Missy, this statement this Government decided to blame the public services for the disaster caused by the financial institutions, and penalised our public services with austerity measures is not accurate. In fact, it is a very skewed perspective.
Government did not "blame" public services for the financial disaster caused by financial institutions. If New Labour had been restrained and Keynesian between 2001 and 2008, the impact of the financial disaster upon British public finances would be been very small indeed.
We are in a period of austerity because British tax receipts fall significantly short of British public spending liabilities: roughly 50 percent of those liabilities were incurred by New Labour between 2001 and 2008 when they doubled public spending over a period of seven years. Gordon Brown felt he could get away with this because he believed we were in a "new economic paradigm" where GDP and tax receipts would constantly rise. Anyone who knows anything about history and economics knows that as soon as someone says "new economic paradigm", we are in a bubble of some sort that will eventually burst.
When that bubble burst with the financial crisis, British tax receipts collapsed by £200bn to around £450bn-ish (we were borrowing around £50bn YOY anyway). Yet we still had roughly a £700bn public expenditure bill every year (roughly 45% of GDP, which is another issue in the pot). This gave us a deficit of around £200bn to £250bn in the aftermath of the crisis when tax receipts simply could not match spend.
That deficit was not because the government gave the banks taxpayer's money to bail themselves out. It is not a question of the NHS having to suffer budget cuts because the government gave that money to the banks. That is a huge misunderstanding of the nature of the bank bailouts under the chancellorship of Alastair Darling.
That deficit was what the government needed to tackle every year, either by raising taxes, reducing spend, borrowing, requesting an expansion of the money supply (which is now a Bank of England responsibility) or a medley of all four. This is a reality, not make-believe.
As I said on another thread, what many people do not realise is that Corbyn's first published economic policy was based upon Osbourne either wiping out the deficit through austerity or reducing this deficit to a mere £50bn a year. That is why Labour has been so weird about the issue with Harman telling Labour MPs not to vote against austerity and Labour not particularly hammering austerity in campaign pitches. They know the problem needs to be sorted.
It's all about priorities, what as a first world Country do we want to spend public money on?
This again is a very complex question. To give you an idea of general spend, we are currently spending about £785bn a year.
- Public pensions cost us £157bn.
- The NHS costs us £143bn.
- Education costs us £85bn.
- Social security costs us £133bn.
This is a total of £518bn already, with £267bn left.
But we haven't yet paid for defence (£46bn), the police (£4bn), law courts, fire service or prisons (a total of £26bn), transport (£30bn), the interest on our debt (£49bn; yes, we pay over ten times in debt interest what we spend on the police every year).
Nor have we funded the cost of government itself (£15bn), or anything to do with waste services, forestry, fishing, pollution, environmental protection, housing development, community amenities, recreational services, broadcasting (£4.2bn, yes, we spend on broadcasting than we do the police) ... all those £2bn and £3bn here and there that make a total of up £118bn.
So where do you cut? What are the priorities? If you don't want to cut health, education, pensions, or social security, what option do you have? Really? If we get rid of the entire criminal justice system and the fire service, so no police, no prisons, no courts, no fire stations, we'll only save £30bn a year. 
We could cut all waste management, so no tips or rubbish collections or recycling anywhere in the country, and we would save £10bn a year.
None of this would sort out the underfunding of the NHS, and the country would be ... well ... a hellhole.
So lets look at raising taxes instead. After the crash, as I said above, the annual deficit was £200bn. The tax take at this point was around £550bn. To raise another £200bn in tax and have no austerity whatsoever would have required increasing the tax burden by over 30%.
Practically no-one in this country can afford their taxes to go up by 30%. It would crash the economy.