🔗 Share this article

The charge carries significant weight: that Rachel Reeves may have lied to Britons, spooking them to accept billions in extra taxes that would be funneled into increased welfare payments. However exaggerated, this isn't typical Westminster bickering; on this occasion, the consequences are more serious. Just last week, critics of Reeves alongside Keir Starmer were calling their budget "uncoordinated". Now, it's branded as lies, and Kemi Badenoch calling for the chancellor to quit.

This grave accusation requires clear answers, so here is my assessment. Has the chancellor lied? On the available evidence, apparently not. There were no blatant falsehoods. However, notwithstanding Starmer's recent remarks, it doesn't follow that there's no issue here and we should move on. The Chancellor did mislead the public regarding the factors informing her decisions. Was this all to channel cash towards "benefits street", like the Tories claim? No, and the numbers demonstrate it.

A Reputation Takes Another Blow, But Facts Should Win Out

The Chancellor has sustained a further blow to her standing, but, if facts continue to have anything to do with politics, Badenoch should call off her lynch mob. Perhaps the stepping down yesterday of OBR head, Richard Hughes, due to the unauthorized release of its own documents will quench SW1's thirst for blood.

Yet the real story is far stranger compared to media reports indicate, extending broader and deeper than the political futures of Starmer and the 2024 intake. Fundamentally, herein lies an account concerning how much say you and I get over the running of our own country. This should should worry you.

First, on to the Core Details

When the OBR published recently a portion of the forecasts it shared with Reeves while she prepared the budget, the surprise was immediate. Not only had the OBR never done such a thing before (described as an "rare action"), its numbers apparently contradicted Reeves's statements. While leaks from Westminster were about how bleak the budget would have to be, the watchdog's forecasts were improving.

Consider the Treasury's so-called "iron-clad" fiscal rule, stating by 2030 day-to-day spending for hospitals, schools, and the rest must be wholly paid for by taxes: in late October, the OBR reckoned it would barely be met, albeit by a tiny margin.

Several days later, Reeves gave a press conference so extraordinary that it caused morning television to break from its regular schedule. Weeks before the real budget, the country was put on alert: taxes would rise, and the primary cause cited as pessimistic numbers provided by the OBR, in particular its conclusion suggesting the UK had become less efficient, putting more in but yielding less.

And so! It came to pass. Notwithstanding the implications from Telegraph editorials and Tory media appearances implied recently, this is essentially what transpired at the budget, that proved to be big and painful and bleak.

The Deceptive Alibi

The way in which Reeves deceived us was her justification, since these OBR forecasts did not force her hand. She might have chosen different options; she might have given other reasons, even on budget day itself. Before last year's election, Starmer promised precisely this kind of people power. "The hope of democracy. The strength of the vote. The potential for national renewal."

A year on, yet it's a lack of agency that jumps out from Reeves's breakfast speech. Our first Labour chancellor in 15 years portrays herself as an apolitical figure buffeted by forces outside her influence: "Given the circumstances of the long-term challenges with our productivity … any chancellor of any party would be in this position today, facing the decisions that I face."

She did make decisions, just not the kind Labour cares to broadcast. Starting April 2029 British workers and businesses will be paying another £26bn a year in tax – and most of that will not be spent on improved healthcare, public services, or enhanced wellbeing. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "welfare claimants".

Where the Money Actually Ends Up

Rather than going on services, more than 50% of the extra cash will in fact give Reeves cushion for her self-imposed fiscal rules. Approximately 25% goes on covering the government's own policy reversals. Examining the OBR's calculations and being as generous as possible to Reeves, a mere 17% of the tax take will go on actual new spending, such as scrapping the two-child cap on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, because it had long been a bit of theatrical cruelty by George Osborne. This administration could and should have binned it in its first 100 days.

The Real Target: Financial Institutions

The Tories, Reform and the entire right-wing media have been barking about how Reeves fits the stereotype of Labour chancellors, soaking strivers to fund the workshy. Labour backbenchers have been cheering her budget as balm to their social concerns, protecting the most vulnerable. Each group could be completely mistaken: The Chancellor's budget was largely targeted towards investment funds, hedge funds and the others in the financial markets.

The government can make a compelling argument for itself. The forecasts from the OBR were deemed insufficient to feel secure, especially given that bond investors demand from the UK the highest interest rate among G7 rich countries – exceeding that of France, which lost a prime minister, higher than Japan that carries way more debt. Combined with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say their plan enables the Bank of England to reduce interest rates.

You can see why those folk with Labour badges might not couch it in such terms when they're on #Labourdoorstep. According to one independent adviser to Downing Street puts it, Reeves has "utilised" the bond market as an instrument of discipline over Labour MPs and the voters. It's why the chancellor cannot resign, no matter what promises are broken. It's the reason Labour MPs must fall into line and vote to take billions off social security, as Starmer indicated yesterday.

Missing Statecraft , an Unfulfilled Promise

What is absent here is any sense of statecraft, of harnessing the finance ministry and the Bank to reach a new accommodation with investors. Missing too is innate understanding of voters,