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Yesterday, the chancellor, Rachel Reeves, presented a Labour economic plan. People have been calling for Labour’s purpose and values to be more clearly articulated. By way of the decisions made – a shift 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.

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

The Central Dividing Line in British Government

The primary dividing line in British politics is yet again on the economy. On the one hand Labour, who want to reform it so it helps everyday working people, and on the other, our opponents, who favor the current system and the unsuccessful doctrine of the past. We must now confront, and prevail in, the argument.

The Tories had 14 years to resolve things and in reality, by any measure, they got far more dire. Their doctrinaire austerity and trickle-down economics – tax cuts for the wealthy, cutting off investment (leaving us with poor productivity and wages), and neglecting to support young people post-Covid – proved ineffective.

Legacy of Decline Under the Previous Government

Living standards fell by the biggest amount 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 became entrenched, young people affected by Covid were left on the scrapheap. The record of failure continues.

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 case for why our strategy will yield benefits.

Social Security and Child Poverty

During 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 manage the effects instead of the solution.

It’s why we are constructing more social housing than for a generation, increasing wages and new rights 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 drive for clean power.

Ending the Two-Child Limit

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

For almost a decade, since it was enacted, poorer families with children have endured from a cruel social experiment that was marketed as fair for working people when it was the opposite. 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, in the end, costs us more, as well as being callous and immoral.

Real Impact 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 real impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed hungry and cold, living in cramped, damp 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 stretched but have to redirect time and resources to supporting children who are living with the consequences of deep poverty.

Lasting Effects of Youth Hardship

Just a quarter of pupils from the poorest 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 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 moral imperative, it is a long-term investment. Poverty costs the economy significantly 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 over a hundred additional children pushed into poverty. The benefits of lifting it will not occur overnight either, so taking early action in the parliament was vital.

The cap was a symbol to 14 years of failed rightwing ideology. Now it is gone.

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, closing tax loopholes and a new “mansion tax”.

Final Thoughts

Fairness and direction – that’s how we will succeed in the contest of ideas. This budget is a definitive statement that we gained the election as Labour, and will govern as Labour. As I repeatedly 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 win this fight about how we will renew Britain and address the entrenched inequalities holding us back.