🔗 Share this article

This allegation represents a grave matter: that Rachel Reeves may have misled the British public, frightening them to accept billions in extra taxes that could be used for increased benefits. However exaggerated, this is not usual political sparring; this time, the stakes are more serious. A week ago, detractors of Reeves alongside Keir Starmer were labeling their budget "uncoordinated". Today, it's branded as falsehoods, with Kemi Badenoch demanding the chancellor to quit.

This serious accusation requires clear responses, therefore here is my assessment. Did the chancellor been dishonest? Based on the available information, no. There were no whoppers. However, notwithstanding Starmer's yesterday's remarks, it doesn't follow that there is no issue here and we can all move along. Reeves did mislead the public about the considerations informing her decisions. Was it to channel cash to "benefits street", like the Tories assert? No, and the numbers demonstrate it.

A Reputation Takes Another Blow, Yet Truth Should Win Out

Reeves has sustained another blow to her reputation, however, if facts still matter in politics, Badenoch should call off her lynch mob. Perhaps the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its own documents will satisfy SW1's appetite for scandal.

Yet the real story is far stranger than media reports indicate, and stretches wider and further than the political futures of Starmer and his 2024 intake. Fundamentally, herein lies an account concerning what degree of influence the public have in the governance of our own country. This should concern you.

Firstly, to Brass Tacks

After the OBR published recently a portion of the forecasts it provided to Reeves while she prepared the red book, the surprise was instant. Not only has the OBR never done such a thing before (an "unusual step"), its numbers apparently contradicted the chancellor's words. Even as rumors from Westminster suggested how bleak the budget was going to be, the watchdog's forecasts were improving.

Take the Treasury's so-called "iron-clad" fiscal rule, that by 2030 daily spending for hospitals, schools, and the rest must be completely paid for by taxes: in late October, the OBR calculated it would just about be met, albeit by a minuscule margin.

Several days later, Reeves held a press conference so extraordinary it forced morning television to interrupt its regular schedule. Weeks before the real budget, the country was put on alert: taxes would rise, and the main reason cited as gloomy numbers from the OBR, specifically its conclusion suggesting the UK had become less efficient, putting more in but yielding less.

And so! It happened. Despite the implications from Telegraph editorials and Tory broadcast rounds implied recently, that is basically what transpired at the budget, which was big and painful and bleak.

The Misleading Justification

The way in which Reeves deceived us was her alibi, because those OBR forecasts didn't compel her actions. She might have chosen different options; she might have given other reasons, including on budget day itself. Prior to the recent election, Starmer pledged precisely this kind of people power. "The promise of democracy. The power of the vote. The possibility for national renewal."

One year later, yet it's a lack of agency that jumps out from Reeves's breakfast speech. Our first Labour chancellor for a decade and a half casts herself to be an apolitical figure at the mercy of factors outside her influence: "In the context of the persistent challenges on our productivity … any finance minister of any party would be in this position today, facing the decisions that I face."

She certainly make decisions, only not one the Labour party cares to broadcast. Starting April 2029 UK workers and businesses are set to be contributing an additional £26bn annually in taxes – and most of that will not be spent on improved healthcare, public services, nor enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "welfare claimants".

Where the Money Actually Ends Up

Rather than going on services, over 50% of the additional revenue will in fact give Reeves a buffer against her own budgetary constraints. About 25% is allocated to covering the administration's policy reversals. Reviewing the watchdog's figures and being as generous as possible towards 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. Its abolition "costs" the Treasury only £2.5bn, because it was always an act of theatrical cruelty from George Osborne. A Labour government could and should have binned it in its first 100 days.

The Real Target: The Bond Markets

Conservatives, Reform and all of Blue Pravda have spent days railing against how Reeves fits the stereotype of left-wing finance ministers, soaking hard workers to fund shirkers. Party MPs have been cheering her budget for being a relief for their social concerns, protecting the most vulnerable. Each group are 180-degrees wrong: Reeves's budget was primarily targeted towards asset managers, hedge funds and the others in the financial markets.

The government could present a compelling argument in its defence. The forecasts provided by the OBR were insufficient for comfort, especially considering lenders demand from the UK the highest interest rate of all G7 rich countries – exceeding that of France, that recently lost a prime minister, higher than Japan that carries far greater debt. Coupled with the measures to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves can say this budget enables the central bank to reduce interest rates.

It's understandable why those wearing Labour badges might not frame it in such terms next time they visit the doorstep. As one independent adviser to Downing Street says, Reeves has "utilised" financial markets as a tool of discipline against her own party and the voters. This is why Reeves cannot resign, no matter what pledges are broken. It's why Labour MPs must fall into line and vote to take billions off social security, just as Starmer promised yesterday.

A Lack of Statecraft , an Unfulfilled Promise

What is absent here is the notion of strategic governance, of mobilising the Treasury and the central bank to reach a new accommodation with markets. Also absent is intuitive knowledge of voters,