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Just recently, the chancellor, Rachel Reeves, presented a Labour Party budget. People have been calling for Labour’s purpose and principles to be more clearly articulated. Through the decisions made – a shift to a fairer tax system, focusing on wealth to pay for tackling child poverty, good public services and the cost of living – we have unequivocally set out what we stand for.

That’s why Labour MPs applauded 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 Political Divide in British Politics

The primary division in British politics is yet again on the economy. On the one hand Labour, who aim to reform it so it benefits ordinary working people, and on the other, our political opponents, who favor the current system and the unsuccessful ideology of the past. We must now confront, and prevail in, the argument.

The Tories had 14 years to fix things and instead, by any measure, they got far more dire. Their ideological austerity and trickle-down economics – tax breaks for the wealthy, reducing investment (leaving us with poor productivity and wages), and failing to support young people post-Covid – proved ineffective.

Record of Failure Under the Former Administration

Quality of life fell by the biggest amount since records began, child poverty reached record levels, NHS waiting lists in England were the highest on record, wages were stagnant, a housing crisis took hold, young people scarred by Covid were left on the scrapheap. The history of failure goes on.

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

Social Security and Youth Deprivation

During the Tories, welfare spending significantly increased. As did child poverty, because they didn’t address the root causes: low pay, high housing costs, deep inequalities in education, health and regions. The state is forced to paying more to deal with the effects instead of the cure.

That’s why we are constructing more affordable homes than for a generation, raising wages and new rights for workers, greatly increasing investment in infrastructure and new industries, getting waiting lists down and lowering the costs of childcare and energy as we drive for clean power.

Removing the Two-Child Limit

This is also the reason we are completely justified to use this budget to remove 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 branded 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, in the end, costs us more, as well as being heartless and immoral.

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 ending 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 overcrowded, 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 stretched but have to divert time and resources to supporting children who are living with the results of severe deprivation.

Lasting Effects of Child Poverty

Just a quarter of pupils from the most disadvantaged families achieve five good GCSEs, compared with almost 75% among affluent families. This predisposes them for the disadvantages they face throughout their lives: unrealized potential, financial struggles and poor 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 £3bn cost of removing the two-child cap, or extending free school meals.

This is the reason we acted promptly in the budget, despite the challenging 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 crucial.

The cap was a totem to 14 years of failed conservative ideology. Now it is gone.

Equitable Funding for Measures

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

Conclusion

Fairness 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 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 strongly 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 fight about how we will renew Britain and address the deep inequalities holding us back.