🔗 Share this article

This allegation carries significant weight: suggesting Rachel Reeves has misled UK citizens, spooking them to accept billions in extra taxes that could be used for higher welfare payments. While exaggerated, this is not typical political bickering; on this occasion, the stakes are higher. A week ago, critics of Reeves and Keir Starmer were labeling their budget "uncoordinated". Now, it's branded as lies, and Kemi Badenoch demanding Reeves to step down.

Such a serious charge demands straightforward answers, so let me provide my assessment. Did the chancellor tell lies? On current evidence, apparently not. There were no major untruths. However, despite Starmer's yesterday's remarks, it doesn't follow that there is no issue here and we can all move along. Reeves did mislead the public about the considerations informing her choices. Was this all to channel cash to "welfare recipients", like the Tories claim? Certainly not, as the numbers prove it.

A Reputation Takes Another Hit, But Facts Must Prevail

The Chancellor has sustained another hit to her reputation, but, should facts still have anything to do with politics, Badenoch ought to stand down her lynch mob. Perhaps the stepping down yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its own documents will quench SW1's appetite for scandal.

But the true narrative is far stranger than media reports indicate, extending broader and deeper beyond the political futures of Starmer and his class of '24. At its heart, this is a story concerning how much say you and I get in the running of the nation. And it should worry you.

Firstly, to Brass Tacks

When the OBR published recently some of the forecasts it shared with Reeves while she wrote the red book, the shock was immediate. Not merely has the OBR not done such a thing before (described as an "exceptional move"), its numbers apparently went against Reeves's statements. While leaks from Westminster suggested how bleak the budget was going to be, the watchdog's predictions were getting better.

Take the Treasury's so-called "iron-clad" rule, stating by 2030 daily spending on hospitals, schools, and the rest must be wholly paid for by taxes: in late October, the watchdog reckoned it would barely be met, albeit only by a tiny margin.

A few days later, Reeves gave a press conference so extraordinary that it caused breakfast TV to interrupt its usual fare. Several weeks before the actual budget, the nation was put on alert: taxes were going up, and the primary cause cited as pessimistic numbers from the OBR, specifically its conclusion that the UK had become less efficient, 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 happened during the budget, that proved to be significant, harsh, and grim.

The Deceptive Alibi

Where Reeves deceived us was her alibi, since these OBR forecasts did not force her hand. She could have chosen different options; she might have given alternative explanations, including on budget day itself. Before the recent election, Starmer pledged exactly such public influence. "The hope of democracy. The strength of the vote. The potential for national renewal."

One year later, yet it's a lack of agency that is evident from Reeves's breakfast speech. Our first Labour chancellor in 15 years casts herself to be an apolitical figure buffeted by forces outside her influence: "In the context of the long-term challenges on our productivity … any chancellor of any political stripe would be in this position today, confronting the decisions that I face."

She certainly make a choice, only not the kind the Labour party cares to publicize. Starting April 2029 British workers as well as businesses are set to be paying an additional £26bn a year in taxes – but the majority of this will not be funding better hospitals, public services, or enhanced wellbeing. Whatever bilge is spouted by Nigel Farage, Badenoch and others, it isn't getting splashed on "benefits street".

Where the Cash Actually Ends Up

Instead of going on services, over 50% of this additional revenue will instead provide Reeves cushion against her self-imposed fiscal rules. Approximately 25% goes on paying for the government's own policy reversals. Examining the watchdog's figures and being as generous as possible towards a Labour chancellor, a mere 17% of the tax take will go on actual new spending, such as abolishing the limit on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, as it had long been an act of political theatre from George Osborne. A Labour government should have have binned it immediately upon taking office.

The True Audience: The Bond Markets

The Tories, Reform and the entire Blue Pravda have spent days railing against the idea that Reeves fits the caricature of left-wing finance ministers, soaking hard workers to fund shirkers. Labour backbenchers are cheering her budget as balm to their troubled consciences, safeguarding the disadvantaged. Both sides could be completely mistaken: Reeves's budget was primarily targeted towards investment funds, speculative capital and the others in the bond markets.

The government could present a compelling argument for itself. The forecasts provided by the OBR were deemed insufficient for comfort, particularly given that bond investors demand from the UK the greatest borrowing cost of all G7 developed nations – higher than France, which lost its leader, and exceeding Japan which has way more debt. Coupled with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves can say this budget enables the Bank of England to reduce its key lending rate.

You can see that those folk with red rosettes may choose not to couch it in such terms next time they visit the doorstep. According to a consultant to Downing Street puts it, Reeves has effectively "weaponised" financial markets to act as a tool of discipline against her own party and the electorate. It's the reason Reeves can't resign, no matter what pledges are broken. 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.

Missing Political Vision , a Broken Promise

What's missing from this is any sense of statecraft, of mobilising the finance ministry and the Bank to reach a new accommodation with markets. Missing too is innate understanding of voters,