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Just recently, the chancellor, Rachel Reeves, delivered a Labour economic plan. People have been calling for Labour’s mission and values to be more clearly articulated. By way of the decisions made – a shift to a fairer tax system, targeting wealth to fund tackling child poverty, quality public services and the cost of living – we have clearly set out what we stand for.

That’s why Labour MPs applauded in the Commons, and it’s why we are up for the battles to come. And it’s why the protests from the right began immediately.

The Main Dividing Line in British Government

The primary division in British politics is once again on the economy. On the one hand Labour, who want to reform it so it helps ordinary working people, and on the opposite side, our political opponents, who favor the current system and the unsuccessful doctrine of the past. We must now confront, and prevail in, the debate.

The Tories were given 14 years to resolve things and instead, by any measure, they got much worse. Their doctrinaire austerity and trickle-down economics – tax cuts for the wealthy, cutting off investment (leaving us with low productivity and wages), and neglecting to support young people post-Covid – didn’t work.

Legacy of Failure Under the Previous Administration

Living standards fell by the largest margin since records began, child poverty reached record levels, NHS waiting lists in England were the highest they’ve ever been, wages remained flat, a housing crisis became entrenched, young people affected by Covid were left on the scrapheap. The record of failure continues.

One budget alone can’t fix everything, 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

Under 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 is forced to paying more to deal with the effects instead of the solution.

It’s why we are building more affordable homes than for a generation, increasing wages and enhanced protections for workers, greatly increasing investment in infrastructure and new industries, getting waiting lists down and lowering the costs of childcare and energy as we pursue clean power.

Ending the Two-Child Limit

It’s also why we are absolutely right to use this budget to lift the two-child benefit cap.

For almost a decade, since it was enacted, low-income families with children have suffered from a unjust 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 Local Areas

I know 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 low-cost wellies as school shoes, children going to bed without food and cold, living in cramped, 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 overburdened but have to divert time and resources to supporting children who are living with the results of severe deprivation.

Lasting Consequences of Youth Hardship

Just one in four 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 grew up in poverty are more likely to be jobless 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.

That’s why we acted promptly 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 won’t happen overnight either, so taking early action in the parliament was vital.

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

Equitable Financing for Policies

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

Conclusion

Equity and purpose – that’s how we will win the battle of ideas. This budget is a clear statement that we gained the election as Labour, and will lead as Labour. As I consistently said during my campaign to become deputy leader, we must seize back the political megaphone and define the narrative more forcefully 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 prevail in this struggle about how we will renew Britain and address the entrenched inequalities impeding progress.