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Just recently, the finance minister, Rachel Reeves, presented a Labour economic plan. The public have been calling for Labour’s mission and principles to be more clearly articulated. Through the decisions made – a transition to a more equitable tax system, targeting wealth to fund tackling child poverty, quality public services and the cost of living – we have clearly demonstrated what we stand for.

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

The Central Dividing Line in UK Politics

The central dividing line in British politics is once again on the economy. On the one side Labour, who want to reform it so it benefits everyday working people, and on the other, our opponents, who favor the status quo and the failed doctrine of the past. We must now confront, and prevail in, the debate.

The Tories were given 14 years to fix things and instead, by any measure, they got far more dire. Their ideological austerity and supply-side economics – tax breaks for the wealthy, reducing investment (leaving us with poor productivity and wages), and failing to support young people after the pandemic – proved ineffective.

Record of Failure Under the Former Government

Quality of life dropped 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 were stagnant, a housing crisis took hold, young people affected by Covid were abandoned. The history of failure goes on.

A single budget alone can’t put all this right, so Labour has a long-term plan for renewal and for restructuring the country. And we have to go out and continue making the argument for why our approach will reap dividends.

Welfare Spending and Youth Deprivation

During the Tories, welfare spending significantly increased. As did child poverty, because they didn’t address the root causes: 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 constructing more social housing than for a generation, raising 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.

Removing the Two-Child Limit

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

For eight long years, since it was enacted, poorer families with children have endured from a cruel 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 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

From experience from my own district – where over 5,000 children will be raised out of poverty as a result of ending 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 cramped, damp homes, parents this Christmas 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 overburdened but have to redirect time and resources to supporting children who are living with the consequences of deep poverty.

Lasting 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 predisposes them for the disadvantages they face during their lives: missed potential, financial struggles and poor health. Children who were raised in poverty are more likely to be jobless or poor as adults.

Confronting child poverty isn’t just a ethical duty, it is a future-oriented strategy. Poverty costs the economy far, far more than the £3bn cost of lifting the two-child cap, or expanding free school meals.

That’s why we acted promptly in the budget, despite the very difficult economic context. Every day with this cap in place sees over a hundred 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 gone.

Fair Funding for Measures

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

Conclusion

Fairness and purpose – that’s how we will succeed in the battle 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 seize back the political megaphone and set the agenda more strongly about what’s truly flawed with the country and how we are repairing it. We’ve certainly done that this week.

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