🔗 Share this article

The accusation carries significant weight: that Rachel Reeves may have deceived Britons, frightening them into accepting billions in extra taxes which would be spent on higher welfare payments. While exaggerated, this isn't usual political sparring; on this occasion, the consequences could be damaging. A week ago, critics of Reeves alongside Keir Starmer had been labeling their budget "uncoordinated". Now, it is denounced as falsehoods, and Kemi Badenoch demanding the chancellor's resignation.

Such a grave charge requires straightforward answers, therefore here is my assessment. Did the chancellor tell lies? On the available evidence, apparently not. She told no major untruths. However, despite Starmer's yesterday's comments, that doesn't mean there is nothing to see and we can all move along. Reeves did misinform the public about the factors shaping her decisions. Was it to funnel cash to "benefits street", as the Tories claim? No, and the figures prove this.

A Standing Sustains A Further Blow, But Facts Should Win Out

Reeves has taken another blow to her standing, however, should facts still matter in politics, Badenoch ought to call off her lynch mob. Perhaps the stepping down recently of OBR head, Richard Hughes, due to the leak of its own documents will satisfy SW1's thirst for blood.

But the real story is much more unusual compared to media reports indicate, and stretches broader and deeper than the careers of Starmer and his 2024 intake. At its heart, herein lies an account about how much say you and I get over the running of the nation. And it should worry everyone.

Firstly, on to Brass Tacks

When the OBR published recently some of the projections it shared with Reeves as she wrote the red book, the surprise was instant. Not merely has the OBR never acted this way before (an "exceptional move"), its numbers apparently went against the chancellor's words. While leaks from Westminster suggested how bleak the budget was going to be, the watchdog's forecasts were improving.

Take the government's most "unbreakable" fiscal rule, stating by 2030 day-to-day spending on hospitals, schools, and the rest would be completely paid for by taxes: at the end of October, the watchdog reckoned it would just about be met, albeit by a minuscule margin.

A few days later, Reeves gave a media briefing 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, with the main reason being gloomy numbers provided by the OBR, specifically its finding that the UK was less efficient, investing more but yielding less.

And so! It happened. Despite the implications from Telegraph editorials combined with Tory broadcast rounds suggested recently, that is basically what happened at the budget, that proved to be significant, harsh, and grim.

The Deceptive Alibi

Where Reeves deceived us was her alibi, since those OBR forecasts didn't compel her actions. She could have made different options; she could have given alternative explanations, including on budget day itself. Prior to last year's election, Starmer promised precisely this kind of public influence. "The promise of democracy. The strength of the vote. The potential for national renewal."

A year on, and it is powerlessness that is evident from Reeves's pre-budget speech. Our first Labour chancellor for a decade and a half portrays herself to be an apolitical figure buffeted by factors outside her influence: "In the context of the persistent challenges with our productivity … any chancellor of any party would be in this position today, facing the decisions that I face."

She did make decisions, just not the kind Labour wishes to broadcast. Starting April 2029 British workers as well as businesses are set to be paying an additional £26bn a year in tax – and the majority of this will not go towards funding improved healthcare, public services, or enhanced wellbeing. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it isn't getting splashed on "benefits street".

Where the Cash Actually Ends Up

Rather than being spent, more than 50% of this additional revenue will in fact give Reeves a buffer against her own fiscal rules. About 25% goes on covering the government's own policy reversals. Examining the watchdog's figures and being as generous as possible towards Reeves, only 17% of the taxes will go on actual new spending, for example abolishing the limit on child benefit. Its abolition "costs" the Treasury a mere £2.5bn, as it had long been a bit of political theatre from George Osborne. A Labour government should have have binned it in its first 100 days.

The Real Target: Financial Institutions

The Tories, Reform and the entire right-wing media have been barking about the idea that Reeves fits the stereotype of Labour chancellors, taxing strivers to fund shirkers. Party MPs are applauding her budget as a relief for their troubled consciences, protecting the disadvantaged. Both sides could be completely mistaken: The Chancellor's budget was primarily targeted towards asset managers, hedge funds and participants within the financial markets.

The government could present a strong case for itself. The margins from the OBR were deemed insufficient for comfort, particularly given that bond investors charge the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, which lost its leader, and exceeding Japan which has far greater debt. Combined with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves can say this budget enables the Bank of England to cut interest rates.

You can see why those wearing Labour badges may choose not to couch it in such terms when they're on the doorstep. According to a consultant to Downing Street says, Reeves has "utilised" financial markets as a tool of control against Labour MPs and the electorate. This is why Reeves can't resign, no matter what promises are broken. It's why Labour MPs must knuckle down and support measures that cut billions from social security, as Starmer indicated recently.

A Lack of Political Vision , a Broken Promise

What's missing from this is the notion of statecraft, of harnessing the Treasury and the central bank to forge a fresh understanding with investors. Missing too is any innate understanding of voters,