🔗 Share this article

The accusation represents a grave matter: that Rachel Reeves may have misled the British public, scaring them into accepting billions in additional taxes that would be used for higher welfare payments. While exaggerated, this isn't usual Westminster sparring; on this occasion, the stakes are higher. A week ago, critics aimed at Reeves alongside Keir Starmer had been labeling their budget "a mess". Today, it is denounced as falsehoods, with Kemi Badenoch demanding the chancellor's resignation.

This grave charge demands clear responses, so here is my assessment. Did the chancellor been dishonest? Based on the available evidence, apparently not. There were no major untruths. But, despite Starmer's recent comments, that doesn't mean there is nothing to see and we can all move along. The Chancellor did mislead the public about the considerations informing her decisions. Was this all to funnel cash towards "benefits street", as the Tories claim? No, as the numbers prove this.

A Standing Takes Another Hit, But Facts Should Win Out

Reeves has taken another hit to her standing, but, should facts continue to matter in politics, Badenoch ought to call off her lynch mob. Perhaps the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its internal documents will satisfy SW1's thirst for blood.

Yet the true narrative is much more unusual than the headlines indicate, and stretches broader and deeper than the political futures of Starmer and his class of '24. At its heart, this is an account about what degree of influence the public have in the running of the nation. And it should worry you.

First, on to Brass Tacks

After the OBR published recently some of the forecasts it provided to Reeves while she wrote the budget, the surprise was immediate. Not merely had the OBR never done such a thing before (described as an "exceptional move"), its figures apparently went against Reeves's statements. Even as leaks from Westminster were about how bleak the budget was going to be, the watchdog's predictions were getting better.

Consider the Treasury's most "iron-clad" fiscal rule, stating by 2030 day-to-day spending for hospitals, schools, and other services must be completely paid for by taxes: at the end of October, the watchdog reckoned this would just about be met, albeit only by a tiny margin.

Several days later, Reeves held a press conference so unprecedented it forced breakfast TV to interrupt its usual fare. Weeks prior to the actual budget, the nation was put on alert: taxes would rise, with the main reason cited as gloomy numbers from the OBR, specifically its finding suggesting the UK had become less productive, putting more in but yielding less.

And so! It happened. Despite what Telegraph editorials combined with Tory media appearances suggested over the weekend, that is essentially what happened at the budget, which was big and painful and bleak.

The Deceptive Justification

The way in which Reeves deceived us concerned her alibi, since those OBR forecasts didn't compel her actions. She might have chosen different options; she might have given other reasons, even during the statement. Prior to the recent election, Starmer promised exactly such public influence. "The hope of democracy. The power of the vote. The possibility for national renewal."

One year later, and it's a lack of agency that is evident in Reeves's pre-budget speech. Our first Labour chancellor in 15 years portrays herself as a technocrat at the mercy of factors outside her influence: "Given the circumstances of the persistent challenges on our productivity … any chancellor of any political stripe would be standing here today, facing the choices that I face."

She certainly make a choice, just not one Labour cares to publicize. From April 2029 British workers as well as businesses are set to be contributing an additional £26bn a year in taxes – and the majority of this will not go towards funding better hospitals, public services, or happier lives. Regardless of what bilge comes from Nigel Farage, Badenoch and their allies, it is not being lavished upon "benefits street".

Where the Cash Really Goes

Rather than being spent, more than 50% of the extra cash will instead provide Reeves a buffer against her own budgetary constraints. About 25% is allocated to paying for the administration's policy reversals. Examining the watchdog's figures and giving maximum benefit of the doubt towards a Labour chancellor, only 17% of the taxes will fund actual new spending, such as scrapping the limit on child benefit. Its abolition "will cost" the Treasury only £2.5bn, as it was always a bit of theatrical cruelty from George Osborne. This administration could and should abolished it immediately upon taking office.

The Real Target: The Bond Markets

The Tories, Reform and all of right-wing media have been barking about how Reeves fits the caricature of left-wing finance ministers, taxing strivers to spend on shirkers. Party MPs have been cheering her budget as balm to their social concerns, safeguarding the disadvantaged. Each group are completely mistaken: The Chancellor's budget was primarily targeted towards asset managers, hedge funds and the others in the financial markets.

Downing Street can make a compelling argument for itself. The margins from the OBR were deemed insufficient to feel secure, particularly considering bond investors charge the UK the highest interest rate among G7 developed nations – exceeding that of France, which lost its leader, and exceeding Japan which has far greater debt. Combined with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan enables the Bank of England to cut interest rates.

It's understandable why those wearing Labour badges might not couch it in such terms next time they're on #Labourdoorstep. As a consultant for Downing Street puts it, Reeves has "weaponised" the bond market as an instrument of control against Labour MPs and the electorate. This is the reason the chancellor can't resign, regardless of which pledges she breaks. It's why Labour MPs must knuckle down and support measures that cut billions from social security, as Starmer promised yesterday.

A Lack of Political Vision , a Broken Promise

What's missing from this is any sense of strategic governance, of mobilising the Treasury and the central bank to reach a fresh understanding with markets. Missing too is intuitive knowledge of voters,