🔗 Share this article

This charge is a serious one: suggesting Rachel Reeves has misled Britons, frightening them into accepting massive extra taxes that could be spent on higher welfare payments. While hyperbolic, this isn't typical political sparring; this time, the stakes could be damaging. A week ago, critics of Reeves alongside Keir Starmer were calling their budget "disorderly". Now, it's branded as lies, with Kemi Badenoch calling for the chancellor to quit.

Such a grave charge requires straightforward answers, therefore here is my view. Has the chancellor tell lies? On the available evidence, apparently not. She told no whoppers. However, notwithstanding Starmer's recent remarks, it doesn't follow that there's nothing to see and we can all move along. The Chancellor did misinform the public about the factors informing her decisions. Was it to funnel cash to "welfare recipients", like the Tories assert? Certainly not, and the numbers demonstrate it.

A Standing Sustains Another Hit, But Facts Should Win Out

The Chancellor has taken another hit to her standing, however, should facts still matter in politics, Badenoch should stand down her lynch mob. Maybe the stepping down yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its internal documents will satisfy SW1's appetite for scandal.

But the true narrative is far stranger compared to the headlines indicate, extending broader and deeper than the careers of Starmer and his class of '24. At its heart, this is an account concerning what degree of influence you and I get over the governance of our own country. This should should worry you.

Firstly, to Brass Tacks

When the OBR released recently some of the projections it shared with Reeves while she prepared the red book, the surprise was immediate. Not only has the OBR never acted this way before (an "exceptional move"), its figures apparently contradicted Reeves's statements. While rumors from Westminster were about the grim nature of the budget would have to be, the watchdog's forecasts were improving.

Take the Treasury's so-called "iron-clad" fiscal rule, stating 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 barely be met, albeit only by a tiny margin.

Several days later, Reeves gave a press conference so unprecedented that it caused breakfast TV to interrupt its usual fare. Several weeks before the actual budget, the country was put on alert: taxes were going up, and the main reason being gloomy numbers provided by the OBR, in particular its conclusion that the UK had become less productive, investing more but getting less out.

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

The Misleading Alibi

Where Reeves misled us concerned her justification, since these OBR forecasts didn't force her hand. She might have made other choices; she could have given alternative explanations, including on budget day itself. Prior to last year's election, Starmer pledged exactly such public influence. "The hope of democracy. The strength of the vote. The potential for national renewal."

A year on, and it's powerlessness that jumps out from Reeves's pre-budget speech. The first Labour chancellor for a decade and a half portrays herself to be an apolitical figure at the mercy of forces outside her influence: "Given the circumstances of the persistent challenges on our productivity … any chancellor of any political stripe would be standing here today, confronting the decisions that I face."

She did make decisions, just not one the Labour party cares to broadcast. Starting April 2029 UK workers and businesses will be contributing an additional £26bn a year in taxes – and most of that will not go towards funding better hospitals, new libraries, nor happier lives. Whatever nonsense is spouted by Nigel Farage, Badenoch and others, it is not being lavished upon "benefits street".

Where the Cash Really Goes

Rather than going on services, more than 50% of this additional revenue will instead give Reeves cushion for her own budgetary constraints. About 25% is allocated to paying for the government's own policy reversals. Reviewing the OBR's calculations and being as generous as possible towards Reeves, only 17% of the tax take will go on actual new spending, for example abolishing the two-child cap on child benefit. Removing it "costs" the Treasury a mere £2.5bn, because it was always an act of political theatre by George Osborne. This administration should have have binned it in its first 100 days.

The True Audience: The Bond Markets

The Tories, Reform and all of Blue Pravda have spent days barking about the idea that Reeves conforms to the caricature of left-wing finance ministers, taxing strivers to spend on shirkers. Labour backbenchers have been cheering her budget for being balm for their social concerns, protecting the disadvantaged. Each group could be completely mistaken: Reeves's budget was primarily targeted towards asset managers, speculative capital and participants within the financial markets.

Downing Street could present a strong case for itself. The forecasts provided by the OBR were deemed too small for comfort, particularly considering lenders demand from the UK the highest interest rate of all G7 developed nations – exceeding that of France, that recently lost a prime minister, and exceeding Japan which has way more debt. Combined with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue their plan allows the central bank to reduce its key lending rate.

You can see why those folk with Labour badges might not couch it this way when they visit the doorstep. According to a consultant for Downing Street puts it, Reeves has effectively "utilised" financial markets to act as an instrument of control over her own party and the electorate. It's why Reeves can't resign, regardless of which promises she breaks. It is also the reason Labour MPs must fall into line and vote that cut billions from social security, just as Starmer promised yesterday.

A Lack of Political Vision , a Broken Promise

What is absent here is the notion of strategic governance, of harnessing the finance ministry and the Bank to reach a new accommodation with markets. Missing too is intuitive knowledge of voters,