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Just recently, the finance minister, Rachel Reeves, presented a Labour Party economic plan. People have been calling for Labour’s mission and principles to be more distinctly articulated. By way of the decisions made – a transition to a fairer tax system, focusing on wealth to fund addressing child poverty, good public services and the cost of living – we have unequivocally demonstrated what we believe in.

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

The Central Political Divide in UK Government

The primary dividing line in British politics is once again on the economy. On the one side Labour, who want to reform it so it helps everyday working people, and on the opposite side, our opponents, who support the status quo and the failed ideology of the past. We must now confront, and win, the debate.

The Tories were given 14 years to resolve things and in reality, by every standard, they got far more dire. Their ideological austerity and supply-side economics – tax cuts for the wealthy, cutting off investment (causing us with poor productivity and wages), and failing to support young people after the pandemic – proved ineffective.

Record of Failure Under the Former Administration

Living standards dropped by the biggest amount since records began, child poverty reached record levels, NHS waiting lists in England were the highest on record, wages were stagnant, a housing crisis took hold, young people affected by Covid were left on the scrapheap. The history of failure goes on.

A single budget alone can’t fix everything, so Labour has a long-term plan for rebuilding and for rewiring the country. And we have to go out and keep making the argument for why our strategy will yield benefits.

Welfare Spending and Child Poverty

Under the Tories, welfare spending significantly increased. 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 ends up paying more to manage the effects instead of the cure.

It’s why we are building more affordable homes than for a generation, increasing wages and new rights 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 pursue clean power.

Ending the Two-Child Benefit Cap

It’s also why we are completely justified 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 the opposite. 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 callous 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 without food and cold, living in overcrowded, damp homes, parents this Christmas relying 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 divert time and resources to supporting children who are living with the consequences of severe deprivation.

Long-Term Effects of Child Poverty

Just one in four pupils from the most disadvantaged families achieve five good GCSEs, compared with almost 75% among wealthier families. This predisposes them for the disadvantages they face during their lives: missed potential, economic struggles and ill health. Children who grew up in poverty are more likely to be jobless or poor as adults.

Confronting child poverty isn’t just a moral imperative, it is a future-oriented strategy. 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 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 effects of lifting it will not occur overnight either, so acting early in the parliament was vital.

The cap was a symbol to 14 years of failed conservative ideology. Now it is abolished.

Fair Financing for Measures

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

Fairness and purpose – that’s how we will succeed in the battle of ideas. This budget is a definitive 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 megaphone and define the narrative more strongly about what’s really wrong with the country and how we are fixing it. We’ve certainly done that this week.

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