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Yesterday, the chancellor, Rachel Reeves, presented a Labour Party economic plan. People have been calling for Labour’s purpose and principles to be more distinctly articulated. By way of the decisions made – a shift to a fairer tax system, targeting wealth to fund addressing child poverty, quality public services and the living expenses – we have clearly set out what we believe in.

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

The Main Political Divide in British Politics

The central dividing line in British politics is yet again on the economy. On the one hand Labour, who aim to reform it so it benefits ordinary working people, and on the opposite side, our opponents, who favor the status quo and the unsuccessful ideology of the past. We must now confront, and prevail in, the argument.

The Tories had 14 years to resolve 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 low 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 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 scarred by Covid were left on the scrapheap. The history of failure continues.

One budget alone can’t put all this right, so Labour has a long-term plan for rebuilding and for restructuring the country. And we have to go out and keep making the case for why our strategy will reap dividends.

Welfare Spending and Child Poverty

During the Tories, welfare spending significantly increased. As did child poverty, because they didn’t address the underlying issues: low pay, high housing costs, significant inequalities in education, health and regions. The state is forced to paying more to manage the symptoms instead of the cure.

That’s why we are constructing more affordable homes than for a generation, increasing wages and enhanced protections 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 absolutely right to use this budget to remove the two-child benefit cap.

For almost a decade, since it was introduced, poorer 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 affected by it have a parent in work.

It has only served to push 300,000 more children into poverty – which, ultimately, costs us more, as well as being callous and immoral.

Tangible Effects 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 £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 modest 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.

Lasting Effects 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, financial struggles and ill health. Children who grew up 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 far, far more than the three billion pound cost of removing the two-child cap, or extending free school meals.

That’s why we acted promptly in the budget, despite the challenging economic context. Every day with this cap in place sees over a hundred extra children pushed into poverty. The effects of lifting it won’t happen overnight either, so acting early in the parliament was crucial.

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

Equitable Funding for Measures

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

Final Thoughts

Fairness and direction – 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 seize back the political megaphone and define the narrative more strongly about what’s truly flawed with the country and how we are fixing it. We’ve definitely done that this week.

So let’s keep hold of it and prevail in this fight about how we will renew Britain and tackle the entrenched inequalities holding us back.