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Just recently, the chancellor, Rachel Reeves, delivered a Labour economic plan. The public have been asking for Labour’s purpose and principles to be more clearly articulated. Through the choices made – a transition to a more equitable tax system, focusing on wealth to pay for tackling child poverty, quality public services and the living expenses – we have unequivocally demonstrated what we stand for.

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 right began right away.

The Main Political Divide in UK Politics

The central division in British politics is once again on the economy. On the one side Labour, who aim to change it so it helps everyday working people, and on the opposite side, our political opponents, who favor the status quo and the unsuccessful ideology of the past. We must now confront, and prevail in, the debate.

The Tories were given 14 years to fix things and instead, by any measure, they got much worse. Their doctrinaire austerity and trickle-down economics – tax breaks for the wealthy, reducing investment (leaving us with poor productivity and wages), and failing to support young people post-Covid – didn’t work.

Record of Decline Under the Former Government

Quality of life 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 were stagnant, a housing crisis took hold, young people scarred 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 rebuilding and for rewiring the country. And we have to go out and continue making the argument for why our strategy will yield benefits.

Welfare Spending and Youth Deprivation

During the Tories, welfare spending rose substantially. 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 building more affordable homes than for a generation, increasing wages and enhanced protections for workers, massively boosting 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 Benefit Cap

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

For eight long years, since it was introduced, poorer families with children have endured 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’s done nothing but push 300,000 more children into poverty – which, in the end, costs us more, as well as being heartless and unethical.

Real Impact in Communities

I know from my own district – where over 5,000 children will be lifted 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 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 redirect time and resources to supporting children who are living with the consequences of deep poverty.

Long-Term Effects of Child Poverty

Just a quarter of pupils from the poorest families achieve five good GCSEs, compared with almost 75% among wealthier families. This predisposes them for the challenges they face during their lives: unrealized potential, financial struggles and ill 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 long-term investment. Poverty costs the economy significantly more than the £3bn cost of removing 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 effects of lifting it will not occur overnight either, so acting early in the parliament was crucial.

The cap was a totem to 14 years of failed rightwing ideology. Now it is gone.

Fair Financing for Policies

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

Conclusion

Fairness and direction – that’s how we will succeed in the contest of ideas. This budget is a clear 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 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 maintain it and prevail in this fight about how we will rebuild Britain and tackle the deep inequalities impeding progress.