🔗 Share this article

The charge represents a grave matter: that Rachel Reeves has lied to UK citizens, spooking them to accept massive extra taxes that could be spent on higher welfare payments. While exaggerated, this is not usual Westminster sparring; this time, the stakes could be damaging. A week ago, critics aimed at Reeves alongside Keir Starmer were calling their budget "a shambles". Today, it is denounced as lies, with Kemi Badenoch calling for the chancellor's resignation.

This serious accusation demands clear answers, therefore here is my view. Has the chancellor been dishonest? Based on the available evidence, apparently not. She told no major untruths. But, despite Starmer's recent comments, it doesn't follow that there's nothing to see and we can all move along. Reeves did mislead the public about the factors informing her decisions. Was it to channel cash towards "benefits street", as the Tories claim? Certainly not, and the numbers demonstrate this.

A Reputation Sustains A Further Hit, Yet Truth Must Prevail

Reeves has sustained another blow to her standing, but, should facts continue to matter in politics, Badenoch should stand down her lynch mob. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its internal documents will satisfy SW1's appetite for scandal.

But the real story is far stranger compared to media reports suggest, extending broader and deeper beyond the careers of Starmer and his class of '24. Fundamentally, herein lies an account about what degree of influence the public have over the running of the nation. And it concern everyone.

Firstly, to Brass Tacks

When the OBR released last Friday a portion of the forecasts it shared with Reeves as she wrote the budget, the shock was instant. Not only has the OBR never acted this way before (an "rare action"), its numbers apparently went against the chancellor's words. Even as leaks from Westminster were about how bleak the budget would have to be, the OBR's own forecasts were getting better.

Take the government's so-called "unbreakable" rule, that by 2030 daily spending on hospitals, schools, and other services must be wholly paid for by taxes: in late October, the OBR calculated it would just about be met, albeit only by a tiny margin.

Several days later, Reeves held a press conference so extraordinary that it caused morning television to break from its usual fare. Several weeks prior to the actual budget, the nation was warned: taxes were going up, with the primary cause cited as pessimistic numbers from the OBR, in particular its conclusion that the UK had become less efficient, putting more in but getting less out.

And lo! It came to pass. Despite what Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, that is essentially what happened at the budget, which was big and painful and bleak.

The Deceptive Justification

Where Reeves deceived us concerned her justification, since these OBR forecasts didn't compel her actions. She might have chosen other choices; she could have given other reasons, including on budget day itself. Before the recent election, Starmer pledged exactly such public influence. "The hope of democracy. The strength of the vote. The possibility for national renewal."

A year on, and it is powerlessness that jumps out in Reeves's pre-budget speech. The first Labour chancellor for a decade and a half portrays herself as a technocrat buffeted by forces beyond her control: "In the context of the long-term challenges on our productivity … any finance minister of any party would be standing here today, facing the decisions that I face."

She did make decisions, only not the kind Labour wishes to broadcast. From April 2029 British workers and businesses are set to be contributing an additional £26bn annually in tax – but the majority of this will not be spent on better hospitals, new libraries, or enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and others, it isn't being lavished upon "benefits street".

Where the Money Actually Ends Up

Rather than going on services, over 50% of this additional revenue will instead give Reeves cushion against her own fiscal rules. About 25% goes on covering the government's own policy reversals. Examining the OBR's calculations and giving maximum benefit of the doubt towards a Labour chancellor, only 17% of the taxes will go on actual new spending, such as abolishing the limit on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, as it was always a bit of political theatre by George Osborne. A Labour government could and should have binned it in its first 100 days.

The Real Target: Financial Institutions

The Tories, Reform along with all of Blue Pravda have been railing against how Reeves conforms to the stereotype of Labour chancellors, taxing hard workers to spend on shirkers. Party MPs have been cheering her budget for being a relief to their social concerns, protecting the most vulnerable. Both sides could be 180-degrees wrong: The Chancellor's budget was largely aimed at asset managers, hedge funds and participants within the financial markets.

The government could present a strong case for itself. The forecasts provided by the OBR were deemed insufficient for comfort, especially given that bond investors demand from the UK the highest interest rate among G7 developed nations – exceeding that of France, which lost a prime minister, and exceeding Japan which has far greater debt. Coupled with the policies to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say this budget enables the central bank to reduce interest rates.

You can see that those wearing red rosettes may choose not to frame it in such terms next time they're on the doorstep. As a consultant for Downing Street says, Reeves has "weaponised" the bond market as an instrument of discipline against her own party and the voters. It's why the chancellor cannot resign, no matter what pledges are broken. It is also the reason Labour MPs will have to knuckle down and support measures to take billions off social security, as Starmer indicated recently.

A Lack of Political Vision , a Broken Promise

What is absent from this is the notion of strategic governance, of harnessing the finance ministry and the central bank to forge a new accommodation with markets. Missing too is any intuitive knowledge of voters,