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Yesterday, the chancellor, Rachel Reeves, delivered a Labour budget. People have been calling for Labour’s purpose and values to be more clearly expressed. By way of the choices made – a transition to a more equitable tax system, targeting wealth to pay for addressing child poverty, quality public services and the cost of living – we have clearly demonstrated what we believe in.

That’s why Labour MPs cheered in the Commons, and it’s why we are up for the fights 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 once again on the economy. On the one side Labour, who aim to reform it so it helps ordinary working people, and on the opposite side, our political opponents, who support the status quo and the unsuccessful ideology 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 doctrinaire austerity and trickle-down economics – tax breaks for the wealthy, cutting off investment (causing us with low productivity and wages), and failing to support young people post-Covid – didn’t work.

Legacy of Failure Under the Former Government

Living standards dropped by the biggest amount since records began, child poverty reached record levels, NHS waiting lists in England were the highest they’ve ever been, wages were stagnant, a housing crisis became entrenched, young people affected by Covid were left on the scrapheap. The history of failure goes on.

One 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 continue making the case for why our strategy will reap dividends.

Social Security and Child Poverty

During 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 symptoms instead of the cure.

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

Removing 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 introduced, low-income families with children have suffered from a unjust social experiment that was branded as fair for working people when it was the opposite. Most of the families impacted 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 immoral.

Tangible Effects in Communities

I know from my own district – 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 during the holidays 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 deep poverty.

Long-Term Effects of Child Poverty

Just one in four pupils from the most disadvantaged families achieve five good GCSEs, compared with nearly three in four among wealthier families. This predisposes them for the disadvantages they face throughout their lives: unrealized potential, economic struggles and ill health. Children who grew up in poverty are more likely to be jobless or poor as adults.

Confronting child poverty isn’t just a ethical duty, it is a future-oriented strategy. Poverty costs the economy far, far more than the three billion pound cost of lifting 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 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 totem to 14 years of unsuccessful conservative ideology. Now it is abolished.

Equitable Funding for Policies

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 purpose – that’s how we will succeed in the battle of ideas. This budget is a definitive statement that we won 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 platform and set the agenda 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 win this fight about how we will rebuild Britain and address the entrenched inequalities impeding progress.