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Yesterday, the chancellor, Rachel Reeves, presented a Labour economic plan. People have been calling for Labour’s purpose and principles to be more clearly expressed. Through the choices made – a transition to a more equitable tax system, focusing on wealth to fund addressing child poverty, good public services and the cost of living – we have clearly demonstrated what we stand for.

That’s why Labour MPs applauded in the Commons, and it’s why we are up for the battles to come. And it’s why the cries from the conservative side began immediately.

The Central Political Divide in UK Politics

The primary dividing line in British politics is once again on the economy. On the one hand Labour, who aim to reform it so it helps everyday working people, and on the opposite side, our opponents, who support the status quo and the unsuccessful doctrine of the past. We must now take on, and prevail in, the debate.

The Tories were given 14 years to resolve things and instead, by every standard, they got much worse. Their ideological austerity and trickle-down economics – tax cuts for the wealthy, reducing investment (causing us with poor productivity and wages), and failing to support young people after the pandemic – didn’t work.

Legacy of Failure Under the Previous Administration

Living standards fell 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 took hold, young people scarred by Covid were left on the scrapheap. The history of failure goes on.

One budget alone can’t fix everything, so Labour has a long-term plan for rebuilding and for rewiring the country. And we have to go out and keep making the argument for why our approach will reap dividends.

Social Security and Child Poverty

Under 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.

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

Ending the Two-Child Limit

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

For almost a decade, since it was enacted, 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, in the end, costs us more, as well as being heartless and immoral.

Tangible Effects in Local Areas

From experience from my own district – where over 5,000 children will be raised out of poverty as a result of ending the cap – the real impact it’s had. Children wearing £1 wellies as school shoes, children going to bed without food and cold, living in overcrowded, mouldy homes, parents this Christmas 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 stretched but have to redirect time and resources to supporting children who are living with the results of severe deprivation.

Lasting Effects of Youth Hardship

Just a quarter of pupils from the poorest families achieve five good GCSEs, compared with almost 75% among affluent families. This predisposes them for the challenges they face during their lives: unrealized potential, economic 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 ethical duty, it is a future-oriented strategy. Poverty costs the economy significantly more than the £3bn cost of removing the two-child cap, or expanding free school meals.

That’s why 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 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 rightwing ideology. Now it is gone.

Fair Funding for Measures

We, as Labour, can also be explicit that these initiatives are being paid for 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 battle of ideas. This budget is a definitive statement that we gained 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 platform 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 struggle about how we will renew Britain and address the entrenched inequalities holding us back.