🔗 Share this article

Yesterday, the finance minister, Rachel Reeves, delivered a Labour economic plan. People have been asking for Labour’s mission and principles to be more distinctly expressed. By way of the choices made – a transition to a fairer tax system, targeting wealth to fund tackling child poverty, quality public services and the cost of living – we have clearly demonstrated what we believe in.

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 protests from the right began right away.

The Central 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 reform it so it helps ordinary working people, and on the other, our political opponents, who favor 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 any measure, they got far more dire. Their doctrinaire austerity and trickle-down economics – tax breaks for the wealthy, reducing investment (causing us with low productivity and wages), and failing to support young people post-Covid – didn’t work.

Record of Failure Under the Former Administration

Living standards fell by the biggest amount since records began, child poverty reached record levels, NHS waiting lists in England were the highest they’ve ever been, wages were stagnant, a housing crisis took hold, young people scarred by Covid were abandoned. The history of failure goes on.

One budget alone can’t fix everything, so Labour has a comprehensive plan for renewal and for rewiring the country. And we have to go out and continue making the argument for why our strategy will reap dividends.

Social Security and Child Poverty

During the Tories, welfare spending significantly increased. 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 manage the effects instead of the cure.

That’s why we are building more affordable homes than for a generation, raising wages and enhanced protections for workers, massively boosting investment in infrastructure and new industries, reducing waiting lists down and bringing down the costs of childcare and energy as we pursue clean power.

Ending the Two-Child Benefit Cap

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 suffered 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 callous and unethical.

Tangible Effects in Local Areas

I know from my own district – 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, damp homes, parents this Christmas relying 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 divert time and resources to supporting children who are living with the consequences of deep poverty.

Long-Term Consequences of Youth Hardship

Just a quarter of 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, financial 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 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 promptly in the budget, despite the challenging economic context. Every day with this cap in place sees more than 100 extra children pushed into poverty. The benefits of lifting it will not occur 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 gone.

Fair Financing for Measures

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

Final Thoughts

Equity and purpose – that’s how we will succeed in the battle 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 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 maintain it and win this fight about how we will renew Britain and address the entrenched inequalities holding us back.