🔗 Share this article

The charge represents a grave matter: that Rachel Reeves has deceived UK citizens, scaring them into accepting massive additional taxes which would be funneled into higher welfare payments. While hyperbolic, this isn't typical Westminster bickering; this time, the stakes could be damaging. A week ago, detractors of Reeves and Keir Starmer were labeling their budget "disorderly". Today, it is denounced as falsehoods, and Kemi Badenoch demanding the chancellor to quit.

Such a grave accusation demands clear responses, therefore let me provide my view. Did the chancellor tell lies? Based on the available evidence, no. She told no blatant falsehoods. However, despite Starmer's recent comments, it doesn't follow that there is nothing to see and we should move on. The Chancellor did mislead the public about the factors shaping her decisions. Was it to channel cash towards "welfare recipients", as the Tories claim? Certainly not, as the figures prove it.

A Reputation Takes Another Hit, But Facts Should Prevail

Reeves has sustained a further hit to her standing, however, should facts still have anything to do with politics, Badenoch ought to call off her attack dogs. Maybe the resignation yesterday of OBR head, Richard Hughes, due to the leak of its own documents will satisfy Westminster's thirst for blood.

Yet the true narrative is much more unusual compared to the headlines indicate, and stretches wider and further beyond the political futures of Starmer and his 2024 intake. At its heart, this is a story about how much say the public get in the governance of the nation. This should should worry you.

Firstly, to Brass Tacks

After the OBR published last Friday a portion of the forecasts it provided to Reeves as she wrote the red book, the shock was immediate. Not only had the OBR not acted this way before (described as an "rare action"), its figures seemingly went against the chancellor's words. Even as rumors from Westminster suggested how bleak the budget was going to be, the OBR's own forecasts were getting better.

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

Several days later, Reeves gave a media briefing so unprecedented that it caused morning television to interrupt its usual fare. Several weeks before the real budget, the country was warned: taxes would rise, with the primary cause being gloomy numbers provided by the OBR, in particular its conclusion suggesting the UK was less productive, putting more in but yielding less.

And lo! It came to pass. Notwithstanding what Telegraph editorials and Tory broadcast rounds suggested recently, that is basically what transpired at the budget, that proved to be significant, harsh, and grim.

The Deceptive Alibi

The way in which Reeves deceived us concerned her justification, since those OBR forecasts didn't force her hand. She could have chosen other choices; she might have provided other reasons, even during the statement. Prior to the recent election, Starmer promised exactly such public influence. "The promise of democracy. The power of the vote. The possibility for national renewal."

One year later, and it's a lack of agency that is evident in Reeves's pre-budget speech. The first Labour chancellor for a decade and a half casts herself as a technocrat at the mercy of factors outside her influence: "Given the circumstances of the long-term challenges with our productivity … any finance minister of any party would be in this position today, confronting the decisions that I face."

She did make decisions, only not one the Labour party wishes to broadcast. From April 2029 British workers as well as businesses will be contributing another £26bn annually in tax – and the majority of this will not be spent on improved healthcare, new libraries, or enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and others, it isn't being lavished upon "welfare claimants".

Where the Money Really Goes

Instead of being spent, more than 50% of the additional revenue will in fact give Reeves a buffer for her self-imposed fiscal rules. Approximately 25% is allocated to 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 genuinely additional spending, for example scrapping the two-child cap on child benefit. Its abolition "costs" the Treasury only £2.5bn, because it was always an act of theatrical cruelty from George Osborne. A Labour government should have abolished it in its first 100 days.

The True Audience: Financial Institutions

Conservatives, Reform and all of right-wing media have been barking about how Reeves conforms to the stereotype of left-wing finance ministers, taxing hard workers to fund the workshy. Party MPs have been applauding her budget for being a relief to their troubled consciences, safeguarding the most vulnerable. Both sides could be completely mistaken: The Chancellor's budget was largely targeted towards investment funds, hedge funds and the others in the financial markets.

Downing Street could present a compelling argument for itself. The forecasts provided by the OBR were deemed insufficient for comfort, especially given that bond investors charge the UK the greatest borrowing cost among G7 developed nations – higher than France, that recently lost a prime minister, higher than Japan that carries far greater debt. Combined with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget allows the Bank of England to cut its key lending rate.

It's understandable that those wearing Labour badges may choose not to frame it this way next time they're on #Labourdoorstep. As one independent adviser for Downing Street says, Reeves has effectively "utilised" financial markets as a tool of control over her own party and the electorate. It's the reason the chancellor cannot resign, regardless of which pledges are broken. It is also why Labour MPs must knuckle down and support measures to take billions off social security, as Starmer promised yesterday.

Missing Political Vision and a Broken Pledge

What is absent here is the notion of statecraft, of mobilising the Treasury and the central bank to forge a fresh understanding with investors. Also absent is any intuitive knowledge of voters,