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Just recently, the finance minister, Rachel Reeves, presented a Labour economic plan. The public have been asking for Labour’s purpose and values to be more clearly articulated. By way of the choices made – a shift to a more equitable tax system, targeting wealth to fund tackling child poverty, quality public services and the living expenses – we have clearly set out what we believe in.

This is 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 immediately.

The Central Dividing Line in British Government

The central dividing line in British politics is yet again on the economy. On the one hand Labour, who aim to change it so it benefits everyday working people, and on the other, our political opponents, who favor 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 in reality, by any measure, they got much worse. Their doctrinaire austerity and trickle-down economics – tax breaks for the wealthy, reducing investment (leaving us with low productivity and wages), and neglecting to support young people post-Covid – didn’t work.

Legacy of Decline Under the Former Administration

Quality of life fell by the biggest amount since records began, child poverty reached 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 record of failure goes on.

A single budget alone can’t put all this right, so Labour has a comprehensive plan for renewal 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 Child Poverty

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

That’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 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 eight long years, since it was introduced, 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 affected 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 callous and immoral.

Tangible Effects in Communities

I know from my own constituency – 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 without food and cold, living in overcrowded, 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 stretched but have to redirect time and resources to supporting children who are living with the results of deep poverty.

Long-Term Effects of Child Poverty

Just one in four 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 throughout their lives: unrealized potential, financial struggles and poor health. Children who were raised in poverty are more likely to be jobless or poor as adults.

Addressing child poverty isn’t just a ethical duty, 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.

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 totem to 14 years of failed conservative 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”.

Final Thoughts

Fairness and purpose – that’s how we will win the battle of ideas. This budget is a clear statement that we won the election as Labour, and will lead as Labour. As I consistently said during my campaign to become deputy leader, we must reclaim the political platform and set the agenda more strongly about what’s truly flawed with the country and how we are repairing it. We’ve definitely done that this week.

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