🔗 Share this article

Yesterday, the chancellor, Rachel Reeves, presented a Labour economic plan. People have been calling for Labour’s mission and principles to be more clearly articulated. By way of the decisions made – a transition to a fairer tax system, focusing on wealth to pay for tackling child poverty, quality public services and the cost of living – we have unequivocally set out what we stand for.

This is why Labour MPs applauded in the Commons, and it’s why we are ready for the battles to come. And it’s why the protests from the conservative side began immediately.

The Main Political Divide in UK Politics

The primary dividing line in British politics is once again on the economy. On the one hand Labour, who aim to change it so it helps everyday working people, and on the opposite side, our political opponents, who support the status quo and the failed ideology of the past. We must now take on, and prevail in, the debate.

The Tories had 14 years to fix things and in reality, by every standard, they got far more dire. Their ideological austerity and trickle-down economics – tax cuts for the wealthy, reducing investment (leaving us with poor productivity and wages), and failing to support young people after the pandemic – proved ineffective.

Legacy of Decline Under the Previous Government

Quality of life fell 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 were stagnant, a housing crisis became entrenched, young people scarred by Covid were abandoned. The history of failure continues.

One budget alone can’t put all this right, so Labour has a long-term plan for renewal and for rewiring the country. And we have to go out and keep making the argument for why our approach will yield benefits.

Social Security and Child Poverty

Under the Tories, welfare spending significantly increased. 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 is forced to paying more to manage the effects instead of the solution.

That’s why we are constructing more affordable homes than for a generation, raising wages and enhanced protections for workers, greatly increasing investment in infrastructure and new industries, reducing waiting lists down and bringing down 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, 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 impacted by it have a parent in work.

It has only served to push 300,000 more children into poverty – which, ultimately, 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 raised 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, damp 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 results of deep poverty.

Lasting Effects of Child Poverty

Just one in four pupils from the poorest families achieve five good GCSEs, compared with almost 75% among affluent families. This predisposes them for the challenges they face throughout their lives: unrealized potential, economic struggles and poor health. Children who were raised in poverty are more likely to be unemployed or poor as adults.

Confronting child poverty isn’t just a ethical duty, it is a long-term investment. Poverty costs the economy far, far more than the £3bn cost of removing the two-child cap, or expanding free school meals.

This is the reason we acted promptly in the budget, despite the challenging economic context. Every day with this cap in place sees over a hundred extra children pushed into poverty. The benefits of lifting it won’t happen overnight either, so acting early in the parliament was vital.

The cap was a totem to 14 years of failed rightwing ideology. Now it is abolished.

Equitable Funding for Measures

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

Final Thoughts

Equity and direction – that’s how we will succeed in the contest of ideas. This budget is a clear statement that we won the election as Labour, and will govern as Labour. As I consistently said during my campaign to become deputy leader, we must reclaim the political megaphone and define the narrative 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 fight about how we will rebuild Britain and address the deep inequalities impeding progress.