🔗 Share this article

This charge carries significant weight: that Rachel Reeves has deceived Britons, frightening them into accepting billions in extra taxes which would be spent on higher benefits. While hyperbolic, this isn't typical political bickering; this time, the consequences are more serious. Just last week, critics of Reeves and Keir Starmer were calling their budget "a shambles". Today, it is branded as lies, and Kemi Badenoch calling for the chancellor's resignation.

Such a serious charge demands clear responses, so let me provide my assessment. Did the chancellor been dishonest? On current information, apparently not. She told no blatant falsehoods. But, notwithstanding Starmer's yesterday's remarks, it doesn't follow that there is nothing to see and we should move on. The Chancellor did mislead the public about the considerations shaping her decisions. Was this all to channel cash to "welfare recipients", like the Tories claim? Certainly not, and the numbers prove this.

A Reputation Sustains Another Blow, Yet Truth Should Prevail

The Chancellor has sustained a further blow to her reputation, however, if facts continue to matter in politics, Badenoch ought to stand down her attack dogs. Maybe the resignation recently of OBR head, Richard Hughes, over the unauthorized release of its internal documents will quench Westminster's thirst for blood.

But the true narrative is far stranger than media reports suggest, and stretches wider and further beyond the careers of Starmer and the 2024 intake. At its heart, this is a story about how much say you and I have over the running of the nation. And it should worry you.

First, on to the Core Details

After the OBR released recently a portion of the projections it provided to Reeves as she prepared the budget, the shock was immediate. Not only has the OBR not done such a thing before (an "rare action"), its figures apparently contradicted the chancellor's words. While rumors from Westminster were about the grim nature of the budget was going to be, the watchdog's forecasts were getting better.

Consider the Treasury's so-called "iron-clad" rule, that by 2030 daily spending on hospitals, schools, and other services must be completely funded by taxes: at the end of October, the watchdog calculated this would barely be met, albeit by a tiny margin.

Several days later, Reeves held a press conference so extraordinary it forced breakfast TV to break from its regular schedule. Weeks before the real budget, the nation was warned: taxes would rise, with the main reason cited as pessimistic numbers provided by the OBR, specifically its conclusion that the UK was less productive, investing more but getting less out.

And so! It came to pass. Despite the implications from Telegraph editorials combined with Tory media appearances implied over the weekend, this is essentially what transpired during the budget, which was big and painful and bleak.

The Deceptive Alibi

Where Reeves deceived us was her justification, because these OBR forecasts did not compel her actions. She might have made different options; she might have given alternative explanations, even on budget day itself. 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 jumps out from Reeves's breakfast speech. The first Labour chancellor for a decade and a half portrays herself as 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 did make decisions, just not one Labour cares to publicize. Starting April 2029 British workers as well as businesses will be paying an additional £26bn annually in taxes – and the majority of this will not be 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 Cash Really Goes

Rather than being spent, over 50% of the extra cash will instead provide Reeves a buffer for her own budgetary constraints. Approximately 25% is allocated to covering the government's own policy reversals. Examining the OBR's calculations and giving maximum benefit of the doubt to a Labour chancellor, a mere 17% of the tax take will go on genuinely additional spending, for example abolishing the two-child cap on child benefit. Its abolition "costs" the Treasury a mere £2.5bn, because it had long been a bit 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 along with all of right-wing media have been railing against how Reeves fits the caricature of Labour chancellors, soaking strivers to spend on shirkers. Party MPs have been cheering her budget for being balm to their social concerns, protecting the disadvantaged. Both sides could be completely mistaken: Reeves's budget was largely targeted towards asset managers, hedge funds and the others in the bond markets.

Downing Street could present a strong case in its defence. The forecasts from the OBR were deemed insufficient for comfort, especially considering lenders demand from the UK the highest interest rate among 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 and train fares, Starmer and Reeves can say their plan enables the Bank of England to cut interest rates.

It's understandable why those folk with red rosettes might not couch it this way when they visit #Labourdoorstep. According to one independent adviser for Downing Street says, Reeves has effectively "utilised" the bond market as a tool of discipline over Labour MPs and the electorate. It's the reason the chancellor can't resign, regardless of which promises she breaks. It is also why Labour MPs will have to knuckle down and vote that cut billions from social security, as Starmer promised recently.

A Lack of Statecraft and a Broken Promise

What is absent here is any sense of strategic governance, of harnessing the Treasury and the Bank to forge a fresh understanding with investors. Also absent is innate understanding of voters,