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Yesterday, the chancellor, Rachel Reeves, delivered a Labour Party economic plan. The public have been calling for Labour’s purpose and principles to be more distinctly expressed. By way of the choices made – a transition to a more equitable tax system, targeting wealth to pay for tackling child poverty, good public services and the cost of living – we have unequivocally set out what we stand for.

This is why Labour MPs applauded in the Commons, and it’s why we are up for the fights to come. And it’s why the protests from the conservative side began immediately.

The Central Political Divide in British Government

The central division in British politics is yet again on the economy. On the one side Labour, who aim to change it so it helps ordinary working people, and on the other, our political opponents, who favor the status quo and the failed doctrine of the past. We must now take on, 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 breaks for the wealthy, cutting off investment (leaving us with poor productivity and wages), and neglecting to support young people post-Covid – didn’t work.

Legacy of Failure Under the Previous Government

Quality of life fell by the biggest amount since records began, child poverty reached record levels, NHS waiting lists in England were the highest on record, wages remained flat, a housing crisis took hold, young people scarred by Covid were abandoned. The record of failure continues.

A single budget alone can’t fix everything, so Labour has a comprehensive plan for rebuilding and for restructuring the country. And we have to go out and continue making the case for why our approach will yield benefits.

Welfare Spending and Child Poverty

During the Tories, welfare spending rose substantially. 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 ends up paying more to deal with the effects instead of the cure.

It’s why we are building more affordable homes than for a generation, raising 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.

Ending the Two-Child Limit

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, poorer families with children have suffered from a cruel social experiment that was marketed as fair for working people when it was the opposite. 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 Local Areas

From experience 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 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 overburdened but have to redirect time and resources to supporting children who are living with the consequences of deep poverty.

Lasting Consequences of Child Poverty

Just one in four pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among affluent families. This sets them up for the disadvantages they face throughout their lives: missed potential, economic struggles and ill health. Children who grew up in poverty are more likely to be unemployed or poor as adults.

Confronting child poverty isn’t just a moral imperative, it is a future-oriented strategy. Poverty costs the economy far, far 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 more than 100 extra children pushed into poverty. The benefits of lifting it won’t happen overnight either, so taking early action in the parliament was vital.

The cap was a totem to 14 years of unsuccessful rightwing ideology. Now it is abolished.

Equitable Financing for Measures

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

Final Thoughts

Equity and purpose – that’s how we will succeed in the battle of ideas. This budget is a definitive 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 megaphone and define the narrative more forcefully about what’s really wrong with the country and how we are fixing 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 address the entrenched inequalities impeding progress.