🔗 Share this article

The allegation is a serious one: that Rachel Reeves may have lied to Britons, frightening them into accepting billions in additional taxes which could be used for increased benefits. However hyperbolic, this is not typical Westminster sparring; this time, the consequences are higher. Just last week, critics of Reeves and Keir Starmer were calling their budget "a shambles". Today, it is denounced as lies, with Kemi Badenoch demanding Reeves to step down.

Such a grave charge demands clear answers, so let me provide my assessment. Has the chancellor lied? Based on the available information, apparently not. There were no blatant falsehoods. But, despite Starmer's recent remarks, that doesn't mean there's no issue here and we can all move along. Reeves did misinform the public about the considerations informing her choices. Was this all to channel cash towards "welfare recipients", as the Tories assert? No, and the figures demonstrate it.

A Reputation Sustains Another Hit, But Facts Should Prevail

The Chancellor has sustained a further hit to her standing, however, if facts continue to have anything to do with politics, Badenoch ought to call off her lynch mob. Perhaps the stepping down yesterday of OBR head, Richard Hughes, due to the unauthorized release of its internal documents will satisfy Westminster's appetite for scandal.

Yet the true narrative is much more unusual compared to the headlines indicate, extending wider and further than the careers of Starmer and his class of '24. At its heart, herein lies an account concerning how much say the public have over the running of the nation. And it concern you.

Firstly, to the Core Details

After the OBR published last Friday some of the projections it shared with Reeves as she wrote the red book, the shock was instant. Not merely had the OBR never done such a thing before (an "unusual step"), its numbers apparently contradicted the chancellor's words. While rumors from Westminster were about how bleak the budget was going to be, the OBR's own forecasts were getting better.

Consider the Treasury's most "unbreakable" rule, that by 2030 day-to-day spending on hospitals, schools, and other services must be completely paid for by taxes: at the end of October, the OBR reckoned this would barely be met, albeit only by a minuscule margin.

A few days later, Reeves held a press conference so extraordinary that it caused breakfast TV to break from its regular schedule. Several weeks prior to the actual budget, the nation was put on alert: taxes were going up, and the main reason cited as pessimistic numbers from the OBR, specifically its conclusion suggesting the UK was less efficient, putting more in but getting less out.

And lo! It came to pass. Notwithstanding the implications from Telegraph editorials and Tory media appearances suggested over the weekend, that is essentially what happened at the budget, that proved to be significant, harsh, and grim.

The Misleading Alibi

Where Reeves deceived us concerned her justification, because those OBR forecasts did not compel her actions. She could have made other choices; she could have provided alternative explanations, even on budget day itself. Prior to last year's election, Starmer pledged exactly such public influence. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, yet it is a lack of agency that jumps out from Reeves's breakfast speech. Our first Labour chancellor in 15 years casts herself as an apolitical figure buffeted by forces beyond her control: "Given the circumstances of the persistent challenges with our productivity … any finance minister of any political stripe would be in this position today, facing the choices that I face."

She did make decisions, only not the kind Labour cares to publicize. From April 2029 British workers and businesses are set to be paying an additional £26bn a year in taxes – but most of that will not go towards funding improved healthcare, public services, nor enhanced wellbeing. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and others, it is not being lavished upon "welfare claimants".

Where the Cash Actually Ends Up

Instead of being spent, over 50% of the additional revenue will in fact give Reeves a buffer for her own budgetary constraints. About 25% is allocated to covering the administration's policy reversals. Examining the watchdog's figures and giving maximum benefit of the doubt towards a Labour chancellor, a mere 17% of the taxes will go on genuinely additional spending, for example scrapping the limit on child benefit. Removing it "costs" the Treasury only £2.5bn, as it had long been a bit of theatrical cruelty from George Osborne. A Labour government could and should have binned it immediately upon taking office.

The Real Target: The Bond Markets

Conservatives, Reform along with the entire right-wing media have spent days barking about the idea that Reeves fits the caricature of Labour chancellors, taxing strivers to fund shirkers. Party MPs are applauding her budget as a relief for their social concerns, protecting the most vulnerable. Each group could be 180-degrees wrong: The Chancellor's budget was largely aimed at 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 too small for comfort, particularly given that bond investors charge the UK the highest interest rate of all G7 developed nations – higher than France, which lost its leader, higher than Japan that carries far greater debt. Combined with our measures to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say this budget allows the central bank to reduce interest rates.

It's understandable that those folk with Labour badges might not couch it this way when they visit the doorstep. According to one independent adviser for Downing Street says, Reeves has "weaponised" the bond market as an instrument of control over her own party and the voters. This is why Reeves cannot resign, no matter what pledges she breaks. It is also the reason Labour MPs will have to fall into line and support measures to take billions off social security, just as Starmer indicated yesterday.

A Lack of Statecraft , an Unfulfilled Promise

What is absent from this is any sense of strategic governance, of mobilising the Treasury and the Bank to forge a fresh understanding with markets. Also absent is innate understanding of voters,