🔗 Share this article

This accusation is a serious one: suggesting Rachel Reeves may have lied to the British public, scaring them into accepting massive additional taxes which could be used for higher welfare payments. While hyperbolic, this isn't usual Westminster sparring; on this occasion, the stakes are higher. A week ago, detractors aimed at Reeves alongside Keir Starmer had been labeling their budget "disorderly". Now, it is denounced as lies, with Kemi Badenoch demanding the chancellor to quit.

This grave charge demands clear responses, so here is my view. Did the chancellor lied? Based on current evidence, no. There were no major untruths. However, notwithstanding Starmer's yesterday's comments, it doesn't follow that there's nothing to see and we should move on. Reeves did mislead the public about the factors shaping her decisions. Was it to channel cash to "welfare recipients", like the Tories assert? Certainly not, and the numbers prove this.

A Reputation Takes A Further Blow, Yet Truth Must Prevail

The Chancellor has sustained another blow to her standing, however, if 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 internal documents will quench Westminster's thirst for blood.

Yet the true narrative is far stranger compared to media reports suggest, extending wider and further than the careers of Starmer and the class of '24. Fundamentally, this is an account about how much say you and I get over the governance of the nation. And it concern you.

Firstly, on to Brass Tacks

When the OBR published recently some of the projections it shared with Reeves while she wrote the red book, the surprise was instant. Not only had the OBR not done such a thing before (an "rare action"), its numbers apparently went against the chancellor's words. While rumors from Westminster were about the grim nature of the budget was going to be, the OBR's own forecasts were improving.

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

Several days later, Reeves gave a media briefing so unprecedented it forced morning television to interrupt its regular schedule. Weeks before the actual budget, the nation was put on alert: taxes would rise, with the main reason being pessimistic numbers from the OBR, specifically its conclusion that the UK was less productive, putting more in but getting less out.

And lo! It happened. Notwithstanding the implications from Telegraph editorials and Tory media appearances implied over the weekend, that is essentially what happened during the budget, that proved to be big and painful and bleak.

The Misleading Justification

Where Reeves deceived us was her alibi, since those OBR forecasts didn't compel her actions. She might have chosen other choices; she might have given other reasons, even during the statement. Before last year's election, Starmer pledged exactly such people power. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, and it's a lack of agency that jumps out from Reeves's pre-budget speech. The first Labour chancellor for a decade and a half casts herself to be a technocrat buffeted by factors beyond her control: "Given the circumstances of the persistent challenges with our productivity … any finance minister of any party would be standing here today, confronting the decisions that I face."

She certainly make decisions, only not the kind the Labour party wishes to broadcast. From April 2029 British workers as well as businesses will be contributing another £26bn annually in taxes – but most of that will not be funding improved healthcare, public services, nor enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and others, it is not being lavished upon "welfare claimants".

Where the Cash Actually Ends Up

Rather than going on services, more than 50% of this extra cash will instead give Reeves cushion against her self-imposed budgetary constraints. About 25% is allocated to paying for 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 fund genuinely additional spending, for example abolishing the two-child cap on child benefit. Removing it "will cost" the Treasury only £2.5bn, as it had long been an act of political theatre 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 right-wing media have spent days barking about how Reeves conforms to the stereotype of Labour chancellors, soaking hard workers to fund the workshy. Party MPs are applauding her budget as balm for their social concerns, protecting the disadvantaged. Each group are completely mistaken: The Chancellor's budget was largely targeted towards asset managers, speculative capital and participants within the financial markets.

Downing Street could present a compelling argument for itself. The forecasts provided by the OBR were insufficient to feel secure, particularly given that bond investors demand from the UK the highest interest rate among G7 rich countries – higher than France, that recently lost its leader, and exceeding Japan which has far greater debt. Combined with the policies to cap fuel bills, prescription charges and train fares, Starmer and Reeves argue this budget allows the Bank of England to reduce its key lending rate.

It's understandable why those folk with Labour badges might not frame it this way next time they visit #Labourdoorstep. As one independent adviser to Downing Street puts it, Reeves has "weaponised" the bond market to act as an instrument of control against Labour MPs and the voters. It's why Reeves cannot resign, no matter what pledges she breaks. It is also why Labour MPs must knuckle down and support measures that cut billions from social security, just as Starmer promised recently.

Missing Statecraft and an Unfulfilled Promise

What is absent from this is any sense of statecraft, of mobilising the finance ministry and the central bank to reach a new accommodation with markets. Also absent is any intuitive knowledge of voters,