🔗 Share this article

This accusation represents a grave matter: suggesting Rachel Reeves may have misled UK citizens, frightening them into accepting massive additional taxes which could be used for higher benefits. While exaggerated, this isn't typical political bickering; this time, the consequences could be damaging. A week ago, critics of Reeves alongside Keir Starmer were calling their budget "a shambles". Now, it is denounced as lies, and Kemi Badenoch calling for the chancellor to quit.

This grave charge requires straightforward answers, therefore here is my assessment. Did the chancellor been dishonest? Based on current evidence, apparently not. She told no major untruths. However, notwithstanding Starmer's yesterday's remarks, it doesn't follow that there's no issue here and we can all move along. Reeves did mislead the public about the factors informing her decisions. Was this all to channel cash to "benefits street", like the Tories assert? No, and the figures demonstrate it.

A Standing Takes A Further Hit, Yet Truth Should Win Out

Reeves has sustained a further hit to her reputation, but, should facts still have anything to do with politics, Badenoch ought to stand down her attack dogs. Maybe the resignation recently of OBR head, Richard Hughes, over the leak of its internal documents will satisfy SW1's appetite for scandal.

Yet the true narrative is far stranger compared to media reports suggest, extending wider and further beyond the political futures of Starmer and his 2024 intake. At its heart, herein lies a story concerning how much say the public have in the running of the nation. And it concern you.

First, on to Brass Tacks

After the OBR released recently some of the projections it shared with Reeves while she prepared the red book, the surprise was immediate. Not merely has the OBR never acted this way before (described as an "exceptional move"), its figures apparently contradicted Reeves's statements. While leaks from Westminster were about the grim nature of the budget would have to be, the OBR's own forecasts were getting better.

Take the Treasury's most "iron-clad" rule, stating by 2030 day-to-day spending on hospitals, schools, and the rest must be completely funded by taxes: in late October, the OBR reckoned it would just about be met, albeit only by a tiny margin.

A few days later, Reeves gave a media briefing so unprecedented that it caused breakfast TV to interrupt its usual fare. Several weeks before the actual budget, the country was put on alert: taxes were going up, and the main reason cited as pessimistic numbers provided by the OBR, specifically its conclusion that the UK was less productive, investing more but getting less out.

And lo! It came to pass. Despite what Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, that is basically what transpired at the budget, which was big and painful and bleak.

The Deceptive Alibi

The way in which Reeves misled us was her alibi, since these OBR forecasts didn't compel her actions. She might have made different options; she could have provided other reasons, even on budget day itself. Prior to last year's election, Starmer promised exactly such people power. "The hope of democracy. The strength of the vote. The potential for national renewal."

A year on, and it's a lack of agency that is evident in Reeves's breakfast speech. Our first Labour chancellor in 15 years portrays herself as a technocrat buffeted by factors beyond her control: "In the context of the long-term challenges with our productivity … any chancellor of any party would be standing here today, confronting the choices that I face."

She did make decisions, just not one Labour cares to broadcast. Starting April 2029 UK workers as well as businesses will be contributing an additional £26bn a year in tax – but the majority of this will not be funding better hospitals, public services, or enhanced wellbeing. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "welfare claimants".

Where the Money Actually Ends Up

Instead of going on services, more than 50% of this extra cash will instead give Reeves a buffer for her self-imposed budgetary constraints. Approximately 25% goes on covering the government's own policy reversals. Reviewing the OBR's calculations and being as generous as possible to Reeves, a mere 17% of the taxes will fund genuinely additional spending, for example abolishing the two-child cap on child benefit. Removing it "costs" the Treasury only £2.5bn, as it was always an act of political theatre by George Osborne. A Labour government should have abolished it immediately upon taking office.

The True Audience: The Bond Markets

Conservatives, Reform along with all of Blue Pravda have been railing against how Reeves conforms to the caricature of left-wing finance ministers, soaking hard workers to fund shirkers. Labour backbenchers are cheering her budget as a relief for their social concerns, safeguarding the disadvantaged. Both sides could be completely mistaken: The Chancellor's budget was primarily targeted towards investment funds, hedge funds and the others in the financial markets.

Downing Street can make a strong case for itself. The forecasts from the OBR were deemed too small for comfort, especially given that bond investors demand from the UK the greatest borrowing cost among G7 rich countries – exceeding that of France, which lost its leader, and exceeding Japan that carries way more debt. Coupled with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget enables the central bank to cut interest rates.

It's understandable that those folk with red rosettes may choose not to couch it this way when they're on the doorstep. According to one independent adviser for Downing Street says, Reeves has "weaponised" the bond market as a tool of control over her own party and the voters. This is why Reeves cannot resign, regardless of which promises are broken. It is also why Labour MPs must knuckle down and vote to take billions off social security, just as Starmer indicated recently.

Missing Statecraft , an Unfulfilled Promise

What is absent from this is the notion of statecraft, of harnessing the finance ministry and the central bank to forge a new accommodation with markets. Also absent is intuitive knowledge of voters,