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Yesterday, the chancellor, Rachel Reeves, delivered a Labour Party economic plan. People have been asking for Labour’s mission and principles to be more distinctly articulated. Through the decisions made – a transition to a more equitable tax system, targeting wealth to fund addressing child poverty, good public services and the cost of living – we have unequivocally set out what we stand for.

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

The Main Political Divide in British Government

The central dividing line in British politics is once again on the economy. On the one hand Labour, who aim to change it so it benefits ordinary working people, and on the other, our political opponents, who support the status quo and the unsuccessful ideology of the past. We must now confront, and win, the debate.

The Tories had 14 years to fix things and instead, by every standard, they got much worse. Their ideological 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 – didn’t work.

Record of Failure Under the Former Government

Living standards dropped by the biggest amount since records began, child poverty hit record levels, NHS waiting lists in England were the highest they’ve ever been, wages remained flat, a housing crisis became entrenched, young people affected by Covid were left on the scrapheap. The history of failure goes on.

A single budget alone can’t put all this right, so Labour has a long-term plan for renewal and for restructuring the country. And we have to go out and continue making the argument for why our strategy will yield benefits.

Social Security and Child Poverty

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

It’s why we are constructing more social housing than for a generation, raising wages and new rights for workers, greatly increasing investment in infrastructure and new industries, reducing waiting lists down and bringing down the costs of childcare and energy as we drive for clean power.

Removing the Two-Child Benefit Cap

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

For almost a decade, since it was introduced, low-income families with children have endured from a cruel social experiment that was marketed 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 unethical.

Tangible Effects in Local Areas

From experience from my own constituency – where over 5,000 children will be raised out of poverty as a result of ending the cap – the actual impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed without food and cold, living in overcrowded, damp homes, parents during the holidays depending 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 stretched but have to divert time and resources to supporting children who are living with the results of deep poverty.

Long-Term Consequences of Child Poverty

Just a quarter of pupils from the most disadvantaged families achieve five good GCSEs, compared with nearly three in four among affluent families. This predisposes them for the disadvantages they face during their lives: missed potential, financial struggles and ill health. Children who were raised in poverty are more likely to be unemployed or poor as adults.

Addressing child poverty isn’t just a moral imperative, it is a future-oriented strategy. Poverty costs the economy significantly more than the three billion pound cost of lifting the two-child cap, or extending free school meals.

This is the reason we acted urgently 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 taking early action in the parliament was crucial.

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

Fair Financing for Policies

We, as Labour, can also be explicit that these measures are being funded in a just way – from a new gaming tax, eliminating tax loopholes and a new “mansion tax”.

Conclusion

Equity and purpose – that’s how we will win the contest of ideas. This budget is a definitive statement that we won the election as Labour, and will govern as Labour. As I repeatedly said during my campaign to become deputy leader, we must reclaim the political megaphone and define the narrative more forcefully about what’s truly flawed with the country and how we are fixing it. We’ve certainly done that this week.

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