🔗 Share this article

The allegation is a serious one: that Rachel Reeves has deceived the British public, frightening them into accepting massive additional taxes which could be used for increased benefits. However exaggerated, this is not typical Westminster bickering; this time, the stakes are higher. Just last week, critics aimed at Reeves and Keir Starmer were labeling their budget "a mess". Now, it is branded as falsehoods, and Kemi Badenoch demanding the chancellor's resignation.

This serious charge demands straightforward answers, therefore here is my assessment. Did the chancellor lied? On the available evidence, apparently not. She told no whoppers. But, despite Starmer's recent remarks, it doesn't follow that there's no issue here and we should move on. Reeves did misinform the public about the considerations shaping her decisions. Was it to funnel cash towards "welfare recipients", like the Tories assert? Certainly not, and the figures demonstrate it.

A Standing Takes Another Hit, But Facts Should Prevail

The Chancellor has taken another hit to her standing, however, if facts still matter in politics, Badenoch ought to call off her lynch mob. Perhaps the stepping down yesterday of OBR head, Richard Hughes, over the leak of its own documents will satisfy SW1's thirst for blood.

But the real story is much more unusual compared to media reports suggest, and stretches broader and deeper than the careers of Starmer and the 2024 intake. At its heart, this is an account concerning what degree of influence the public have in the governance of the nation. And it concern you.

First, to the Core Details

When the OBR published last Friday a portion of the projections it shared with Reeves while she prepared the budget, the surprise was immediate. Not only had the OBR not done such a thing before (described as an "unusual step"), its figures seemingly contradicted Reeves's statements. Even as rumors from Westminster were about how bleak the budget would have to be, the OBR's own forecasts were improving.

Take the government's most "unbreakable" fiscal rule, stating by 2030 day-to-day spending on hospitals, schools, and the rest must be wholly funded by taxes: in late October, the OBR calculated this would just about be met, albeit only by a minuscule margin.

A few days later, Reeves held a media briefing so extraordinary that it caused breakfast TV to break from its regular schedule. Several weeks before the real budget, the nation was warned: taxes would rise, and the main reason being pessimistic numbers from the OBR, in particular its finding that the UK was less productive, putting more in but yielding less.

And lo! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory broadcast rounds implied over the weekend, this is essentially what transpired at the budget, that proved to be significant, harsh, and grim.

The Deceptive Justification

The way in which Reeves misled us concerned her alibi, since these OBR forecasts didn't compel her actions. She might have chosen different options; she could have given alternative explanations, including on budget day itself. Before last year's election, Starmer promised exactly such people power. "The promise of democracy. The strength of the vote. The possibility for national renewal."

One year later, and it is a lack of agency that is evident in Reeves's breakfast speech. The first Labour chancellor for a decade and a half casts herself to be a technocrat at the mercy of factors beyond her control: "Given the circumstances of the long-term challenges with our productivity … any chancellor of any political stripe would be in this position today, confronting the choices that I face."

She did make decisions, only not the kind Labour wishes to broadcast. From April 2029 UK workers as well as businesses are set to be paying an additional £26bn a year in tax – and most of that will not go towards spent on better hospitals, public services, nor enhanced wellbeing. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "benefits street".

Where the Money Actually Ends Up

Rather than being spent, over 50% of the extra cash will in fact give Reeves a buffer for her self-imposed fiscal rules. About 25% goes on covering the administration's policy reversals. Reviewing the OBR's calculations and giving maximum benefit of the doubt to Reeves, only 17% of the taxes will fund genuinely additional spending, for example abolishing the two-child cap on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, as it had long been an act of political theatre by George Osborne. This administration should have have binned it in its first 100 days.

The Real Target: Financial Institutions

Conservatives, Reform and all of Blue Pravda have been railing against the idea that Reeves conforms to the caricature of Labour chancellors, taxing strivers to spend on shirkers. Labour backbenchers have been applauding her budget for being balm for their troubled consciences, safeguarding the most vulnerable. Each group are completely mistaken: The Chancellor's budget was primarily targeted towards asset managers, hedge funds and the others in the bond markets.

The government could present a compelling argument in its defence. The forecasts from the OBR were too small for comfort, especially considering lenders demand from the UK the greatest borrowing cost of all G7 rich countries – exceeding that of France, which lost its leader, higher than Japan that carries far greater debt. Coupled with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say this budget enables the central bank to cut interest rates.

You can see why those folk with Labour badges might not frame it this way next time they visit the doorstep. As one independent adviser for Downing Street puts it, Reeves has "weaponised" the bond market as an instrument of discipline over Labour MPs and the voters. It's why Reeves can't resign, regardless of which pledges are broken. It's why Labour MPs must fall into line and support measures to take billions off social security, just as Starmer indicated recently.

Missing Political Vision and an Unfulfilled Pledge

What's missing from this is the notion of statecraft, of mobilising the finance ministry and the central bank to forge a fresh understanding with investors. Missing too is intuitive knowledge of voters,