By now, a phrase we’ve often heard is that COVID-19 exposed and exacerbated existing inequalities in the UK. In some ways it might be natural to see the pandemic period as a breakpoint, and thus to use it as the starting point when considering problems of inequality in the UK. But we must not allow the pandemic era to become a reset point in public memory – the inequalities we saw in and after the pandemic really begun about a decade before the outbreak of COVID-19. Discussions of the broad and deep inequality in the UK today must therefore begin with austerity.
For the UK, the years from the financial crisis to the pandemic were more than just a lost decade. They saw people’s lives become materially harder, as a direct result of political choices made by their government. Disparities in the level and impact of austerity cuts meant that, in certain regions and among certain groups, vulnerability became chronic and entrenched. Those most impacted by austerity are now among the worst affected by the pandemic. The inequalities that were exposed and exacerbated by COVID are really the results of austerity policies. The austerity programme, and those who enacted and enabled it, have a lot to answer for.
Beginnings of Austerity
The most recent wave of austerity started with the 2008 financial crisis—specifically with an interpretation of the crisis as the result of the British state having lived beyond its means for too long. This interpretation led to the conclusion that intervening in the crisis would require reining in spending and cutting down on debt, public and private.
Two things are worth noting here. First, this narrative places the blame implicitly on individuals and households, those using credit cards and government services. But the ‘irresponsibility’ was really on the side of banks and other financial institutions. Second, this narrative is inexorably linked to a conservative small-state, pro-business ideology as exhibited in David Cameron’s ‘Big Society’ agenda. This purported belt-tightening imperative, combined with an enthusiasm for reducing the size of the state, resulted in the package of cuts to government services known as austerity.
From 2002, the UK government had been running budget deficits, which further increased in the post-crash recession due to the ‘automatic stabiliser’ effect—falling household income leading to increased welfare payments and reduced income tax. George Osborne, then newly appointed chancellor, stated in his infamous 2010 Austerity Budget speech that his government’s priorities over the coming years were to eliminate the budget deficit and reduce the public debt-to-GDP ratio.
It is contestable that austerity was the right policy to pursue following the financial crisis. The main economic argument in favour of austerity was that fiscal over-extension in the post-crisis recession needed to be corrected; austerity would rebalance the UK’s budget.
But this ran counter to a fundamental insight of Keynesian macroeconomic management: in recessions the government must increase spending, not reduce it. This ensures that households still demand goods and services, which keeps the economy going at a time when it would otherwise slow to a halt. As well as pulling the economy out of a recession, Keynesian policy may have had a positive impact on the deficit. As the economy improves, incomes increase, increasing tax revenues and reducing government spending on benefits.
Without going too far into the details, this point draws out two things. First, it is unclear that austerity was a good policy choice on its own terms. The goals of balancing budgets and restoring equilibrium could have been better achieved with a different policy package.
Second, economics is political. Decisions on how to manage the economy are always informed by the assumptions made about it, and policy prescriptions are susceptible to the politicised beliefs used to create them. Given that there are several competing policy ideas for managing recessions, austerity was favoured because it allowed the government to pursue objectives they already wanted to pursue—specifically, David Cameron’s vision of the ‘Big Society.’ In his own words:
The Big Society is a huge culture change…where people…don’t always turn to officials, local authorities or central government for answers to the problems they face…but instead feel both free and powerful enough to help themselves and their own communities. It’s about people setting up great new schools. Businesses helping people getting trained for work. Charities working to rehabilitate offenders. It’s about liberation -the biggest, most dramatic redistribution of power from elites in Whitehall to the man and woman on the street.
In short, the ‘Big Society’ was about small government, a rebranding of old ideas about shrinking the state and leaving people and business to solve problems themselves. This idea clearly complemented the case for austerity, because it allowed the government to argue that there would be benefits to cutting public services; as the suffocating state steps back, ‘society’ steps in to take over. We see this when Cameron suggested in 2013 that, even once the deficit had been eliminated, public spending would remain low, contrary to his 2010 statement that cuts were only in place until the deficit was reduced. Again in his own words, a ‘leaner, more efficient state’ would be here to stay.
Austerity was not necessary, nor was it presented in good faith. It was an ideologically motivated policy choice.
Unequal Impacts
The austerity cuts were substantial and comprehensive—spending cuts and tax increases totalled to around £110 billion. The cuts were highly unequal in magnitude and effect. Local councils were told to cut their budgets, which ended up around 60% smaller than previously, and councils had to decide where the cuts should fall. Councils have statutory obligations to provide certain goods and services, and the cost of meeting these was in many cases close to exhausting their entire reduced budget. The services cut were public goods like libraries, parks, and youth clubs, as well as children and family services like Surestart. All this was combined with an increase in council tax.
Some areas of spending were supposedly ‘ringfenced’ from cuts, specifically the NHS and state education. Despite this, around £30 billion was cut from these services in the post-austerity decade. Health and education outcomes are not just a function of the NHS and state-funded education—they depend on other factors like exercise and diet for health, and outside learning opportunities, teacher quality, and social attitudes for education. So even if the NHS and state education had not been cut, health and education outcomes would have taken a substantial hit via the reduction in other services.
The disparities in austerity cuts are made particularly clear when looking at income inequality within regions. Poorer families are more dependent on council-provided services, like exercise classes, parks and green spaces, and childcare. They are also less able to substitute away from council services when they are cut. A report from the Joseph Rowntree Foundation found that disadvantaged users of council services increasingly stayed at home, for lack of things to do. Poorer families are also more dependent on food vouchers and welfare payments; the period from 2010 to 2019 saw a near-exponential increase in food bank use, rising from around 40,000 in 2009/10 to just under 2,000,000 in 2019/20. The number of children in poverty increased by 600,000 between 2012 and 2019, having fallen by nearly 800,000 between 1998 and 2012.
With poorer families unable to access a decent diet and council-provided health services, growth in life expectancy began to fall. Life expectancy should increase over time as technology and healthcare improve. But the ‘Marmot Review: 10 Years On’ report, released in 2020, showed that life expectancy stopped increasing from 2010-2020. It highlights that the largest slowdowns in life expectancy growth were in more deprived areas, and that mortality rates were increasing in younger age brackets.
As well as living relatively shorter lives, people in more deprived areas were also in increasingly worse health. The report attributed at least 80% of this relative deterioration in health to influences other than seasonality, particularly social and economic conditions. In short, austerity caused poorer people to live shorter, less healthy lives. It doesn’t take much of a stretch of the imagination to consider the effects of this when COVID hit.
Since council tax rates are derived from property values , council funding is highly dependent on house prices in the area. Councils in poorer areas felt the cuts more than those in more affluent areas. A 2015 JRF report showed that, between 2010 and 2014, spending on social care fell by £65 per person under most deprived local authorities, but actually increased by £28 per head in the least deprived. This means that health inequalities were also regional; the 2020 Marmot Report found growing regional inequalities in life expectancy. People in the North have a lower life expectancy than people in the South, and living in a poor area in the North is worse for your health than a similarly poor area in the South.
Equality of opportunity was also deeply affected by austerity. As well as the cuts to supposedly ringfenced formal education, supplementary education services in children’s education like youth clubs, family services, and sports and arts disappeared. Wealthier families could substitute to private services. Poorer families could not. The effect of this reduced access to holistic education on social mobility is profound. Poverty is cumulative and intergenerational. Children growing up with fewer opportunities are not able to access well-paying jobs, entrenching disadvantage and job insecurity in poorer communities. So much for the Big Society.
Vulnerability to COVID-19
Austerity hurt poorer families and regions the most, by rendering local councils unable to provide essential services, embedding weakness and vulnerability in the communities and households that needed government help the most. And Cameron was right: the austerity cuts were here to stay. The think tank IPPR found that austerity had ‘a disproportionately damaging impact upon the North of England’s resilience and its capacity to deal with the social and economic impacts of the COVID-19 pandemic.’
Austerity meant local councils did not have the resources to help when they were needed most. These inequalities—in health and education outcomes—are the ones were most exposed and exacerbated when the pandemic hit. They were the direct results of spending cuts, enacted without regard for the fact that they would most affect the most vulnerable.
When the pandemic came, food bank use again substantially increased. Data produced by the ONS shows that people in poorer communities were twice as likely to die after contracting COVID. A report from the Centre for Social Justice revealed that nearly 100,000 children did not return to education after covid, with two in five of those absent children being eligible for free school meals, despite only one in five children being eligible nationwide. Many of these missing children are vulnerable to being recruited by gangs.
Political Origins of Inequality
Inequalities in education, health, and income are not just parameters of our society. They did not appear naturally before COVID, ready to be worsened by lockdowns and recession. They were the result of political choices to make cuts and to let resulting harms fall on the most vulnerable. Regressive cuts weakened disadvantaged communities, making them susceptible to adverse situations like covid. The effects of austerity continue today, seen through collapsing public services and struggling communities. We must hold accountable those responsible for austerity. And to halt the UK’s decline and really help the communities most in need, we must tackle its continuing legacy.