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Yesterday, the finance minister, Rachel Reeves, delivered a Labour budget. People have been asking for Labour’s purpose and principles to be more clearly expressed. By way of the choices made – a shift to a more equitable tax system, targeting wealth to fund addressing child poverty, good public services and the cost of living – we have clearly set out what we believe in.

That’s why Labour MPs cheered 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 right away.

The Main Political Divide in UK Government

The primary dividing line 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 opposite side, our political opponents, who favor the status quo and the unsuccessful doctrine 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 much worse. Their doctrinaire austerity and supply-side economics – tax cuts for the wealthy, cutting off investment (leaving us with low productivity and wages), and failing to support young people after the pandemic – proved ineffective.

Record of Failure Under the Previous Administration

Quality of life dropped by the biggest amount 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 history of failure continues.

One budget alone can’t put all this right, so Labour has a comprehensive plan for rebuilding and for restructuring the country. And we have to go out and keep making the case for why our strategy will yield benefits.

Social Security and Child Poverty

During the Tories, welfare spending rose substantially. As did child poverty, because they didn’t address the root causes: low pay, high housing costs, significant inequalities in education, health and regions. The state ends up paying more to manage the symptoms instead of the solution.

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

Ending the Two-Child Benefit Cap

It’s also why we are absolutely right 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 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, ultimately, costs us more, as well as being callous and unethical.

Real Impact in Communities

I know from my own district – 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 low-cost wellies as school shoes, children going to bed without food and cold, living in overcrowded, 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 stretched but have to divert time and resources to supporting children who are living with the results of severe deprivation.

Long-Term Effects of Child Poverty

Just a quarter of pupils from the most disadvantaged families achieve five good GCSEs, compared with nearly three in four among wealthier families. This sets them up for the disadvantages they face throughout their lives: unrealized potential, financial struggles and ill 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 significantly more than the three billion pound cost of removing the two-child cap, or expanding 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 more than 100 additional children pushed into poverty. The benefits of lifting it won’t happen 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 clear 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 direction – that’s how we will succeed in the contest 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 definitely done that this week.

So let’s maintain it and prevail in this fight about how we will renew Britain and tackle the deep inequalities impeding progress.