The decade of austerity that followed the financial crisis eviscerated the British economy and left lasting scars on our society. Perhaps more than anything else, the experience of austerity—and the resistance to it—was responsible for reviving the movement for socialism in the UK. So why on earth are the Tories about to try it again?

In the wake of the financial crisis of 2008, governments all over the world were forced to spend billions bailing out the banks that caused it, and pumping money into the economies they destroyed.

But this massive programme of money creation threatened the legitimacy of neoliberalism. If the state was capable of massive intervention in financial markets to prop up an ailing banking system, then why wasn’t it capable of alleviating the burden felt by working people attempting to repay the debts that those very banks had created?

This question gave the British left its post-crisis rallying cry: ‘the banks got bailed out, we got sold out.’ And it created a problem for the Conservative government that came to power in 2010.

David Cameron needed to convince the British people that he was governing in the national interest, not just in the interests of a small elite (just ask Liz Truss what happens to Conservative leaders that fail in this regard). This is where austerity came in.

The idea was simple: the British people had had it very good for a very long time. We’d all been buying houses that seemed to endlessly increase in value and then taking out debt to buy new TVs and nice cars. The Labour Party had made the problem worse by over-taxing businesses and the wealthy and spending the proceeds on unproductive handouts to benefits cheats and immigrants.

But now the good times were over, and it was time for all of us to tighten our belts. ‘We’re all in this together’ was the message of Cameron’s Tories. And for a while—as we watched banks collapse, the economy shrink, and our neighbours lose their homes and jobs—it was believable.

But before long, it became very clear that we weren’t all in it together at all.

To start with, a crisis that looked as though it might engulf the entire financial system, thanks to the swift coordination between the world’s most powerful states, financial institutions, and international organisations, only destroyed one major investment bank in its entirety: Lehman Brothers.

The others were either directly or indirectly bailed out, acquired by other banks, or split up and sold off by the state. In the US, only one banker went to jail for his role in the financial crisis. In the UK, the authorities only brought charges against those involved in the LIBOR scandal and against Barclays for its desperate attempts to save itself when the crisis hit.

Bank profitability remained subdued after the financial crisis—particularly in the UK and Europe—but only when compared to the pre-crisis bonanza in the sector. In 2021, in the midst of another crisis, US banks once again started to generate record profits. And 2021 was a bumper year for the UK finance sector too.

The 13 years after the financial crisis were quite different for everyone else.

The Institute for Fiscal Studies, which was one of the greatest advocates of austerity, found that the coalition government’s reforms led to increases in poverty across the board. By 2013, there were 1.5 million more working-age people—and 800,000 more children—predicted to be living in poverty in the UK in 2020 than in 2010.

These figures are unsurprising given that wages in the UK stagnated for a decade after the financial crisis. Now, with the impact of the pandemic and the cost of living crisis, UK real wages are expected to be lower in 2026 than they were in 2008.

Before the pandemic, more than 8 million people in the UK were struggling with some form of problem debt and nearly a quarter of adults had less than £100 in savings. When Covid hit, many of these people were pushed to the brink of bankruptcy. By the end of this year, nearly 4 million households are expected to default on their debts.

Poverty, wage stagnation, and rising household debt were both the direct and indirect results of austerity. On the one hand, it led to cuts to public sector wages and benefits. On the other, it constrained demand, limiting public and private investment, and therefore constraining growth. Employment recovered fairly quickly, but only because wages and conditions were so poor that many people were desperate for a job, even one paying less than minimum wage.

And that’s just the impact on individuals. As anyone who has recently had to use the NHS will be aware, the impact on our public services has been just as dire.

It would be easy to ascribe the decline of the NHS to the strains imposed by Covid, were it not for the fact that the state of our health services was perhaps the biggest issue of the 2019 election aside from Brexit. Today, waiting lists are the highest since records began.

And the NHS was one of the parts of the public sector that was supposed to be protected from the impact of austerity. Local government, which provides critical services like adult’s and children’s social care, has been decimated by the cuts at the same time as demand for these services has increased as poverty has made life harder for the most vulnerable.

In the decade following the financial crisis, the number of children in care increased from 59,000 to 75,000. Experts warned that children’s social care services were at ‘breaking point’ due to the combination of increased demand and lower spending. And the BMA has recently warned that cuts to adult social care mean that those in the most deprived areas are unable to access the services they need.

The story is the same everywhere. Our education and criminal justice systems are under such extreme pressure that legal aid lawyers have already taken industrial action, and teachers are currently deciding whether to do the same. Our high streets have been boarded up and public spaces have fallen into disrepair. The number of people sleeping rough is 40% higher than in 2010 and 90% of people in the UK now believe that homelessness is a ‘serious problem’.

It is hard to find an area of British society that hasn’t been negatively affected by austerity. Even Boris Johnson realised that austerity had become toxic for the Conservative brand and signalled that there would be no return to cuts after the pandemic.

Rishi Sunak claimed to agree with Johnson when he was his chancellor. But after Liz Truss’ dire attempt at Thatcherism 2.0 it will be easy for Sunak to turn back on his word, once again claiming that in the aftermath of a crisis we all have to tighten our belts.

He might have rescued the country from Liz Truss, but Sunak’s austerity agenda—if it succeeds—will simply lead to another crisis. Rather than a quick collapse in the value of sterling, it will be felt as a steady collapse in peoples’ living standards, which have already been decimated by a decade of cuts to public services.

There was a reason Johnson reportedly banned his party from using the term ‘austerity’. As it has become clear that we are not, in fact, all in this together, the term has become toxic—and people are already starting to resist.