🔗 Share this article

Yesterday, the finance minister, Rachel Reeves, delivered a Labour economic plan. People have been calling for Labour’s purpose and principles to be more clearly expressed. By way of the choices made – a transition to a more equitable tax system, focusing on wealth to fund tackling child poverty, quality 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 up for the battles 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 yet again on the economy. On the one side Labour, who aim to reform it so it benefits everyday working people, and on the other, our political opponents, who favor the status quo and the failed doctrine of the past. We must now take on, and prevail in, the debate.

The Tories had 14 years to resolve things and in reality, by any measure, they got far more dire. Their ideological austerity and supply-side economics – tax cuts for the wealthy, cutting off investment (causing us with poor productivity and wages), and failing to support young people post-Covid – proved ineffective.

Legacy of Decline Under the Previous Government

Quality of life dropped by the biggest amount since records began, child poverty hit record levels, NHS waiting lists in England were the highest on record, wages remained flat, a housing crisis took hold, young people scarred by Covid were abandoned. The history of failure goes on.

A single budget alone can’t put all this right, so Labour has a long-term plan for rebuilding and for rewiring the country. And we have to go out and continue making the argument for why our approach will reap dividends.

Welfare Spending 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, significant inequalities in education, health and regions. The state is forced to paying more to deal with the effects instead of the solution.

It’s why we are constructing more affordable homes than for a generation, raising 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 pursue clean power.

Ending the Two-Child Limit

It’s also why we are absolutely right to use this budget to remove the two-child benefit cap.

For eight long years, since it was introduced, poorer families with children have suffered from a unjust social experiment that was marketed as fair for working people when it was anything but. 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 heartless and unethical.

Tangible Effects in Local Areas

From experience from my own constituency – where over 5,000 children will be lifted out of poverty as a result of abolishing the cap – the actual impact it’s had. Children wearing £1 wellies as school shoes, children going to bed hungry and cold, living in cramped, 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 stretched but have to divert time and resources to supporting children who are living with the results of deep poverty.

Lasting Effects of Youth Hardship

Just a quarter of pupils from the most disadvantaged families achieve five good GCSEs, compared with almost 75% among affluent families. This sets them up for the challenges they face during their lives: missed potential, financial struggles and ill health. Children who were raised in poverty are more likely to be unemployed or poor as adults.

Addressing child poverty isn’t just a ethical duty, it is a long-term investment. 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 challenging economic context. Every day with this cap in place sees over a hundred additional children pushed into poverty. The effects 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 unsuccessful conservative ideology. Now it is abolished.

Fair Financing for Policies

We, as Labour, can also be explicit 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

Fairness and purpose – that’s how we will win the contest of ideas. This budget is a definitive 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 seize back the political megaphone and define the narrative more forcefully about what’s truly flawed with the country and how we are fixing it. We’ve definitely done that this week.

So let’s maintain it and prevail in this fight about how we will renew Britain and tackle the entrenched inequalities holding us back.