🔗 Share this article

Yesterday, the chancellor, Rachel Reeves, presented a Labour Party economic plan. People have been calling for Labour’s purpose and values to be more distinctly expressed. Through the choices made – a transition to a more equitable tax system, focusing on wealth to pay for addressing child poverty, good public services and the cost of living – we have unequivocally demonstrated what we stand for.

That’s 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 right away.

The Central Political Divide in UK Government

The central dividing line in British politics is once again on the economy. On the one side Labour, who aim to reform it so it helps everyday working people, and on the opposite side, our opponents, who favor the current system and the failed ideology of the past. We must now confront, and prevail in, the argument.

The Tories were given 14 years to resolve 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 poor productivity and wages), and neglecting to support young people post-Covid – didn’t work.

Legacy of Decline Under the Former Administration

Living standards fell 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.

A single budget alone can’t fix everything, so Labour has a comprehensive plan for rebuilding and for rewiring 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

During the Tories, welfare spending rose substantially. As did child poverty, because they didn’t address the root causes: low pay, high housing costs, deep 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, increasing wages and new rights 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 Benefit Cap

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 enacted, low-income 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 impacted 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.

Tangible Effects in Local Areas

I know from my own constituency – 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 £1 wellies as school shoes, children going to bed hungry and cold, living in overcrowded, damp homes, parents during the holidays 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 stretched but have to divert time and resources to supporting children who are living with the results of severe deprivation.

Long-Term Consequences of Child Poverty

Just a quarter of pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among affluent 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 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 extending 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 over a hundred additional children pushed into poverty. The benefits of lifting it won’t happen overnight either, so taking early action in the parliament was crucial.

The cap was a totem to 14 years of failed conservative ideology. Now it is gone.

Equitable Financing for Policies

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

Final Thoughts

Equity and purpose – 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 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 maintain it and prevail in this struggle about how we will rebuild Britain and address the entrenched inequalities impeding progress.