🔗 Share this article

Yesterday, the finance minister, Rachel Reeves, delivered a Labour Party economic plan. The public have been calling for Labour’s purpose and principles to be more distinctly articulated. Through the decisions made – a shift to a fairer tax system, focusing on wealth to fund tackling child poverty, quality public services and the cost of living – we have clearly set out what we stand for.

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

The Central Dividing Line in British Government

The central dividing line in British politics is yet again on the economy. On the one side Labour, who want to reform it so it benefits everyday working people, and on the opposite side, our political opponents, who support the status quo and the unsuccessful ideology of the past. We must now confront, and win, the debate.

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

Record of Failure Under the Former Government

Living standards dropped 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 remained flat, a housing crisis became entrenched, young people affected by Covid were abandoned. The record of failure continues.

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

Social Security and Child Poverty

Under the Tories, welfare spending significantly increased. As did child poverty, because they failed to tackle the root causes: low pay, high housing costs, deep 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 building more affordable homes than for a generation, increasing wages and new rights for workers, greatly increasing investment in infrastructure and new industries, reducing waiting lists down and lowering the costs of childcare and energy as we drive for clean power.

Ending the Two-Child Benefit Cap

This is also the reason we are completely justified to use this budget to remove the two-child benefit cap.

For almost a decade, since it was introduced, low-income 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 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 district – where over 5,000 children will be raised out of poverty as a result of abolishing the cap – the actual impact it’s had. Children wearing low-cost wellies as school shoes, children going to bed without food and cold, living in overcrowded, damp homes, parents this Christmas 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 redirect time and resources to supporting children who are living with the results of deep poverty.

Lasting Effects of Child Poverty

Just a quarter of pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among wealthier families. This predisposes them for the disadvantages they face during their lives: unrealized potential, financial struggles and poor health. Children who grew up in poverty are more likely to be unemployed or poor as adults.

Addressing child poverty isn’t just a ethical duty, it is a future-oriented strategy. 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 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 taking early action in the parliament was vital.

The cap was a symbol to 14 years of failed conservative ideology. Now it is abolished.

Equitable Funding for Policies

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

Conclusion

Equity and direction – 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 lead as Labour. As I consistently said during my campaign to become deputy leader, we must reclaim the political platform 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 keep hold of it and win this struggle about how we will rebuild Britain and address the entrenched inequalities holding us back.