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Just recently, the finance minister, Rachel Reeves, delivered a Labour budget. People have been calling for Labour’s purpose and principles to be more clearly expressed. Through the decisions made – a transition to a fairer tax system, focusing on wealth to fund tackling child poverty, quality public services and the living expenses – we have clearly demonstrated what we believe in.

This is why Labour MPs applauded in the Commons, and it’s why we are up for the fights to come. And it’s why the cries from the right began immediately.

The Central Dividing Line in UK Government

The central dividing line in British politics is once again on the economy. On the one side Labour, who aim to change it so it helps ordinary working people, and on the other, our opponents, who favor the status quo and the unsuccessful doctrine of the past. We must now confront, and win, the argument.

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

Record of Decline 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 left on the scrapheap. The record of failure goes on.

One budget alone can’t fix everything, so Labour has a long-term plan for renewal and for rewiring the country. And we have to go out and keep making the argument for why our strategy will yield benefits.

Social Security 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 manage the effects instead of the cure.

It’s why we are building more social housing than for a generation, increasing wages and new rights for workers, greatly increasing investment in infrastructure and new industries, reducing waiting lists down and bringing down the costs of childcare and energy as we pursue clean power.

Ending the Two-Child Limit

It’s also why we are completely justified to use this budget to remove the two-child benefit cap.

For eight long years, since it was enacted, low-income 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 district – where over 5,000 children will be lifted out of poverty as a result of ending the cap – the actual impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed without food and cold, living in overcrowded, mouldy 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 stretched but have to divert time and resources to supporting children who are living with the consequences of severe deprivation.

Lasting Effects of Child Poverty

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: unrealized potential, economic struggles and ill health. Children who were raised in poverty are more likely to be jobless or poor as adults.

Addressing child poverty isn’t just a ethical duty, it is a long-term investment. Poverty costs the economy significantly more than the three billion pound cost of removing 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 over a hundred extra children pushed into poverty. The effects 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 conservative ideology. Now it is abolished.

Fair Funding for Policies

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

Conclusion

Fairness and direction – 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 truly flawed with the country and how we are fixing it. We’ve certainly done that this week.

So let’s keep hold of it and win this struggle about how we will rebuild Britain and address the deep inequalities impeding progress.