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Just recently, the finance minister, Rachel Reeves, delivered a Labour budget. The public have been calling for Labour’s purpose and principles to be more distinctly articulated. By way of the choices made – a transition to a more equitable tax system, targeting wealth to pay for tackling child poverty, quality public services and the living expenses – we have clearly set out what we believe in.

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 cries from the conservative side began immediately.

The Main Political Divide in UK Government

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

The Tories had 14 years to fix things and instead, by every standard, they got far more dire. Their doctrinaire austerity and trickle-down economics – tax cuts for the wealthy, reducing investment (causing us with poor productivity and wages), and neglecting to support young people after the pandemic – proved ineffective.

Record of Failure Under the Previous Administration

Quality of life fell 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 took hold, young people scarred 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 keep making the argument for why our strategy will reap dividends.

Social Security and Child Poverty

During the Tories, welfare spending significantly increased. As did child poverty, because they failed to tackle the root causes: low pay, high housing costs, significant inequalities in education, health and regions. The state is forced to paying more to deal with the symptoms instead of the solution.

That’s why we are constructing more social housing than for a generation, raising 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.

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 eight long years, since it was introduced, poorer families with children have endured from a unjust 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, ultimately, costs us more, as well as being heartless and immoral.

Tangible Effects in Communities

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 actual impact it’s had. Children wearing £1 wellies as school shoes, children going to bed without food and cold, living in cramped, damp homes, parents this Christmas depending 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 divert time and resources to supporting children who are living with the consequences of severe deprivation.

Lasting Consequences of Youth Hardship

Just a quarter of pupils from the most disadvantaged families achieve five good GCSEs, compared with almost 75% among affluent families. This sets them up for the challenges they face during their lives: unrealized potential, economic struggles and poor health. Children who grew up in poverty are more likely to be unemployed 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 three billion pound cost of lifting the two-child cap, or extending free school meals.

This is the reason we acted urgently 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 won’t happen overnight either, so acting early in the parliament was vital.

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

Equitable Financing for Measures

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

Conclusion

Fairness and purpose – that’s how we will win the contest of ideas. This budget is a definitive statement that we won the election as Labour, and will govern as Labour. As I consistently said during my campaign to become deputy leader, we must reclaim the political megaphone and define the narrative more strongly about what’s truly flawed with the country and how we are repairing 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 holding us back.