By ending a cruel Tory social experiment, this budget clearly set out how Labour will fight the battle to renew Britain | Lucy Powell

Yesterday the chancellor, Rachel Reeves, delivered a Labour budget. People have been asking for Labour’s purpose and values to be more clearly expressed. Through the choices made – a shift to a fairer tax system, targeting wealth to pay for tackling child poverty, good public services and the cost of living – we have clearly set out what we stand for.

That’s why Labour MPs cheered in the Commons, and it’s why we are up for the fights to come. And it’s why the cries from the right began immediately.

The central dividing line in British politics is once again on the economy. On the one side Labour, who want to change it so it benefits ordinary working people, and on the other, our political opponents, who support the status quo and the failed ideology of the past. We must now take on, and win, the argument.

The Tories had 14 years to fix things and instead, by any measure, they got much worse. Their ideological austerity and trickle-down economics – tax breaks for the wealthy, cutting off investment (leaving us with low productivity and wages), and failing to support young people post-Covid – didn’t work.

Living standards fell by the largest margin 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 left on the scrapheap. The record of failure goes on.

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 reap dividends.

Take welfare spending and child poverty. Under the Tories, welfare spending significantly increased. As did child poverty, because they didn’t address the root causes: low pay, high housing costs, deep 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 building more social housing than for a generation, increasing wages and new rights for workers, massively boosting investment in infrastructure and new industries, getting waiting lists down and bringing down the costs of childcare and energy as we drive for clean power.

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

For eight long years, since George Osborne introduced it, poorer families with children have suffered from a cruel social experiment that was branded as fair for working people when it was anything but. Most of the families affected by it have a parent in work.

It’s done nothing but push 300,000 more children into poverty – which, in the end, costs us more, as well as being callous and immoral.

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 Matalan wellies as school shoes, children going to bed hungry and cold, living in cramped, mouldy 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 divert time and resources to supporting children who are living with the consequences of deep poverty.

Just one in four pupils from the poorest families achieve five good GCSEs, compared with nearly three in four among affluent families. This sets them up for the disadvantages they face throughout their lives: missed potential, financial struggles and ill health. Children who grew up in poverty are more likely to be unemployed or poor as adults.

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

That’s why we acted urgently in the budget, despite the very difficult economic context. Every day with this cap in place sees more than 100 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 failed rightwing ideology. Now it is gone.

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

Fairness and purpose – that’s how we will win the battle of ideas. This budget is a clear statement that we won 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 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 keep hold of it and win this fight about how we will renew Britain and tackle the deep inequalities holding us back.

• Lucy Powell is MP for Manchester Central and deputy leader of the Labour party

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