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Yesterday, the chancellor, Rachel Reeves, presented a Labour Party economic plan. The public have been calling for Labour’s purpose and values to be more clearly articulated. Through the decisions made – a transition to a more equitable tax system, targeting wealth to fund tackling child poverty, quality public services and the living expenses – we have unequivocally demonstrated what we believe in.

This is why Labour MPs cheered in the Commons, and it’s why we are ready for the battles to come. And it’s why the protests from the conservative side began right away.

The Central Dividing Line in British Politics

The central dividing line in British politics is once again on the economy. On the one side Labour, who want to reform it so it benefits everyday working people, and on the other, our opponents, who favor the current system and the unsuccessful doctrine of the past. We must now take on, and prevail in, the debate.

The Tories were given 14 years to fix things and instead, by every standard, they got far more dire. Their doctrinaire austerity and supply-side economics – tax cuts for the wealthy, cutting off investment (leaving us with poor productivity and wages), and failing to support young people after the pandemic – proved ineffective.

Legacy of Failure Under the Former Government

Living standards fell by the largest margin since records began, child poverty hit record levels, NHS waiting lists in England were the highest on record, wages remained flat, a housing crisis took hold, young people scarred by Covid were abandoned. The record of failure goes on.

A single budget alone can’t fix everything, so Labour has a long-term plan for renewal and for rewiring the country. And we have to go out and continue making the argument for why our approach will yield benefits.

Welfare Spending and Child Poverty

Under the Tories, welfare spending rose substantially. As did child poverty, because they failed to tackle the root causes: low pay, high housing costs, deep inequalities in education, health and regions. The state ends up paying more to deal with the symptoms instead of the cure.

That’s why we are constructing more social housing than for a generation, raising wages and enhanced protections for workers, massively boosting investment in infrastructure and new industries, reducing waiting lists down and bringing down the costs of childcare and energy as we pursue clean power.

Ending the Two-Child Benefit Cap

It’s also why we are completely justified to use this budget to lift the two-child benefit cap.

For almost a decade, since it was introduced, poorer families with children have suffered from a cruel social experiment that was branded as fair for working people when it was the opposite. Most of the families impacted by it have a parent in work.

It’s done nothing but push 300,000 more children into poverty – which, ultimately, costs us more, as well as being heartless and immoral.

Real Impact in Local Areas

I know from my own constituency – where over 5,000 children will be raised out of poverty as a result of abolishing the cap – the actual impact it’s had. Children wearing £1 wellies as school shoes, children going to bed hungry and cold, living in overcrowded, mouldy homes, parents during the holidays relying on food banks for a simple meal or small gift for their kids.

I also see the impact on schools, teachers, social workers, doctors and charities who are already overburdened but have to redirect time and resources to supporting children who are living with the consequences of severe deprivation.

Long-Term Effects of Child Poverty

Just one in four pupils from the poorest families achieve five good GCSEs, compared with almost 75% among wealthier families. This predisposes them for the challenges they face throughout their lives: missed potential, economic struggles and poor health. Children who were raised in poverty are more likely to be unemployed or poor as adults.

Confronting child poverty isn’t just a moral imperative, it is a future-oriented strategy. Poverty costs the economy far, far more than the £3bn cost of lifting the two-child cap, or expanding free school meals.

This is the reason we acted promptly in the budget, despite the challenging economic context. Every day with this cap in place sees over a hundred additional children pushed into poverty. The benefits of lifting it will not occur overnight either, so acting early in the parliament was vital.

The cap was a symbol to 14 years of unsuccessful rightwing ideology. Now it is abolished.

Equitable Financing for Measures

We, as Labour, can also be explicit that these measures are being funded in a fair way – from a new gambling levy, closing tax loopholes and a new “mansion tax”.

Final Thoughts

Fairness and purpose – that’s how we will win the battle of ideas. This budget is a definitive statement that we gained the election as Labour, and will lead as Labour. As I repeatedly said during my campaign to become deputy leader, we must seize back the political megaphone and define the narrative more forcefully about what’s really wrong with the country and how we are repairing it. We’ve definitely done that this week.

So let’s keep hold of it and win this fight about how we will rebuild Britain and address the deep inequalities impeding progress.