🔗 Share this article

Yesterday, the finance minister, Rachel Reeves, delivered a Labour economic plan. The public have been asking for Labour’s mission and values to be more clearly articulated. By way of the decisions made – a transition to a fairer tax system, targeting wealth to pay for addressing child poverty, good public services and the living expenses – we have unequivocally demonstrated what we stand for.

This is why Labour MPs applauded in the Commons, and it’s why we are ready for the fights to come. And it’s why the cries from the right began right away.

The Main Political Divide in British Politics

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

The Tories had 14 years to fix things and instead, by any measure, they got far more dire. Their doctrinaire austerity and supply-side economics – tax cuts for the wealthy, reducing investment (causing us with low productivity and wages), and neglecting to support young people post-Covid – didn’t work.

Record of Decline Under the Previous Administration

Quality of life fell by the largest margin since records began, child poverty reached record levels, NHS waiting lists in England were the highest on record, wages were stagnant, a housing crisis took hold, young people scarred by Covid were abandoned. The record of failure goes on.

One budget alone can’t fix everything, 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.

Welfare Spending and Child Poverty

Under the Tories, welfare spending rose substantially. As did child poverty, because they didn’t address the underlying issues: low pay, high housing costs, significant inequalities in education, health and regions. The state is forced to paying more to deal with the effects instead of the cure.

It’s why we are constructing more social housing than for a generation, raising wages and new rights for workers, massively boosting investment in infrastructure and new industries, getting waiting lists down and lowering 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 eight long years, since it was enacted, low-income families with children have endured from a unjust 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 immoral.

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 actual impact it’s had. Children wearing £1 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 stretched but have to divert time and resources to supporting children who are living with the consequences of severe deprivation.

Lasting Consequences of Youth Hardship

Just one in four pupils from the poorest families achieve five good GCSEs, compared with almost 75% among wealthier families. This sets them up for the disadvantages they face during their lives: unrealized potential, economic 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 far, far more than the £3bn 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 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 symbol to 14 years of failed conservative ideology. Now it is abolished.

Equitable Funding for Measures

We, as Labour, can also be clear that these measures are being funded in a just way – from a new gaming tax, eliminating tax loopholes and a new “mansion tax”.

Final Thoughts

Fairness and direction – 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 lead as Labour. As I consistently said during my campaign to become deputy leader, we must seize back the political megaphone and set the agenda more strongly about what’s really wrong with the country and how we are fixing it. We’ve certainly done that this week.

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