🔗 Share this article

The allegation carries significant weight: suggesting Rachel Reeves may have lied to UK citizens, spooking them to accept billions in extra taxes which would be used for increased benefits. While hyperbolic, this isn't usual Westminster sparring; on this occasion, the stakes could be damaging. Just last week, critics of Reeves alongside Keir Starmer had been calling their budget "a mess". Now, it is branded as lies, with Kemi Badenoch demanding the chancellor to quit.

Such a grave accusation requires straightforward answers, so let me provide my assessment. Has the chancellor been dishonest? Based on current information, no. There were no blatant falsehoods. However, notwithstanding Starmer's recent remarks, it doesn't follow that there's nothing to see and we can all move along. Reeves did misinform the public about the considerations informing her decisions. Was it to funnel cash to "benefits street", like the Tories claim? Certainly not, and the figures demonstrate this.

A Reputation Sustains A Further Hit, But Facts Should Win Out

Reeves has sustained a further hit to her standing, but, should facts continue to have anything to do with politics, Badenoch should stand down 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 appetite for scandal.

Yet the true narrative is much more unusual compared to the headlines suggest, extending wider and further beyond the political futures of Starmer and the class of '24. At its heart, this is an account about what degree of influence the public have in the running of the nation. This should concern everyone.

First, to Brass Tacks

When the OBR released last Friday a portion of the forecasts it provided to Reeves while she prepared the red book, the surprise was immediate. Not merely has the OBR never done such a thing before (described as an "unusual step"), its figures apparently went against Reeves's statements. While leaks from Westminster were about the grim nature of the budget would have to be, the watchdog's forecasts were improving.

Consider the Treasury's most "iron-clad" fiscal rule, that by 2030 day-to-day spending on hospitals, schools, and the rest would be wholly paid for by taxes: in late October, the watchdog calculated it would barely be met, albeit by a minuscule margin.

A few days later, Reeves held a media briefing so unprecedented that it caused morning television to interrupt its usual fare. Several weeks prior to the actual budget, the country was warned: taxes were going up, with the main reason 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 happened. Notwithstanding what Telegraph editorials combined with Tory media appearances suggested over the weekend, this is essentially what transpired during the budget, which was significant, harsh, and grim.

The Deceptive Justification

The way in which Reeves deceived us concerned her alibi, since those OBR forecasts didn't force her hand. She might have chosen different options; she might have provided alternative explanations, even on budget day itself. Before the recent election, Starmer promised exactly such people power. "The hope of democracy. The power of the vote. The possibility for national renewal."

One year later, and it is powerlessness that jumps out in Reeves's breakfast speech. Our first Labour chancellor in 15 years casts herself to be an apolitical figure buffeted by factors outside her influence: "In the context of the long-term challenges on our productivity … any chancellor of any party would be in this position today, facing the choices that I face."

She did make decisions, just not one the Labour party cares to publicize. From April 2029 UK workers as well as businesses are set to be contributing an additional £26bn annually in taxes – and the majority of this will not be funding improved healthcare, public services, or enhanced wellbeing. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "welfare claimants".

Where the Money Really Goes

Instead of being spent, more than 50% of this additional revenue will instead provide Reeves cushion for her self-imposed budgetary constraints. Approximately 25% is allocated to covering the administration's U-turns. Examining the watchdog's figures and being as generous as possible towards a Labour chancellor, only 17% of the taxes will go on actual new spending, for example scrapping the limit on child benefit. Its abolition "will cost" the Treasury only £2.5bn, because it was always an act of theatrical cruelty by George Osborne. A Labour government could and should abolished it in its first 100 days.

The Real Target: Financial Institutions

The Tories, Reform along with the entire Blue Pravda have spent days barking about how Reeves conforms to the stereotype of Labour chancellors, taxing strivers to spend on the workshy. Labour backbenchers are cheering her budget as balm for their troubled consciences, safeguarding the most vulnerable. Each group could be completely mistaken: The Chancellor's budget was primarily aimed at investment funds, hedge funds and the others in the financial markets.

Downing Street can make a strong case in its defence. The forecasts provided by the OBR were deemed insufficient for comfort, particularly considering bond investors demand from the UK the highest interest rate among G7 rich countries – exceeding that of France, that recently lost its leader, higher than Japan which has far greater debt. Coupled with the measures to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan enables the central bank to cut interest rates.

It's understandable that those folk with Labour badges may choose not to frame it this way next time they visit #Labourdoorstep. According to a consultant to Downing Street puts it, Reeves has "weaponised" the bond market as a tool of control over Labour MPs and the voters. It's why the chancellor cannot resign, regardless of which promises are broken. It's the reason Labour MPs will have to knuckle down and vote that cut billions from social security, as Starmer indicated yesterday.

Missing Statecraft , an Unfulfilled Pledge

What is absent here is any sense of strategic governance, of harnessing the finance ministry and the central bank to forge a fresh understanding with markets. Also absent is any intuitive knowledge of voters,