Report

Austerity postponed? The impact of Labour’s first budget on public services

This report from UK think tank the Institute for Government examines the impact of Labour’s first budget on public services.

The outgoing Conservative government left public services in a precarious state. Waiting lists in the NHS are stubbornly high, councils are on the verge of bankruptcy, backlogs in the criminal courts are at record levels and prisons are at bursting point. The spending plans inherited by Labour would likely have left most services performing worse at the next election in 2028/29 than they were at the 2019 election – and substantially worse than in 2010.

In July, shortly after Labour entered government, we described these spending plans, at the time implicitly adhered to by the party, as “untenable”. Our report highlighted the major crises that the new government would need to get a grip on and set out the longer term reforms that would be necessary.

This paper picks up where we left off now that the chancellor, Rachel Reeves, has delivered her first budget – the first from a Labour government in a decade and a half. It offers a cross-service analysis of the budget’s impact on public services, before looking in detail at four key areas: the NHS, local government, schools and the criminal justice system.