As the 2025 Budget approaches, another period of fiscal tightening seems inevitable given ominous signals that the Office for Budget Responsibility is set to downgrade the UK’s productivity performance. Departments and agencies are already planning for reductions in spending, further efficiency drives and delayed investments. Yet the real challenge ahead is not financial management alone. It is leadership.
The coming months will test whether the centre of government can provide coherence and purpose during a period of spending constraint that has lasted more than a decade. Austerity, after all, is not just about money. It is about the choices the state makes when there is less of it – what it protects, what it pauses and how it explains those decisions to citizens and staff.
This moment calls for clarity, courage and care: three qualities that determine whether austerity becomes managed decline or disciplined renewal.
Clarity: Decide what truly matters
Every spending round reveals the same weakness in the system: when resources decrease, government 'salami-slices' budgets and spreads the pain rather than setting priorities. The result is incremental erosion rather than strategic choice.
Clarity means defining the few outcomes that matter most for the government's political priorities, most of all boosting economic growth and tackling the cost of living, alongside national resilience – safety, legality, fairness and service continuity and making them explicit. The centre must then align budgets, governance and delivery mechanisms behind those outcomes.
That requires difficult conversations about what to stop, not just what to save. Clarity also means honesty: spelling out to the public that not everything can continue as before and that value will increasingly come from focus, not scale. That will mean difficult conversations in areas such as welfare provision where there are live debates about generational fairness as the triple lock on pensions is protected while more children fall into poverty.
Courage: Lead through hard trade-offs
In times of austerity, the instinct is to protect reputation rather than purpose. The temptation grows to manage by narrative – to rebrand cuts as transformation and fiscal limits as reform. But every credible delivery system depends on leaders willing to tell the truth about what is possible.
Courage at the centre means making visible choices and taking responsibility for them. It means refusing to hide behind process or language that masks reality. It means ensuring that decision-making is grounded in evidence and principle, not convenience or communication cycles.
Courage also has a collective dimension. The centre must act as a stabiliser across departments, not as an enforcer, encouraging collaboration and breaking down silos. It should support leaders to confront the politics of prioritisation: helping them act on facts rather than sentiment and to sustain delivery over time.
Care: Protect people and capability
Cuts made without care are false economies. Every fiscal squeeze risks hollowing out the professional capability and institutional memory that make reform possible. Care in leadership means protecting the system’s capacity to recover and rebuild.
That includes treating staff with honesty and respect, managing exits with fairness and preserving skills that will be essential when conditions improve. Care is also about maintaining trust. Within teams, across departments and between government and the public. When trust erodes, so does compliance, motivation and consequently delivery.
Compassion and competence are not opposites. They are interdependent.
Delivering from the centre
In an era of austerity, the centre’s role is not to command but to connect: to ensure coherence across strategy, spending and delivery. That means tighter coordination between the Treasury, Cabinet Office and departmental delivery functions. It means aligning fiscal discipline with operational reality and ensuring that every pound spent advances the government’s declared priorities.
Delivery from the centre should focus on three disciplines:
- Consistency: a single narrative for government priorities that guides decisions at every level.
- Transparency: clear communication of what is being protected, reduced, or stopped and the rationale behind it.
- Discipline: fewer initiatives, faster decision cycles, stronger accountability for outcomes.
Austerity exposes the weaknesses in fragmented governance. The centre’s task is to rebuild coherence without drifting into control.
The test ahead
This budget will not just set fiscal limits and priorities. It will test whether government can still act with clarity, courage and care when those limits tighten.
Clarity to focus on what truly matters.
Courage to make and defend difficult choices.
Care to hold the people and institutions of public service together.
Spending restraint is unavoidable. Drift is not. What happens next will depend on whether leaders at the centre of government can rediscover the discipline and humanity that define good governance – even, and especially, when times are hard.
Patrick Diamond is professor of public policy at Queen Mary University of London and a former head of policy planning in No.10. Vijay K. Luthra is a public service transformation specialist and former civil servant, local government councillor, school governor and NHS NED