Austerity is a term used in many different ways, but this post will involve numbers, so I need to be precise about what I mean by ending austerity. I want a measure to capture how the provision of public services (including welfare provision) is significantly poorer than people might expect given general levels of prosperity. Note that this definition makes austerity about the level of public services, and not their rate of change. Many people use austerity as shorthand for cuts to public spending, and particularly the period from 2010, but it makes more sense here to treat austerity as reflecting the level of public services relative to some norm defined by general levels of prosperity.
We know we are currently living in a period of public sector austerity by looking at sector specific indicators: hospital waiting times are unusually high, court cases are being delayed for months or years, and so on. (For a detailed analysis covering four key sectors, see this Institute for Government report.) However it is much more difficult to know how much extra spending is required to get all those indicators back to more normal levels.
Some of the spending required to restore public services may be in the form of a one-off increase in public investment, to make up for a lack of investment over the past 14 years. As John Burn-Murdoch showed here for example, investment in the NHS collapsed after 2010. There are excellent reasons why one-off or ‘catch-up’ increases in spending should be financed by borrowing rather than tax increases, while permanent spending increases should be matched by higher taxation. As a result, my focus in this post is on permanent rather than one-off increases in public spending. I will discuss public investment in a later
