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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 clearly articulated. By way of the decisions made – a transition to a fairer tax system, targeting wealth to fund tackling child poverty, quality public services and the cost of living – we have clearly demonstrated what we believe in.

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

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 benefits ordinary working people, and on the other, our opponents, who support the current system and the failed doctrine of the past. We must now confront, and win, the argument.

The Tories were given 14 years to fix things and instead, by every standard, they got much worse. Their ideological austerity and supply-side economics – tax cuts for the wealthy, cutting off investment (causing us with poor productivity and wages), and neglecting to support young people after the pandemic – proved ineffective.

Legacy of Failure Under the Former Government

Quality of life fell by the largest margin 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 became entrenched, young people affected by Covid were left on the scrapheap. The history of failure goes on.

One budget alone can’t fix everything, so Labour has a comprehensive plan for renewal and for rewiring the country. And we have to go out and keep making the case for why our strategy will yield benefits.

Welfare Spending and Youth Deprivation

Under the Tories, welfare spending significantly increased. As did child poverty, because they failed to tackle the underlying issues: low pay, high housing costs, significant 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 social housing than for a generation, increasing wages and enhanced protections for workers, massively boosting 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.

Ending the Two-Child Benefit Cap

This is also the reason we are absolutely right to use this budget to remove the two-child benefit cap.

For almost a decade, since it was introduced, low-income families with children have suffered from a cruel social experiment that was marketed as fair for working people when it was anything but. 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, ultimately, costs us more, as well as being heartless and immoral.

Tangible Effects in Local Areas

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 actual impact it’s had. Children wearing £1 wellies as school shoes, children going to bed hungry and cold, living in cramped, mouldy homes, parents this Christmas 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.

Long-Term Consequences 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 sets them up for the challenges they face during their lives: missed 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 long-term investment. Poverty costs the economy significantly more than the three billion pound cost of lifting the two-child cap, or expanding free school meals.

This is the reason we acted urgently in the budget, despite the very difficult economic context. Every day with this cap in place sees more than 100 extra children pushed into poverty. The effects of lifting it won’t happen overnight either, so acting early in the parliament was vital.

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

Fair Financing for Policies

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

Conclusion

Equity and direction – 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 seize back the political platform and set the agenda more forcefully about what’s truly flawed with the country and how we are repairing it. We’ve definitely done that this week.

So let’s maintain it and prevail in this struggle about how we will renew Britain and address the deep inequalities holding us back.