🔗 Share this article

This charge carries significant weight: that Rachel Reeves may have misled the British public, frightening them to accept billions in extra taxes that could be used for increased benefits. However exaggerated, this is not typical Westminster bickering; on this occasion, the consequences could be damaging. Just last week, detractors aimed at Reeves alongside Keir Starmer had been calling their budget "a mess". Today, it is branded as lies, with Kemi Badenoch calling for Reeves to step down.

Such a grave accusation demands clear responses, therefore let me provide my view. Did the chancellor lied? Based on the available information, apparently not. She told no blatant falsehoods. However, despite Starmer's recent remarks, it doesn't follow that there is no issue here and we should move on. Reeves did mislead the public about the factors informing her choices. Was this all to funnel cash towards "welfare recipients", like the Tories assert? Certainly not, and the figures demonstrate it.

A Reputation Takes A Further Blow, But Facts Should Prevail

The Chancellor has sustained a further blow to her standing, however, should facts still matter in politics, Badenoch should stand down her lynch mob. Maybe the resignation yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will satisfy SW1's appetite for scandal.

Yet the true narrative is much more unusual compared to the headlines indicate, extending wider and further beyond the careers of Starmer and the class of '24. Fundamentally, this is an account about what degree of influence you and I have over the running of the nation. This should should worry everyone.

First, to Brass Tacks

When the OBR published recently a portion of the projections it provided to Reeves as she prepared the budget, the shock was immediate. Not merely had the OBR never done such a thing before (described as an "exceptional move"), its numbers seemingly went against the chancellor's words. Even as rumors from Westminster were about the grim nature of the budget would have to be, the watchdog's forecasts were getting better.

Consider the Treasury's so-called "unbreakable" rule, stating by 2030 daily spending for hospitals, schools, and other services would be completely funded by taxes: in late October, the watchdog reckoned this would just about be met, albeit only by a tiny margin.

Several days later, Reeves gave a press conference so extraordinary it forced breakfast TV to break from its usual fare. Weeks prior to the actual budget, the country was put on alert: taxes were going up, with the main reason cited as gloomy numbers from the OBR, specifically its conclusion suggesting the UK had become less efficient, putting more in but getting less out.

And lo! It happened. Despite the implications from Telegraph editorials and Tory broadcast rounds suggested recently, that is basically what transpired during the budget, which was significant, harsh, and grim.

The Deceptive Justification

The way in which Reeves misled us concerned her alibi, since those OBR forecasts did not force her hand. She could have made other choices; she might have provided other reasons, including on budget day itself. Prior to the recent election, Starmer promised exactly such people power. "The promise of democracy. The power of the vote. The potential for national renewal."

A year on, and it's powerlessness that is evident in Reeves's pre-budget speech. The first Labour chancellor in 15 years portrays herself to be a technocrat buffeted by factors beyond her control: "In the context of the persistent challenges with our productivity … any finance minister of any party would be standing here today, facing the choices that I face."

She certainly make decisions, just not one the Labour party cares to publicize. From April 2029 British workers and businesses will be contributing an additional £26bn a year in taxes – and the majority of this will not be funding better hospitals, public services, or happier lives. Regardless of what bilge comes from Nigel Farage, Badenoch and others, it isn't being lavished upon "welfare claimants".

Where the Money Really Goes

Rather than being spent, over 50% of this extra cash will in fact provide Reeves cushion for her own fiscal rules. Approximately 25% is allocated to paying for the government's own policy reversals. Examining the watchdog's figures and being as generous as possible towards Reeves, only 17% of the tax take will fund actual new spending, such as scrapping the limit on child benefit. Removing it "costs" the Treasury a mere £2.5bn, because it was always an act of theatrical cruelty by George Osborne. A Labour government could and should have binned it in its first 100 days.

The Real Target: The Bond Markets

Conservatives, Reform and all of Blue Pravda have been barking about how Reeves conforms to the caricature of left-wing finance ministers, taxing strivers to spend on the workshy. Party MPs are cheering her budget as a relief for their social concerns, safeguarding the disadvantaged. Both sides are completely mistaken: Reeves's budget was largely targeted towards investment funds, hedge funds and the others in the financial markets.

The government could present a compelling argument in its defence. The forecasts provided by the OBR were deemed too small to feel secure, particularly considering bond investors demand from the UK the highest interest rate of all G7 developed nations – higher than France, that recently lost its leader, higher than Japan which has way more debt. Combined with the policies to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves can say their plan allows the Bank of England to cut its key lending rate.

You can see that those folk with Labour badges may choose not to frame it in such terms when they're on the doorstep. As a consultant to Downing Street says, Reeves has effectively "utilised" the bond market as an instrument of discipline against Labour MPs and the voters. This is the reason Reeves can't resign, regardless of which pledges she breaks. It is also the reason Labour MPs will have to knuckle down and support measures that cut billions from social security, just as Starmer promised recently.

A Lack of Political Vision , an Unfulfilled Pledge

What's missing from this is the notion of strategic governance, of harnessing the finance ministry and the central bank to forge a new accommodation with markets. Missing too is any intuitive knowledge of voters,