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Yesterday, the finance minister, Rachel Reeves, presented a Labour Party economic plan. People have been asking for Labour’s mission and principles to be more clearly articulated. By way of the decisions made – a shift to a more equitable tax system, focusing on wealth to fund addressing child poverty, good public services and the living expenses – we have unequivocally 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 protests from the right began immediately.

The Central Political Divide in British Government

The central dividing line in British politics is yet again on the economy. On the one side Labour, who want to change it so it benefits everyday working people, and on the opposite side, our opponents, who support the current system and the failed doctrine of the past. We must now take on, and prevail in, the argument.

The Tories were given 14 years to resolve things and instead, by any measure, 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 failing to support young people post-Covid – proved ineffective.

Record of Decline Under the Former Government

Living standards 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 became entrenched, young people scarred by Covid were abandoned. The history 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 case for why our strategy will yield benefits.

Welfare Spending and Child Poverty

During the Tories, welfare spending significantly increased. As did child poverty, because they failed to tackle the underlying issues: low pay, high housing costs, significant inequalities in education, health and regions. The state is forced to paying more to manage the effects instead of the cure.

It’s why we are building 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.

Ending 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 suffered 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 has only served to push 300,000 more children into poverty – which, in the end, costs us more, as well as being callous and unethical.

Real Impact in Local Areas

From experience from my own district – where over 5,000 children will be lifted 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, mouldy 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 overburdened but have to redirect time and resources to supporting children who are living with the consequences of deep poverty.

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 sets them up for the challenges they face throughout their lives: missed potential, economic struggles and ill health. Children who were raised in poverty are more likely to be unemployed or poor as adults.

Addressing child poverty isn’t just a ethical duty, it is a future-oriented strategy. Poverty costs the economy significantly 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 very difficult 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 acting early in the parliament was vital.

The cap was a symbol to 14 years of unsuccessful conservative ideology. Now it is gone.

Fair Funding for Policies

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

Conclusion

Equity and purpose – that’s how we will succeed in the contest of ideas. This budget is a definitive statement that we won the election as Labour, and will govern as Labour. As I repeatedly said during my campaign to become deputy leader, we must reclaim the political megaphone and define the narrative more forcefully about what’s really wrong with the country and how we are repairing it. We’ve certainly done that this week.

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