🔗 Share this article

This charge represents a grave matter: suggesting Rachel Reeves has lied to the British public, spooking them into accepting billions in extra taxes that would be used for higher benefits. However hyperbolic, this isn't usual political sparring; this time, the stakes are higher. A week ago, critics aimed at Reeves and Keir Starmer were calling their budget "a mess". Today, it's denounced as lies, and Kemi Badenoch demanding Reeves to step down.

Such a grave accusation requires clear answers, therefore here is my assessment. Did the chancellor tell lies? Based on the available evidence, no. She told no blatant falsehoods. But, notwithstanding Starmer's yesterday's comments, it doesn't follow that there is nothing to see and we can all move along. Reeves did mislead the public regarding the considerations shaping her decisions. Was this all to channel cash to "welfare recipients", like the Tories assert? Certainly not, as the numbers demonstrate it.

A Reputation Sustains Another Hit, Yet Truth Should Win Out

Reeves has sustained a further blow to her standing, but, should facts still have anything to do with politics, Badenoch ought to call off her attack dogs. Perhaps the stepping down recently of OBR head, Richard Hughes, over the leak of its own documents will satisfy Westminster's thirst for blood.

Yet the true narrative is far stranger than the headlines indicate, extending broader and deeper beyond the political futures of Starmer and his 2024 intake. At its heart, herein lies an account concerning what degree of influence you and I get over the governance of the nation. This should should worry everyone.

Firstly, on to Brass Tacks

When the OBR published last Friday some of the forecasts it provided to Reeves while she prepared the red book, the surprise was immediate. Not only has the OBR never done such a thing before (described as an "exceptional move"), its numbers 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 predictions were getting better.

Take the government's so-called "iron-clad" rule, stating by 2030 day-to-day spending for hospitals, schools, and other services would be completely paid for by taxes: at the end of October, the OBR calculated it would barely be met, albeit by a tiny margin.

Several days later, Reeves held a media briefing so unprecedented that it caused morning television to interrupt its usual fare. Weeks before the real budget, the country was put on alert: taxes would rise, and the primary cause cited as gloomy numbers from the OBR, in particular its conclusion suggesting the UK was less efficient, putting more in but yielding less.

And lo! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory media appearances implied recently, that is basically what happened during the budget, that proved to be big and painful and bleak.

The Misleading Justification

The way in which Reeves deceived us was her alibi, because those OBR forecasts didn't force her hand. She might have made different options; she might have provided alternative explanations, even on budget day itself. Before the recent election, Starmer promised exactly such public influence. "The hope of democracy. The strength of the vote. The potential for national renewal."

A year on, yet it is powerlessness that jumps out in Reeves's pre-budget speech. The first Labour chancellor for a decade and a half portrays herself as a technocrat buffeted by forces outside her influence: "In the context of the persistent challenges with our productivity … any finance minister of any political stripe would be standing here today, facing the decisions that I face."

She did make decisions, only not the kind Labour wishes to publicize. Starting April 2029 UK workers and businesses will be contributing another £26bn a year in taxes – but the majority of this will not go towards spent on better hospitals, new libraries, nor happier lives. Regardless of what bilge comes from Nigel Farage, Badenoch and others, it is not being lavished upon "welfare claimants".

Where the Money Really Goes

Rather than going on services, over 50% of the extra cash will instead provide Reeves a buffer against her own budgetary constraints. About 25% goes on paying for the government's own U-turns. Reviewing the OBR's calculations and being as generous as possible towards a Labour chancellor, a mere 17% of the taxes will fund genuinely additional spending, for example scrapping the limit on child benefit. Its abolition "costs" the Treasury a mere £2.5bn, as it had long been an act of theatrical cruelty from George Osborne. This administration could and should abolished it in its first 100 days.

The Real Target: The Bond Markets

Conservatives, Reform and the entire Blue Pravda have spent days barking about how Reeves conforms to the stereotype of left-wing finance ministers, taxing strivers to spend on the workshy. Party MPs are applauding her budget for being balm to their social concerns, safeguarding the disadvantaged. Each group are completely mistaken: Reeves's budget was largely aimed at investment funds, speculative capital and the others in the financial markets.

The government can make a strong case for itself. The margins provided by the OBR were deemed too small for comfort, particularly given that bond investors charge the UK the highest interest rate of all G7 developed nations – exceeding that of France, which lost its leader, and exceeding Japan that carries way more debt. Coupled with our policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves can say this budget allows the Bank of England to reduce interest rates.

You can see that those folk with red rosettes may choose not to couch it in such terms when they visit #Labourdoorstep. According to a consultant for Downing Street says, Reeves has effectively "weaponised" financial markets to act as an instrument of control over her own party and the electorate. This is why Reeves cannot resign, no matter what promises she breaks. It is also why Labour MPs must fall into line and support measures to take billions off social security, as Starmer indicated yesterday.

A Lack of Statecraft , a Broken Promise

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