Yesterday, the finance minister, Rachel Reeves, presented a Labour budget. People have been asking for Labour’s mission and values to be more distinctly expressed. Through the choices made – a transition to a fairer tax system, targeting wealth to pay for tackling child poverty, good public services and the cost of living – 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 cries from the right began immediately.
The Central Dividing Line in UK Government
The central dividing line in British politics is yet again on the economy. On the one side Labour, who aim to change it so it helps ordinary working people, and on the other, our political opponents, who support the current system and the failed doctrine of the past. We must now confront, and prevail in, the argument.
The Tories had 14 years to resolve things and in reality, by any measure, they got much worse. Their ideological austerity and trickle-down economics – tax cuts for the wealthy, reducing investment (causing us with poor productivity and wages), and neglecting to support young people post-Covid – didn’t work.
Legacy of Decline Under the Previous Administration
Living standards fell 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 scarred by Covid were left on the scrapheap. The history of failure continues.
A single budget alone can’t fix everything, 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 strategy will yield benefits.
Welfare Spending and Child Poverty
Under the Tories, welfare spending rose substantially. 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 ends up paying more to deal with the symptoms instead of the cure.
It’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, reducing waiting lists down and bringing down the costs of childcare and energy as we pursue clean power.
Removing the Two-Child Limit
This is also the reason we are completely justified 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 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 unethical.
Real Impact 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 £1 wellies as school shoes, children going to bed hungry and cold, living in overcrowded, damp homes, parents during the holidays 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 results of severe deprivation.
Long-Term Consequences of Child Poverty
Just one in four pupils from the most disadvantaged 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: missed potential, financial struggles and poor health. Children who were raised in poverty are more likely to be jobless or poor as adults.
Addressing child poverty isn’t just a moral imperative, it is a future-oriented strategy. Poverty costs the economy significantly more than the three billion pound cost of removing the two-child cap, or expanding free school meals.
That’s why we acted urgently 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 effects of lifting it will not occur overnight either, so taking early action in the parliament was crucial.
The cap was a symbol to 14 years of failed rightwing ideology. Now it is gone.
Equitable Financing for Policies
We, as Labour, can also be explicit that these initiatives are being paid for in a fair way – from a new gaming tax, 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 gained the election as Labour, and will govern as Labour. As I repeatedly said during my campaign to become deputy leader, we must seize back the political platform and set the agenda more strongly about what’s really wrong with the country and how we are repairing it. We’ve definitely done that this week.
So let’s keep hold of it and win this struggle about how we will renew Britain and address the deep inequalities impeding progress.
