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Just recently, the chancellor, Rachel Reeves, presented a Labour Party economic plan. People have been asking for Labour’s purpose and principles to be more clearly expressed. By way of the choices made – a transition to a fairer tax system, targeting wealth to pay for tackling child poverty, quality public services and the living expenses – we have unequivocally set out 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 right began immediately.

The Central Political Divide in British Politics

The primary dividing line in British politics is yet again on the economy. On the one hand Labour, who aim to change it so it helps everyday 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 any measure, they got far more dire. Their ideological austerity and trickle-down economics – tax cuts for the wealthy, cutting off investment (leaving us with low productivity and wages), and failing to support young people after the pandemic – proved ineffective.

Legacy of Failure Under the Previous Government

Living standards dropped by the largest margin since records began, child poverty reached record levels, NHS waiting lists in England were the highest on record, wages remained flat, a housing crisis became entrenched, young people scarred by Covid were abandoned. The history of failure continues.

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

Welfare Spending and Youth Deprivation

Under the Tories, welfare spending rose substantially. As did child poverty, because they didn’t address the underlying issues: 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 solution.

That’s why we are building more social housing than for a generation, raising wages and new rights for workers, massively boosting investment in infrastructure and new industries, reducing waiting lists down and lowering the costs of childcare and energy as we pursue clean power.

Ending the Two-Child Benefit Cap

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

For eight long years, since it was enacted, 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 impacted 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 heartless and unethical.

Real Impact in Local Areas

I know from my own constituency – where over 5,000 children will be raised out of poverty as a result of abolishing the cap – the actual impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed without food and cold, living in cramped, 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 divert time and resources to supporting children who are living with the consequences of severe deprivation.

Lasting Consequences of Child Poverty

Just a quarter of pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among wealthier families. This predisposes them for the disadvantages they face throughout their lives: unrealized potential, economic struggles and ill 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 far, far more than the £3bn cost of removing the two-child cap, or extending 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 additional children pushed into poverty. The benefits of lifting it won’t happen 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 abolished.

Fair Financing for Policies

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

Final Thoughts

Equity 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 govern 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 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 fight about how we will renew Britain and address the entrenched inequalities impeding progress.