🔗 Share this article

The accusation carries significant weight: suggesting Rachel Reeves has deceived UK citizens, spooking them to accept massive additional taxes which could be funneled into higher benefits. However hyperbolic, this isn't typical political bickering; this time, the stakes are more serious. A week ago, detractors aimed at Reeves alongside Keir Starmer had been calling their budget "chaotic". Now, it is branded as lies, with Kemi Badenoch demanding the chancellor's resignation.

Such a grave charge demands clear answers, so here is my assessment. Has the chancellor lied? On the available evidence, apparently not. There were no blatant falsehoods. But, despite Starmer's recent comments, that doesn't mean there is no issue here and we should move on. The Chancellor did misinform the public regarding the considerations informing her decisions. Was it to funnel cash towards "benefits street", as the Tories assert? No, as the numbers demonstrate this.

A Reputation Takes Another Blow, But Facts Must Win Out

The Chancellor has sustained a further blow to her standing, but, should facts still have anything to do with politics, Badenoch ought to call off her lynch mob. Perhaps the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its own documents will satisfy Westminster's appetite for scandal.

Yet the real story is far stranger than the headlines indicate, extending broader and deeper than the political futures of Starmer and the 2024 intake. Fundamentally, this is an account concerning how much say the public have in the running of our own country. And it concern you.

Firstly, on to the Core Details

When the OBR published recently some of the forecasts it shared with Reeves while she wrote the red book, the surprise was instant. Not only has the OBR never done such a thing before (described as an "exceptional move"), its figures seemingly went against Reeves's statements. Even as leaks from Westminster suggested the grim nature of the budget would have to be, the OBR's own forecasts were improving.

Consider the Treasury's so-called "iron-clad" fiscal rule, stating by 2030 daily spending for hospitals, schools, and the rest would be completely paid for by taxes: at the end of October, the OBR reckoned it would barely be met, albeit only by a tiny margin.

Several days later, Reeves gave a media briefing so unprecedented that it caused morning television to interrupt its usual fare. Weeks prior to the actual budget, the nation was warned: taxes would rise, and the main reason cited as pessimistic numbers from the OBR, in particular its finding that the UK had become less productive, putting more in but getting less out.

And so! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, that is basically what happened during the budget, that proved to be big and painful and bleak.

The Misleading Alibi

The way in which Reeves misled us was her alibi, because these OBR forecasts did not force her hand. She could have chosen other choices; she could have provided other reasons, even during the statement. Before the recent 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 powerlessness that is evident from Reeves's breakfast speech. Our first Labour chancellor for a decade and a half portrays herself as an apolitical figure at the mercy of 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, facing the decisions that I face."

She did make decisions, only not one Labour wishes to broadcast. From April 2029 British workers and businesses are set to be paying an additional £26bn annually in tax – but most of that will not go towards spent on better hospitals, new libraries, nor enhanced wellbeing. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "welfare claimants".

Where the Cash Actually Ends Up

Instead of going on services, over 50% of the extra cash will instead give Reeves a buffer against her self-imposed budgetary constraints. Approximately 25% goes on paying for the administration's policy reversals. Reviewing the OBR's calculations and being as generous as possible to Reeves, only 17% of the taxes will fund genuinely additional spending, such as abolishing the two-child cap on child benefit. Its abolition "costs" the Treasury only £2.5bn, because it had long been a bit of theatrical cruelty by George Osborne. A Labour government could and should abolished it immediately upon taking office.

The True Audience: Financial Institutions

The Tories, Reform along with the entire Blue Pravda have been barking about how Reeves fits the stereotype of Labour chancellors, soaking hard workers to fund shirkers. Labour backbenchers are cheering her budget for being balm for their troubled consciences, safeguarding the most vulnerable. Both sides could be 180-degrees wrong: The Chancellor's budget was largely aimed at investment funds, speculative capital and participants within the bond markets.

Downing Street can make a strong case for itself. The margins provided by the OBR were deemed insufficient for comfort, especially given that lenders charge the UK the highest interest rate of all G7 developed nations – higher than France, that recently lost its leader, and exceeding Japan that carries way more debt. Coupled with our policies to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue this budget allows the central bank to reduce its key lending rate.

You can see that those folk with red rosettes might not couch it in such terms when they're on #Labourdoorstep. As one independent adviser for Downing Street puts it, Reeves has effectively "utilised" financial markets as a tool of discipline over her own party and the voters. It's why Reeves can't resign, regardless of which promises are broken. It's why Labour MPs will have to fall into line and vote that cut billions from social security, just as Starmer indicated yesterday.

Missing Political Vision , a Broken Promise

What's missing from this is the notion of strategic governance, of harnessing the Treasury and the Bank to reach a fresh understanding with markets. Also absent is any intuitive knowledge of voters,