🔗 Share this article

This allegation is a serious one: that Rachel Reeves may have misled the British public, scaring them to accept billions in additional taxes which would be used for increased benefits. However exaggerated, this is not usual political sparring; this time, the consequences are higher. A week ago, detractors of Reeves and Keir Starmer had been labeling their budget "uncoordinated". Now, it's branded as falsehoods, with Kemi Badenoch demanding Reeves to step down.

This grave charge requires clear responses, so let me provide my assessment. Has the chancellor been dishonest? On the available information, apparently not. She told no blatant falsehoods. But, notwithstanding Starmer's yesterday's comments, that doesn't mean there's nothing to see and we should move on. The Chancellor did mislead the public regarding the factors informing her decisions. Was it to channel cash towards "welfare recipients", like the Tories assert? Certainly not, and the numbers demonstrate it.

A Reputation Sustains A Further Blow, But Facts Must Win Out

The Chancellor has taken another blow to her standing, however, should facts continue to have anything to do with politics, Badenoch ought to call off her attack dogs. Maybe the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its own documents will quench SW1's thirst for blood.

Yet the real story is far stranger compared to media reports indicate, and stretches broader and deeper beyond the political futures of Starmer and the class of '24. At its heart, herein lies an account concerning what degree of influence the public get in the running of our own country. This should should worry everyone.

Firstly, to Brass Tacks

After the OBR released last Friday a portion of the forecasts it shared with Reeves while she prepared the budget, the surprise was instant. Not only has the OBR not acted this way before (described as an "exceptional move"), its numbers seemingly contradicted the chancellor's words. Even as leaks from Westminster were about the grim nature of the budget would have to be, the OBR's own predictions were improving.

Take the government's so-called "unbreakable" rule, stating by 2030 day-to-day spending on hospitals, schools, and the rest must be wholly 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 extraordinary that it caused morning television to break from its usual fare. Weeks prior to the actual budget, the country was warned: taxes would rise, with the primary cause being pessimistic numbers from the OBR, in particular its finding that the UK was less productive, putting more in but yielding less.

And so! It came to pass. Despite what Telegraph editorials and Tory broadcast rounds suggested over the weekend, this is essentially what transpired during the budget, which was big and painful and bleak.

The Misleading Justification

The way in which Reeves deceived us was her justification, since these OBR forecasts didn't compel her actions. She could have chosen different options; she might have given other reasons, even on budget day itself. Before last year's election, Starmer promised exactly such people power. "The promise of democracy. The strength of the vote. The possibility for national renewal."

A year on, yet it's a lack of agency that is evident from Reeves's breakfast speech. Our first Labour chancellor for a decade and a half portrays herself as an apolitical figure buffeted by factors beyond her control: "Given the circumstances of the long-term challenges on our productivity … any finance minister of any political stripe would be in this position today, confronting the decisions that I face."

She did make decisions, only not one Labour cares to publicize. From April 2029 UK workers as well as businesses will be paying an additional £26bn annually in tax – but the majority of this will not be funding improved healthcare, new libraries, nor happier lives. Whatever nonsense comes from Nigel Farage, Badenoch and others, it isn't being lavished upon "welfare claimants".

Where the Money Actually Ends Up

Rather than going on services, over 50% of the extra cash will instead give Reeves a buffer for her self-imposed fiscal rules. About 25% goes on covering the government's own policy reversals. Reviewing 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 two-child cap on child benefit. Its abolition "costs" the Treasury a mere £2.5bn, because it was always a bit of political theatre by George Osborne. This administration could and should have binned it immediately upon taking office.

The True Audience: Financial Institutions

Conservatives, Reform along with all of Blue Pravda have spent days railing against how Reeves fits the stereotype of left-wing finance ministers, soaking hard workers to fund shirkers. Labour backbenchers have been cheering her budget for being balm to their troubled consciences, protecting the disadvantaged. Both sides are 180-degrees wrong: Reeves's budget was primarily aimed at investment funds, speculative capital and the others in the bond markets.

The government could present a strong case in its defence. The forecasts provided by the OBR were too small to feel secure, especially given that bond investors demand from the UK the highest interest rate of all G7 rich countries – exceeding that of France, which lost a prime minister, and exceeding Japan which has far greater debt. Coupled with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue their plan enables the central bank to reduce interest rates.

You can see why those wearing Labour badges may choose not to frame it in such terms when they visit the doorstep. As a consultant to Downing Street says, Reeves has effectively "utilised" financial markets as a tool of control over her own party and the electorate. This is the reason the chancellor can't resign, regardless of which promises she breaks. It is also the reason Labour MPs will have to fall into line and support measures that cut billions from social security, as Starmer promised recently.

A Lack of Statecraft , a Broken Promise

What is absent from this is any sense of strategic governance, of harnessing the Treasury and the Bank to forge a new accommodation with investors. Missing too is innate understanding of voters,