The charge carries significant weight: suggesting Rachel Reeves may have deceived Britons, frightening them into accepting billions in additional taxes that could be spent on higher welfare payments. However exaggerated, this is not usual political sparring; on this occasion, the stakes are higher. A week ago, detractors aimed at Reeves alongside Keir Starmer had been calling their budget "uncoordinated". Now, it is denounced as falsehoods, and Kemi Badenoch calling for the chancellor to quit.
This serious charge requires clear answers, therefore let me provide my view. Has the chancellor tell lies? Based on current information, no. She told no blatant falsehoods. But, despite Starmer's yesterday's comments, it doesn't follow that there's no issue here and we should move on. Reeves did mislead the public about the factors shaping her choices. Was this all to funnel cash to "benefits street", as the Tories assert? Certainly not, as the figures demonstrate it.
A Standing Takes Another Hit, Yet Truth Must Prevail
The Chancellor has sustained a further hit to her reputation, but, if facts still matter in politics, Badenoch should stand down her attack dogs. Maybe the stepping down yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the unauthorized release of its own documents will quench SW1's thirst for blood.
Yet the true narrative is far stranger compared to media reports suggest, extending broader and deeper beyond the political futures of Starmer and his class of '24. At its heart, herein lies a story concerning what degree of influence you and I get in the running of the nation. This should should worry everyone.
First, to the Core Details
When the OBR published last Friday a portion of the forecasts it provided to Reeves while she prepared the red book, the shock was instant. Not merely has the OBR never done such a thing before (an "unusual step"), its figures seemingly went against the chancellor's words. Even as rumors from Westminster were about the grim nature of the budget was going to be, the watchdog's forecasts were improving.
Consider the government's so-called "unbreakable" rule, stating by 2030 day-to-day spending on hospitals, schools, and other services must be wholly funded by taxes: at the end of October, the OBR calculated this would barely be met, albeit by a minuscule margin.
Several days later, Reeves gave a press conference so extraordinary that it caused morning television to interrupt its usual fare. Several weeks before the real budget, the nation was put on alert: taxes would rise, with the main reason cited as pessimistic numbers provided by the OBR, specifically its conclusion suggesting the UK had become less productive, investing more but getting less out.
And lo! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory media appearances suggested recently, this is essentially what happened at the budget, that proved to be big and painful and bleak.
The Deceptive Justification
The way in which Reeves misled us concerned her alibi, because these OBR forecasts didn't force her hand. She might have chosen different options; she might have provided alternative explanations, including during the statement. Prior to the recent election, Starmer pledged exactly such public influence. "The promise of democracy. The strength of the vote. The potential for national renewal."
One year later, yet it's powerlessness that is evident in Reeves's breakfast speech. The first Labour chancellor for a decade and a half portrays herself to be an apolitical figure at the mercy of factors beyond her control: "Given the circumstances of the long-term challenges on our productivity … any chancellor of any political stripe would be in this position today, facing the choices that I face."
She did make decisions, just not the kind the Labour party cares to publicize. Starting April 2029 UK workers as well as businesses will be paying another £26bn a year in taxes – but most of that will not be spent on improved healthcare, new libraries, or enhanced wellbeing. Regardless of what bilge comes from Nigel Farage, Badenoch and their allies, it is not being lavished upon "welfare claimants".
Where the Money Really Goes
Rather than being spent, over 50% of this additional revenue will instead give Reeves a buffer for her self-imposed fiscal rules. About 25% is allocated to paying for the government's own U-turns. Reviewing 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 scrapping the limit on child benefit. Its abolition "will cost" the Treasury only £2.5bn, because it had long been a bit of political theatre by George Osborne. A Labour government could and should abolished it in its first 100 days.
The Real Target: The Bond Markets
The Tories, Reform and all of right-wing media have spent days railing against how Reeves fits the caricature of Labour chancellors, soaking strivers to spend on shirkers. Party MPs have been cheering her budget as balm for their social concerns, protecting the disadvantaged. Both sides are 180-degrees wrong: Reeves's budget was primarily targeted towards investment funds, speculative capital and the others in the financial markets.
Downing Street could present a compelling argument for itself. The margins provided by the OBR were insufficient for comfort, especially given that lenders charge the UK the greatest borrowing cost among G7 rich countries – higher than France, which lost its leader, and exceeding Japan which has way more debt. Combined with the policies to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves can say their plan allows the Bank of England to cut interest rates.
It's understandable that those folk with Labour badges might not frame it this way when they visit the doorstep. According to one independent adviser for Downing Street puts it, Reeves has "utilised" the bond market as an instrument of control over Labour MPs and the electorate. It's the reason Reeves cannot resign, no matter what promises she breaks. It's why Labour MPs will have to knuckle down and support measures to take billions off social security, as Starmer promised yesterday.
A Lack of Political Vision and a Broken Pledge
What is absent from this is the notion of strategic governance, of harnessing the Treasury and the central bank to reach a new accommodation with investors. Missing too is any innate understanding of voters,
