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Just recently, the chancellor, Rachel Reeves, presented a Labour budget. The public have been asking for Labour’s purpose and values to be more distinctly articulated. By way of the decisions made – a shift to a fairer tax system, focusing on wealth to pay for tackling child poverty, good public services and the living expenses – we have clearly set out 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 right away.

The Main Dividing Line in UK Government

The central division in British politics is yet again on the economy. On the one side Labour, who want to reform it so it benefits everyday working people, and on the opposite side, our political opponents, who favor the status quo and the failed ideology of the past. We must now take on, and prevail in, the argument.

The Tories were given 14 years to resolve things and instead, by any measure, they got much worse. Their ideological austerity and trickle-down economics – tax breaks for the wealthy, cutting off investment (leaving us with poor productivity and wages), and failing to support young people post-Covid – proved ineffective.

Legacy of Failure Under the Former Administration

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 took hold, young people scarred by Covid were left on the scrapheap. The history of failure goes on.

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

Welfare Spending and Youth Deprivation

During the Tories, welfare spending rose substantially. As did child poverty, because they failed to tackle the root causes: low pay, high housing costs, significant inequalities in education, health and regions. The state is forced to paying more to manage the symptoms 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, getting waiting lists down and bringing down 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 remove the two-child benefit cap.

For eight long years, since it was enacted, poorer families with children have suffered from a unjust social experiment that was marketed as fair for working people when it was anything but. 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, ultimately, costs us more, as well as being heartless and unethical.

Tangible Effects in Local Areas

From experience from my own constituency – where over 5,000 children will be raised 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, damp homes, parents during the holidays 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 results of deep poverty.

Long-Term Consequences 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 throughout their lives: missed potential, economic struggles and poor health. Children who were raised in poverty are more likely to be unemployed or poor as adults.

Addressing child poverty isn’t just a moral imperative, it is a long-term investment. Poverty costs the economy far, far more than the £3bn cost of lifting the two-child cap, or extending 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 benefits of lifting it will not occur overnight either, so acting early in the parliament was vital.

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

Fair Funding for Measures

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

Conclusion

Fairness and direction – that’s how we will succeed in the contest 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 reclaim the political megaphone and set the agenda 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 tackle the deep inequalities holding us back.