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Yesterday, the finance minister, Rachel Reeves, presented a Labour economic plan. People have been asking for Labour’s mission and values to be more clearly expressed. Through the choices made – a transition to a more equitable tax system, targeting wealth to fund addressing child poverty, quality public services and the cost of living – we have unequivocally 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 right away.

The Main Dividing Line in UK Politics

The central division in British politics is once again on the economy. On the one side Labour, who aim to reform 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 confront, and prevail in, the argument.

The Tories had 14 years to fix things and instead, by any measure, they got much worse. Their ideological austerity and supply-side economics – tax breaks for the wealthy, cutting off investment (leaving us with low productivity and wages), and neglecting to support young people post-Covid – didn’t work.

Legacy of Decline Under the Previous Government

Quality of life dropped by the largest margin since records began, child poverty hit record levels, NHS waiting lists in England were the highest they’ve ever been, wages were stagnant, a housing crisis took hold, young people scarred by Covid were left on the scrapheap. The record 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 continue making the case for why our strategy will yield benefits.

Welfare Spending and Child Poverty

Under 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 deal with the effects instead of the solution.

That’s why we are building more affordable homes than for a generation, increasing 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

This is also the reason we are absolutely right to use this budget to lift 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 the opposite. 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 Communities

I know from my own district – where over 5,000 children will be lifted out of poverty as a result of ending the cap – the actual impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed hungry and cold, living in cramped, mouldy homes, parents this Christmas relying 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 overburdened but have to redirect time and resources to supporting children who are living with the results of severe deprivation.

Long-Term Consequences of Child Poverty

Just one in four pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among wealthier families. This predisposes them for the challenges they face during their lives: missed potential, financial struggles and ill health. Children who grew up in poverty are more likely to be unemployed or poor as adults.

Confronting child poverty isn’t just a moral imperative, 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.

That’s why we acted urgently 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 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 gone.

Fair Financing for Policies

We, as Labour, can also be explicit that these initiatives 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 battle of ideas. This budget is a clear statement that we gained the election as Labour, and will lead as Labour. As I repeatedly 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 repairing it. We’ve certainly done that this week.

So let’s keep hold of it and win this struggle about how we will rebuild Britain and address the deep inequalities holding us back.