🔗 Share this article

The allegation represents a grave matter: suggesting Rachel Reeves has misled the British public, scaring them to accept billions in additional taxes that would be used for increased benefits. However exaggerated, this isn't usual Westminster bickering; on this occasion, the stakes are more serious. Just last week, critics of Reeves and Keir Starmer had been calling their budget "a shambles". Now, it is denounced as falsehoods, and Kemi Badenoch calling for the chancellor to quit.

Such a grave accusation requires straightforward answers, so here is my view. Did the chancellor been dishonest? Based on the available evidence, apparently not. She told no major untruths. However, despite Starmer's recent comments, it doesn't follow that there's nothing to see and we should move on. Reeves did mislead the public regarding the considerations informing her choices. Was this all to funnel cash to "benefits street", as the Tories claim? No, and the numbers demonstrate it.

A Standing Sustains Another Blow, Yet Truth Should Prevail

Reeves has taken another hit to her reputation, but, if facts still matter in politics, Badenoch ought to stand down her lynch mob. Maybe the resignation yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will quench SW1's appetite for scandal.

But the real story is much more unusual compared to the headlines suggest, extending wider and further beyond the political futures of Starmer and the class of '24. Fundamentally, this is a story concerning how much say the public have in the governance of the nation. And it concern everyone.

Firstly, 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 instant. Not merely had the OBR never done such a thing before (described as an "unusual step"), its numbers seemingly contradicted the chancellor's words. Even as leaks from Westminster suggested how bleak the budget was going to be, the OBR's own predictions were getting better.

Take the government's most "unbreakable" rule, stating by 2030 day-to-day spending for hospitals, schools, and other services would be wholly paid for by taxes: in late October, the watchdog reckoned this would just about be met, albeit only by a minuscule margin.

A few days later, Reeves held a press conference so unprecedented it forced breakfast TV to break from its regular schedule. Weeks prior to the actual budget, the country was warned: taxes were going up, with the primary cause cited as gloomy numbers from the OBR, specifically its finding that the UK was less productive, putting more in but getting less out.

And so! It happened. Despite the implications from Telegraph editorials combined with Tory media appearances suggested over the weekend, that is basically what transpired during the budget, that proved to be significant, harsh, and grim.

The Deceptive Justification

The way in which Reeves misled us was her alibi, because those OBR forecasts didn't force her hand. She might have chosen different options; she could have given other reasons, including on budget day itself. Before last year's election, Starmer pledged exactly such people power. "The promise of democracy. The strength of the vote. The possibility for national renewal."

A year on, yet it is powerlessness that is evident in Reeves's pre-budget speech. Our first Labour chancellor in 15 years casts herself as a technocrat buffeted by forces outside her influence: "Given the circumstances of the persistent challenges with our productivity … any chancellor of any party would be standing here today, facing the choices that I face."

She certainly make decisions, only not one Labour cares to broadcast. Starting April 2029 British workers and businesses are set to be contributing another £26bn annually in taxes – and the majority of this will not be funding improved healthcare, public services, nor happier lives. Whatever bilge comes from Nigel Farage, Badenoch and others, it is not being lavished upon "welfare claimants".

Where the Cash Really Goes

Rather than going on services, more than 50% of the extra cash will in fact provide Reeves cushion against her own budgetary constraints. About 25% is allocated to covering the government's own policy reversals. Examining the OBR's calculations and being as generous as possible to a Labour chancellor, only 17% of the tax take will go on genuinely additional spending, for example scrapping the two-child cap on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, as it had long been an act of theatrical cruelty by George Osborne. This administration could and should abolished it immediately upon taking office.

The True Audience: Financial Institutions

The Tories, Reform along with the entire Blue Pravda have been railing against the idea that Reeves fits the stereotype of left-wing finance ministers, soaking strivers to fund shirkers. Labour backbenchers are cheering her budget for being a relief for their troubled consciences, protecting the disadvantaged. Both sides could be 180-degrees wrong: The Chancellor's budget was largely targeted towards investment funds, speculative capital and the others in the bond markets.

Downing Street can make a compelling argument in its defence. The margins provided by the OBR were insufficient for comfort, particularly considering bond investors charge the UK the highest interest rate of all G7 rich countries – higher than France, which lost its leader, higher than Japan that carries far greater debt. Coupled with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say their plan enables the central bank to reduce its key lending rate.

It's understandable why those folk with red rosettes might not couch it in such terms next time they visit #Labourdoorstep. As one independent adviser to Downing Street says, Reeves has "weaponised" financial markets to act as an instrument of control against her own party and the electorate. This is the reason Reeves cannot resign, no matter what promises she breaks. It is also the reason Labour MPs must fall into line and support measures that cut billions from social security, just as Starmer indicated recently.

A Lack of Political Vision and a Broken Pledge

What's missing from this is any sense of strategic governance, of harnessing the Treasury and the central bank to reach a new accommodation with investors. Missing too is any innate understanding of voters,