🔗 Share this article

This accusation is a serious one: that Rachel Reeves has deceived UK citizens, spooking them into accepting billions in extra taxes that would be spent on higher welfare payments. However hyperbolic, this isn't typical political sparring; this time, the stakes are more serious. Just last week, critics of Reeves alongside Keir Starmer had been labeling their budget "chaotic". Now, it's branded as falsehoods, with Kemi Badenoch demanding Reeves to step down.

Such a grave charge requires straightforward answers, therefore here is my view. Did the chancellor tell lies? On current evidence, apparently not. She told no blatant falsehoods. However, despite Starmer's yesterday's comments, it doesn't follow that there is nothing to see and we should move on. Reeves did misinform the public about the considerations informing her decisions. Was it to channel cash towards "benefits street", like the Tories assert? Certainly not, and the numbers prove this.

A Reputation Takes A Further Blow, But Facts Should Win Out

The Chancellor has taken another blow to her reputation, but, should facts still matter in politics, Badenoch should stand down her attack dogs. Perhaps the stepping down recently of OBR head, Richard Hughes, due to the unauthorized release of its internal documents will satisfy SW1's thirst for blood.

Yet the true narrative is far stranger compared to the headlines suggest, extending wider and further than the political futures of Starmer and his class of '24. Fundamentally, herein lies a story about what degree of influence you and I get in the governance of the nation. And it should worry you.

First, to Brass Tacks

After the OBR published last Friday some of the projections it shared with Reeves while she wrote the budget, the surprise was instant. Not merely has the OBR not done such a thing before (described as an "rare action"), its figures seemingly contradicted Reeves's statements. While rumors from Westminster were about the grim nature of the budget was going to be, the OBR's own predictions were improving.

Consider the government's most "unbreakable" fiscal rule, that by 2030 daily spending for hospitals, schools, and other services would be wholly funded by taxes: in late October, the watchdog reckoned it would just about be met, albeit by a tiny margin.

Several days later, Reeves gave a media briefing so unprecedented it forced breakfast TV to break from its regular schedule. Weeks before the real budget, the nation was warned: taxes would rise, and the primary cause cited as gloomy numbers provided by the OBR, specifically its conclusion that the UK was less efficient, investing more but getting less out.

And lo! It happened. Despite what Telegraph editorials and Tory broadcast rounds implied recently, that is essentially what happened at the budget, that proved to be significant, harsh, and grim.

The Misleading Justification

The way in which Reeves deceived us was her justification, since those OBR forecasts did not force her hand. She might have made other choices; she might have provided other reasons, including during the statement. Before last year's election, Starmer promised precisely this kind of people power. "The promise of democracy. The power of the vote. The potential for national renewal."

A year on, and it's a lack of agency that jumps out in Reeves's pre-budget speech. Our first Labour chancellor for a decade and a half portrays herself as an apolitical figure buffeted by factors outside her influence: "Given the circumstances of the persistent challenges on our productivity … any finance minister of any party would be in this position today, facing the choices that I face."

She did make decisions, just not one Labour wishes to publicize. From April 2029 British workers and businesses are set to be contributing an additional £26bn a year in tax – but the majority of this will not go towards spent on better hospitals, public services, or enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it is not being lavished upon "benefits street".

Where the Money Actually Ends Up

Rather than going on services, more than 50% of this extra cash will in fact give Reeves a buffer against her self-imposed fiscal rules. About 25% is allocated to paying for the government's own U-turns. Reviewing the watchdog's figures and being as generous as possible towards Reeves, a mere 17% of the tax take will go on genuinely additional spending, such as scrapping the limit on child benefit. Removing it "costs" the Treasury only £2.5bn, as it was always an act of political theatre from George Osborne. A Labour government could and should abolished it in its first 100 days.

The True Audience: The Bond Markets

Conservatives, Reform and all of Blue Pravda have spent days railing against how Reeves conforms to the caricature of Labour chancellors, soaking strivers to spend on shirkers. Party MPs have been applauding her budget as a relief to their troubled consciences, safeguarding the most vulnerable. Both sides could be completely mistaken: The Chancellor's budget was primarily targeted towards investment funds, speculative capital and the others in the financial markets.

Downing Street could present a compelling argument in its defence. The forecasts from the OBR were insufficient to feel secure, especially considering bond investors demand from the UK the highest interest rate of all G7 rich countries – higher than France, which lost a prime minister, and exceeding Japan which has way more debt. Combined with our measures to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue this budget enables the Bank of England to reduce its key lending rate.

It's understandable why those wearing Labour badges might not couch it in such terms next time they're on the doorstep. According to a consultant to Downing Street puts it, Reeves has "weaponised" the bond market to act as a tool of control over her own party and the electorate. It's why the chancellor can't resign, no matter what promises she breaks. It is also the reason Labour MPs will have to fall into line and vote that cut billions from social security, as Starmer indicated yesterday.

Missing Political Vision and an Unfulfilled Pledge

What's missing here is the notion of statecraft, of mobilising the finance ministry and the Bank to reach a new accommodation with markets. Also absent is any innate understanding of voters,