🔗 Share this article

This allegation is a serious one: suggesting Rachel Reeves has lied to the British public, scaring them into accepting massive additional taxes which could be used for increased benefits. While hyperbolic, this isn't typical political sparring; this time, the stakes are more serious. Just last week, critics aimed at Reeves alongside Keir Starmer had been labeling their budget "chaotic". Today, it is denounced as lies, and Kemi Badenoch calling for Reeves to step down.

This serious accusation demands clear responses, so here is my view. Has the chancellor lied? On current evidence, no. She told no major untruths. However, notwithstanding Starmer's recent comments, that doesn't mean there is no issue here and we can all move along. Reeves did mislead the public regarding the considerations shaping her choices. Was this all to funnel cash to "welfare recipients", like the Tories assert? No, as the numbers prove it.

A Standing Takes A Further Hit, Yet Truth Should Prevail

The Chancellor has sustained a further blow to her reputation, however, if facts still matter in politics, Badenoch should call off her attack dogs. Perhaps the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its internal documents will satisfy SW1's appetite for scandal.

But the true narrative is far stranger than the headlines indicate, and stretches broader and deeper beyond the political futures of Starmer and his class of '24. At its heart, herein lies a story about what degree of influence the public get over the governance of the nation. And it should worry you.

Firstly, on to Brass Tacks

After the OBR released last Friday a portion of the projections it provided to Reeves as she wrote the red book, the shock was immediate. Not only has the OBR never done such a thing before (an "unusual step"), its figures seemingly went against Reeves's statements. Even as leaks from Westminster were about how bleak the budget would have to be, the OBR's own predictions were improving.

Consider the Treasury's most "iron-clad" rule, stating by 2030 day-to-day spending for hospitals, schools, and the rest would be completely funded by taxes: at the end of October, the watchdog calculated it would just about be met, albeit only by a tiny margin.

A few days later, Reeves held a media briefing so extraordinary it forced morning television to break from its regular schedule. Weeks before the actual budget, the nation was put on alert: taxes were going up, with the primary cause cited as gloomy numbers provided by the OBR, in particular its conclusion that the UK was less efficient, putting more in but yielding less.

And lo! It came to pass. Notwithstanding what Telegraph editorials and Tory broadcast rounds suggested over the weekend, that is basically what transpired during the budget, that proved to be significant, harsh, and grim.

The Misleading Alibi

The way in which Reeves deceived us was her justification, because these OBR forecasts did not force her hand. She might have chosen different options; she could have given alternative explanations, including during the statement. Prior to last year's election, Starmer promised exactly such people power. "The promise of democracy. The power of the vote. The potential for national renewal."

One year later, yet it's powerlessness that is evident from Reeves's breakfast speech. The first Labour chancellor in 15 years casts herself as a technocrat buffeted by factors beyond her control: "In the context of the persistent challenges on our productivity … any finance minister of any party would be standing here today, confronting the decisions that I face."

She did make decisions, just not the kind the Labour party wishes to broadcast. Starting April 2029 UK workers as well as businesses will be paying another £26bn annually in tax – but the majority of this will not be spent on better hospitals, new libraries, or enhanced wellbeing. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and others, it isn't being lavished upon "benefits street".

Where the Money Really Goes

Instead of being spent, more than 50% of this extra cash will in fact provide Reeves cushion for her own fiscal rules. About 25% is allocated to covering the administration's U-turns. Reviewing the watchdog's figures and being as generous as possible towards Reeves, a mere 17% of the taxes will go on genuinely additional spending, such as abolishing the two-child cap on child benefit. Removing it "will cost" the Treasury only £2.5bn, as it was always an act of theatrical cruelty from George Osborne. A Labour government should have have binned it immediately upon taking office.

The Real Target: Financial Institutions

The Tories, Reform and the entire right-wing media have spent days railing against how Reeves conforms to the stereotype of left-wing finance ministers, soaking strivers to fund the workshy. Party MPs are applauding her budget for being a relief to their troubled consciences, safeguarding the disadvantaged. Each group could be 180-degrees wrong: The Chancellor's budget was primarily targeted towards investment funds, speculative capital and the others in the bond markets.

Downing Street could present a strong case in its defence. The forecasts from the OBR were too small for comfort, particularly given that lenders charge the UK the highest interest rate of all G7 rich countries – higher than France, that recently lost its leader, and exceeding Japan which has far greater debt. Coupled with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan allows the Bank of England to reduce its key lending rate.

It's understandable that those folk with red rosettes might not frame it in such terms next time they're on the doorstep. As one independent adviser for Downing Street puts it, Reeves has effectively "weaponised" the bond market to act as an instrument of discipline against her own party and the electorate. It's why the chancellor cannot resign, regardless of which promises she breaks. It's why Labour MPs must fall into line and vote to take billions off social security, as Starmer promised yesterday.

Missing Political Vision , a Broken Pledge

What's missing here is the notion of strategic governance, of mobilising the finance ministry and the Bank to reach a new accommodation with markets. Also absent is any intuitive knowledge of voters,