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Yesterday, the chancellor, Rachel Reeves, presented a Labour Party economic plan. The public have been asking for Labour’s mission and values to be more distinctly expressed. Through the choices made – a transition to a fairer tax system, focusing on wealth to fund addressing child poverty, quality public services and the cost of living – we have clearly set out what we stand for.

That’s why Labour MPs cheered in the Commons, and it’s why we are ready for the fights to come. And it’s why the cries from the right began immediately.

The Central Political Divide in UK Politics

The central division 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 opposite side, our opponents, who favor the current system and the failed ideology of the past. We must now confront, and prevail in, the argument.

The Tories were given 14 years to fix things and instead, by any measure, they got far more dire. Their ideological austerity and supply-side economics – tax cuts for the wealthy, reducing investment (causing us with poor productivity and wages), and neglecting to support young people after the pandemic – proved ineffective.

Record of Decline Under the Former Administration

Living standards fell by the biggest amount since records began, child poverty reached record levels, NHS waiting lists in England were the highest on record, wages were stagnant, a housing crisis took hold, young people affected by Covid were left on the scrapheap. The record of failure continues.

A single budget alone can’t put all this right, 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 reap dividends.

Welfare Spending and Child Poverty

During the Tories, welfare spending significantly increased. 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 is forced to paying more to manage the symptoms instead of the cure.

It’s why we are building more affordable homes than for a generation, raising wages and new rights for workers, greatly increasing investment in infrastructure and new industries, getting waiting lists down and lowering the costs of childcare and energy as we drive for clean power.

Removing the Two-Child Limit

This is also the reason we are completely justified to use this budget to remove the two-child benefit cap.

For eight long years, since it was enacted, low-income families with children have suffered from a unjust social experiment that was branded as fair for working people when it was anything but. Most of the families impacted by it have a parent in work.

It has only served to push 300,000 more children into poverty – which, in the end, costs us more, as well as being callous and unethical.

Real Impact in Communities

From experience from my own district – where over 5,000 children will be lifted out of poverty as a result of abolishing the cap – the real impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed without food and cold, living in cramped, mouldy homes, parents during the holidays depending on food banks for a modest 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 divert time and resources to supporting children who are living with the consequences of deep poverty.

Long-Term Consequences of Youth Hardship

Just a quarter of pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among wealthier families. This predisposes them for the challenges they face during 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 ethical duty, it is a long-term investment. Poverty costs the economy far, far more than the £3bn cost of lifting the two-child cap, or extending free school meals.

That’s why we acted urgently in the budget, despite the very difficult economic context. Every day with this cap in place sees more than 100 extra children pushed into poverty. The effects of lifting it will not occur overnight either, so taking early action in the parliament was crucial.

The cap was a totem to 14 years of failed conservative ideology. Now it is abolished.

Fair Financing for Policies

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

Conclusion

Fairness 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 consistently said during my campaign to become deputy leader, we must seize back the political megaphone and set the agenda more strongly about what’s really wrong with the country and how we are repairing it. We’ve definitely done that this week.

So let’s maintain it and prevail in this struggle about how we will rebuild Britain and address the entrenched inequalities holding us back.