School of Social & Political Sciences

The former Conservative Chancellor’s use of austerity as a political tool demonstrates how strategic direction on the economy can shape political narratives and drive future electoral success. His approach is one that the present Labour Government would do well to reflect on.

Austerity was the defining economic policy of the Conservative-Liberal Democrat Coalition in 2010. Although fiscal targets were frequently missed, Osborne’s use of “austerity as statecraft” was a strikingly effective political strategy. Osborne’s success rested on three pillars: apportioning blame, programmatic coherence and strategic flexibility. Together, these shaped a compelling political narrative that delivered electoral success.

The Starmer Government is teetering on the brink. After a series of disastrous elections in Holyrood, at the Senedd and across local councils in May 2026, Keir Starmer’s time as Prime Minister looks increasingly vulnerable. Despite the sizeable mandate won in 2024, Labour has yet to provide the strategic direction on the economy capable of shaping a winning political narrative. In a landscape where Reform UK is emerging as a credible challenger, failing to get this right could be fatal for Starmer or whoever assumes leadership of the party over the coming months.

Austerity as statecraft

Andrew Gamble described Osborne’s use of austerity as “an aspect of statecraft”, emphasising that its primary purpose was to achieve political ends. Central to this approach was political narrative. Osborne and David Cameron understood that winning the argument in the run-up to the 2010 general election was where the makings of a successful electoral strategy for the subsequent election began. This strategy made austerity a powerful tool of statecraft and today provides a useful lens for assessing the present Labour Government’s approach and some of its failures.

Apportioning blame

The first pillar of Osborne’s austerity as statecraft approach revolved around apportioning blame for the 2008 financial crisis. Osborne saw the opportunity to pin Labour as responsible for the “deficit and the ‘decade of debt’ and ever-rising borrowing” as “irresistible” and “seized it with both hands”. The key narrative was that Labour could not be trusted on the economy, having been reckless with spending during their time in office. In response, Osborne introduced a period of economic constraint. The political strategy succeeded, as more voters attributed economic problems to Labour rather than to external factors. In his Emergency Budget speech of June 2010, Osborne opened by referring to the need to pay “for the past” that the Coalition had “inherited from their predecessors”, giving a clear sense of political positioning before turning to the economic details. This gave the Coalition the upper hand and reinforced the narrative that the Conservatives were more trustworthy than Labour with public finances. Four years into their time in office, polling suggested that Cameron and Osborne remained more trusted to run the economy than Labour (42% vs 26%).

There is an interesting comparison to be made with the present Labour Government, which has adopted a similar strategy of blaming predecessors in order to justify difficult economic choices. In the 2024 Budget, Rachel Reeves cited a black hole in public finances to justify raising £40 billion worth of taxes, arguing that the “British people have inherited the Conservative party’s failures”. The narrative was similar to Osborne’s, but the contrast lies in how effectively this politics of blame has translated into electoral gain. Recent polling indicates that just 13% of people think Reeves is doing a good job as Chancellor, suggesting that the public have not bought her attempt to blame predecessors for taking tough economic decisions. Part of this is down to the broader political context. Trust and confidence in British governments have eroded significantly over the past 15 years. Polling shows that 45% of people feel governments almost never act in the nation’s best interests, whilst Covid-19 has added further volatility to an already unstable British political environment. In terms of the electoral context, Reform UK has emerged as a credible challenger to the traditional two-party system, currently polling at around 25%, with the public seeing them as a real alternative. In this more skeptical and fragmented political landscape, Osborne’s method of apportioning blame carries far less weight than it once did.

Programmatic coherence

Whilst apportioning blame can help shape a narrative, governments also require a coherent governing philosophy to secure electoral success. This was key for Osborne and the Conservatives. Austerity provided a unifying framework that structured messaging and implementation during the Coalition and beyond. It resonated with the public as there was an understanding that much like a household, if the country has overspent and fallen into debt, cutting back was the responsible course of action. As Osborne put it in his Spending Review of October 2010, “we are going to ensure, like every solvent household in the country, that what we buy we can afford”. This narrative helped organise economic policy and reinforced that Labour could not be trusted with public finances. Crucially, the political coherence of austerity outlasted its economic shortcomings. Spending was higher in 2014 than in 2010, borrowing remained around £100 billion per year and real-term incomes fell below inflation. But the narrative endured and Osborne chose “to dig in”. Gamble said it would “be a remarkable achievement in the art of statecraft” if Osborne and the Conservatives won in 2015. It managed to do exactly that. The Conservatives gained a net 24 seats in 2015 and secured an overall majority. Osborne transformed austerity into a coherent political narrative that despite economic shortcomings, delivered electoral success.

By contrast, the present Labour Government has struggled to establish a comparable governing philosophy. Within six months of entering office, Starmer’s Government had already advanced “missions”, “first steps” and “milestones”, each signalling various relaunches and making it difficult to discern a single narrative. Polling shows that only 14% of people think Starmer is decisive, and this hesitant approach has shaped his Government’s economic strategy. Without a settled philosophy to provide direction, key economic decisions have appeared reactive, subject to internal party management and increasingly tied to pressure over Starmer’s leadership. The scrapping of the two-child benefit cap, which will cost an estimated £3 billion per year by the end of the parliament, is widely understood to have followed sustained pressure from backbench Labour MPs. Fiscal decisions have been shaped by parliamentary dynamics rather than a coherent Downing Street strategy. U-turns in terms of watering down inheritance tax plans for farmers and winter fuel payment cuts, point to a similar story, with the Labour Government’s economic decisions in terms of tax and spending subject to external political pressure. This is very much the inverse of Osborne’s austerity, which involved a coherent political narrative that insulated the economic programme, meaning shortcomings could be absorbed. The absence of a comparable programme under the Labour Government has left their economic policy unsettled, in turn leaving voters unclear about what Starmer stands for and undermining his leadership.

Strategic flexibility

Programmatic coherence was central to austerity’s political durability, but greatly assisted by strategic flexibility. For Osborne, having a degree of flexibility at the core of the austerity programme meant missing economic targets was plausible. It quickly became clear that the goal of eliminating the deficit within a single parliament would not be met. Osborne conceded as early as 2011 that the deficit would remain in place until at least 2016-17. Targets were continually pushed forward, with the most severe cuts delayed until the following parliament. Central to this strategy of deferral was returning to the narrative that only the Conservatives could be trusted to finish austerity. This was “a fairly brazen claim (seeing as it was Osborne’s implementation which had failed), but in terms of statecraft it was astute, because it gave Osborne and the Conservatives a clear story to tell going into the election”. The flexibility built into the austerity programme saw distinct phases introduced, with targets projected forward and strategy adapted. The approach was politically shrewd. Osborne and the Conservatives were able to return to the narrative that they were most trusted to run public finances, a claim backed up by a great degree of programmatic coherence and popular backing which allowed them to be flexible where necessary.

The present Labour Government has been not just incoherent, but rigid with their economic plan thus far. In the pre-election period of the campaign, Labour was in a favourable position and projected to win the sizeable majority that they did. Their approach during this period was likened to a “ming vase strategy”, as the party was overly careful in terms of electoral commitments. Any significant deviation risked destabilising Labour’s polling advantage, and Starmer and Reeves ensured the ming vase was held upright. They wanted to be cautious, but perhaps they erred too much on the side of caution. This was particularly true in economic terms, where Labour ruled out increases to National Insurance, Income Tax and VAT whilst introducing rigid fiscal rules. The IFS noted that such pledges “not to increase a wide range of specific tax are problematic” as they severely restrict a government’s flexibility. Nevertheless, Starmer and Reeves sought to run this small-target campaign due to the fear of surrendering a winning position. This has left the present Labour Government in a rut today, with fewer economic levers to pull whilst growth falters. Osborne was able to move through different phases and postpone targets within a flexible framework, but Starmer and Reeves have less adaptability. This Government may have been in a winning position in 2024, but approaching almost two years since that emphatic victory, they now appear politically constrained.

A look ahead

The success of Osborne’s austerity did not lie in meeting fiscal targets, but in the arts of statecraft. Osborne constructed a clear economic narrative capable of apportioning blame and ensured a great degree of coherence and flexibility that culminated in electoral success for the Conservatives in 2015.

The present Labour Government has yet to translate its economic policy into a compelling governing story capable of doing the same. The electoral clock is ticking. With the political damage sustained at the May 2026 elections, it is clear that both Reform UK and the Greens pose a serious threat to the Labour Party. If Labour is to stand a chance at the next election – whether under Starmer or a different leader – it must move beyond managing decline and construct a political narrative that can win. They could do worse than looking to George Osborne as a good place to start.

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This blog is part of the SPS Student Academic Blog series. You can read more contributions from the series here.

First published: 26 May 2026