🔗 Share this article

This charge carries significant weight: that Rachel Reeves has lied to UK citizens, scaring them to accept billions in additional taxes which would be funneled into higher benefits. While hyperbolic, this isn't usual political bickering; on this occasion, the consequences could be damaging. Just last week, critics of Reeves and Keir Starmer were calling their budget "disorderly". Today, it is branded as lies, and Kemi Badenoch calling for Reeves to step down.

Such a grave accusation requires straightforward answers, so let me provide my view. Did the chancellor lied? Based on current evidence, apparently not. She told no major untruths. However, despite Starmer's recent remarks, it doesn't follow that there's nothing to see and we should move on. The Chancellor did misinform the public regarding the factors informing her choices. Was this all to funnel cash to "welfare recipients", as the Tories claim? No, as the numbers prove this.

A Reputation Sustains A Further Blow, But Facts Should Prevail

Reeves has taken another hit to her standing, however, if facts still matter in politics, Badenoch should stand down her attack dogs. Maybe the resignation yesterday of OBR head, Richard Hughes, due to the leak of its internal documents will quench Westminster's appetite for scandal.

But the real story is far stranger compared to the headlines suggest, and stretches wider and further than the careers of Starmer and his class of '24. At its heart, herein lies an account about what degree of influence the public get in the governance of our own country. This should concern everyone.

Firstly, to the Core Details

When the OBR published last Friday a portion of the forecasts it provided to Reeves while she wrote the budget, the shock was immediate. Not merely had the OBR never acted this way before (described as an "rare action"), its figures seemingly went against Reeves's statements. While leaks from Westminster suggested how bleak the budget was going to be, the OBR's own forecasts were getting better.

Consider the government's so-called "iron-clad" fiscal rule, stating by 2030 daily spending on hospitals, schools, and the rest must be completely funded by taxes: at the end of October, the OBR reckoned this would just about be met, albeit by a minuscule margin.

A few days later, Reeves held a press conference so extraordinary that it caused breakfast TV to interrupt its regular schedule. Weeks before the real budget, the country was put on alert: taxes would rise, and the primary cause cited as gloomy numbers provided by the OBR, specifically its finding that the UK was less productive, investing more but yielding less.

And so! 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 Misleading Alibi

The way in which Reeves deceived us concerned her justification, since these OBR forecasts didn't compel her actions. She could have chosen different options; she could have given other reasons, including during the statement. Prior to last year's election, Starmer pledged precisely this kind of people power. "The hope of democracy. The strength of the vote. The possibility for national renewal."

A year on, yet it is powerlessness that jumps out from Reeves's breakfast speech. Our first Labour chancellor for a decade and a half portrays herself to be an apolitical figure at the mercy of factors beyond her control: "In the context of the persistent challenges on our productivity … any chancellor of any political stripe would be in this position today, confronting the decisions that I face."

She did make a choice, just not one the Labour party cares to publicize. From April 2029 UK workers as well as businesses are set to be paying an additional £26bn a year in taxes – and the majority of this will not go towards spent on improved healthcare, public services, nor happier lives. Whatever bilge comes from Nigel Farage, Badenoch and others, it is not getting splashed on "welfare claimants".

Where the Cash Actually Ends Up

Instead of being spent, over 50% of this extra cash will instead give Reeves a buffer against her self-imposed budgetary constraints. Approximately 25% goes on paying for the government's own policy reversals. Reviewing the OBR's calculations and being as generous as possible towards a Labour chancellor, a mere 17% of the taxes will go on genuinely additional spending, such as scrapping the limit on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, as it was always an act of theatrical cruelty from George Osborne. A Labour government could and should have binned it immediately upon taking office.

The True Audience: Financial Institutions

The Tories, Reform and all of Blue Pravda have been railing against how Reeves conforms to the stereotype of left-wing finance ministers, soaking hard workers to spend on shirkers. Party MPs are cheering her budget as balm for their social concerns, safeguarding the disadvantaged. Each group could be completely mistaken: Reeves's budget was largely targeted towards asset managers, hedge funds and participants within the bond markets.

Downing Street can make a compelling argument for itself. The margins provided by the OBR were deemed insufficient for comfort, particularly given that lenders demand from the UK the highest interest rate of all G7 rich countries – higher than France, that recently lost a prime minister, and exceeding Japan that carries way more debt. Coupled with the measures to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves can say this budget enables the Bank of England to cut its key lending rate.

You can see that those folk with Labour badges may choose not to frame it in such terms when they visit the doorstep. According to one independent adviser to Downing Street puts it, Reeves has effectively "weaponised" financial markets to act as an instrument of discipline over her own party and the electorate. It's the reason the chancellor can't resign, no matter what pledges she breaks. It is also why Labour MPs must fall into line and vote to take billions off social security, just as Starmer promised recently.

Missing Statecraft , a Broken Pledge

What's missing here is any sense of strategic governance, of harnessing the finance ministry and the Bank to reach a new accommodation with investors. Also absent is intuitive knowledge of voters,