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Yesterday, the chancellor, Rachel Reeves, presented a Labour economic plan. People have been calling for Labour’s mission and principles to be more clearly expressed. Through the decisions made – a shift to a fairer tax system, focusing on wealth to fund addressing child poverty, quality public services and the living expenses – we have clearly set out what we stand for.

That’s why Labour MPs applauded 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 Central Dividing Line in UK Government

The central division in British politics is yet again on the economy. On the one hand Labour, who aim to reform it so it helps ordinary working people, and on the other, our political opponents, who support the status quo and the unsuccessful ideology of the past. We must now confront, and win, the argument.

The Tories were given 14 years to resolve things and in reality, by every standard, they got far more dire. Their doctrinaire austerity and trickle-down economics – tax breaks for the wealthy, reducing investment (leaving us with poor productivity and wages), and neglecting to support young people after the pandemic – proved ineffective.

Legacy of Failure Under the Previous Government

Quality of life 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 goes on.

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

Welfare Spending and Child Poverty

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 deal with the symptoms instead of the solution.

That’s why we are constructing more social housing than for a generation, increasing wages and new rights for workers, massively boosting investment in infrastructure and new industries, getting waiting lists down and lowering the costs of childcare and energy as we drive for 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 almost a decade, since it was introduced, low-income families with children have suffered 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 callous and unethical.

Tangible Effects in Communities

I know from my own district – 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 hungry and cold, living in cramped, damp homes, parents this Christmas depending 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 overburdened but have to divert time and resources to supporting children who are living with the results of deep poverty.

Lasting Consequences of Child Poverty

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

Confronting 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 expanding free school meals.

That’s why we acted urgently in the budget, despite the very difficult 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 crucial.

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

Equitable Funding for Policies

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

Conclusion

Equity and direction – that’s how we will win the contest 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 seize back the political platform and set the agenda more forcefully about what’s truly flawed with the country and how we are fixing it. We’ve definitely done that this week.

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