🔗 Share this article

Yesterday, the chancellor, Rachel Reeves, delivered a Labour budget. The public have been asking for Labour’s purpose and principles to be more distinctly articulated. By way of the choices made – a transition to a fairer tax system, targeting wealth to pay for addressing child poverty, good public services and the cost of living – we have clearly set out what we believe in.

That’s why Labour MPs cheered in the Commons, and it’s why we are up for the battles to come. And it’s why the protests from the conservative side began right away.

The Central Dividing Line in British Government

The central division 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 other, our political opponents, who support the status quo and the failed ideology of the past. We must now confront, and win, the argument.

The Tories were given 14 years to resolve things and instead, by every standard, they got far more dire. Their ideological austerity and trickle-down economics – tax breaks for the wealthy, reducing investment (leaving us with low productivity and wages), and failing to support young people post-Covid – didn’t work.

Record of Failure Under the Previous Administration

Living standards dropped by the biggest amount since records began, child poverty hit record levels, NHS waiting lists in England were the highest they’ve ever been, wages remained flat, a housing crisis became entrenched, young people affected by Covid were abandoned. The record of failure continues.

One budget alone can’t fix everything, so Labour has a comprehensive plan for rebuilding and for restructuring the country. And we have to go out and keep making the argument 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 failed to tackle the underlying issues: low pay, high housing costs, deep 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 constructing more social housing 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 pursue 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, poorer families with children have endured from a cruel social experiment that was marketed as fair for working people when it was the opposite. 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, in the end, costs us more, as well as being heartless and immoral.

Tangible Effects in Communities

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 low-cost wellies as school shoes, children going to bed hungry and cold, living in overcrowded, mouldy homes, parents during the holidays 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 Effects of Youth Hardship

Just one in four pupils from the poorest families achieve five good GCSEs, compared with almost 75% among affluent families. This sets them up for the challenges they face during 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.

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 urgently 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 effects of lifting it will not occur 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.

Equitable Funding for Policies

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

Conclusion

Equity and purpose – that’s how we will win the contest of ideas. This budget is a definitive statement that we gained the election as Labour, and will govern as Labour. As I consistently said during my campaign to become deputy leader, we must seize back the political platform and define the narrative more forcefully about what’s really wrong with the country and how we are fixing 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 address the deep inequalities impeding progress.