This allegation is a serious one: suggesting Rachel Reeves has deceived Britons, spooking them into accepting billions in extra taxes which could be used for increased benefits. While hyperbolic, this isn't typical Westminster sparring; on this occasion, the stakes are more serious. Just last week, critics of Reeves alongside Keir Starmer had been calling their budget "a shambles". Today, it is branded as falsehoods, with Kemi Badenoch calling for Reeves to step down.
This grave accusation demands straightforward responses, therefore let me provide my view. Has the chancellor tell lies? Based on the available information, apparently not. There were no blatant falsehoods. But, despite Starmer's recent comments, it doesn't follow that there is nothing to see and we can all move along. The Chancellor did misinform the public regarding the factors shaping her choices. Was this all to channel cash towards "welfare recipients", as the Tories claim? Certainly not, and the figures prove this.
A Standing Sustains Another Blow, Yet Truth Should Win Out
The Chancellor has taken another hit to her standing, but, if facts continue to have anything to do with politics, Badenoch ought to stand down her lynch mob. Maybe the stepping down yesterday of OBR head, Richard Hughes, due to the unauthorized release of its internal documents will quench Westminster's thirst for blood.
Yet the true narrative is much more unusual compared to media reports suggest, extending wider and further beyond the careers of Starmer and his 2024 intake. Fundamentally, herein lies a story concerning how much say the public have in the running of our own country. This should concern everyone.
Firstly, to Brass Tacks
When the OBR published last Friday a portion of the forecasts it provided to Reeves while she prepared the budget, the surprise was instant. Not only had the OBR never done such a thing before (described as an "exceptional move"), its figures apparently went against Reeves's statements. While leaks from Westminster suggested the grim nature of the budget was going to be, the OBR's own predictions were improving.
Consider the government's so-called "iron-clad" fiscal rule, that by 2030 daily spending for hospitals, schools, and other services 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.
Several days later, Reeves gave a media briefing so unprecedented it forced morning television to break from its usual fare. Several weeks before the actual budget, the nation was put on alert: taxes would rise, and the primary cause being pessimistic numbers provided by the OBR, specifically its conclusion suggesting the UK had become less productive, putting more in but getting less out.
And lo! It came to pass. Notwithstanding what Telegraph editorials combined with Tory broadcast rounds implied over the weekend, that is essentially what transpired during the budget, that proved to be significant, harsh, and grim.
The Deceptive Alibi
Where Reeves deceived us concerned her justification, because those OBR forecasts didn't compel her actions. She might have made other choices; she might have given alternative explanations, including during the statement. Prior to the recent election, Starmer promised precisely this kind of people power. "The promise of democracy. The power of the vote. The possibility for national renewal."
A year on, and it is powerlessness that is evident from Reeves's breakfast speech. The first Labour chancellor in 15 years casts herself to be an apolitical figure buffeted by forces beyond her control: "Given the circumstances of the long-term challenges on our productivity … any chancellor of any political stripe would be standing here today, facing the choices that I face."
She certainly make decisions, just not one the Labour party cares to broadcast. From April 2029 UK workers as well as businesses will be paying another £26bn annually in taxes – but the majority of this will not go towards funding better hospitals, public services, nor happier lives. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it is not getting splashed on "welfare claimants".
Where the Money Really Goes
Rather than being spent, over 50% of the additional revenue will in fact give Reeves a buffer against her self-imposed budgetary constraints. Approximately 25% goes on paying for the government's own U-turns. Reviewing the watchdog's figures and giving maximum benefit of the doubt towards Reeves, only 17% of the tax take will go on actual new spending, such as scrapping the two-child cap on child benefit. Its abolition "costs" the Treasury a mere £2.5bn, because it had long been an act of political theatre from George Osborne. A Labour government should have abolished it immediately upon taking office.
The True Audience: The Bond Markets
The Tories, Reform and all of Blue Pravda have been railing against the idea that Reeves fits the caricature of Labour chancellors, taxing hard workers to fund shirkers. Labour backbenchers have been cheering her budget as balm to their troubled consciences, safeguarding the disadvantaged. Both sides are completely mistaken: Reeves's budget was largely aimed at asset managers, speculative capital and the others in the bond markets.
The government can make a compelling argument in its defence. The forecasts provided by the OBR were too small for comfort, especially given that bond investors charge the UK the highest interest rate among G7 rich countries – exceeding that of France, which lost its leader, higher than Japan that carries far greater debt. Combined with our policies to hold down fuel bills, prescription charges and train fares, Starmer and Reeves can say their plan allows the Bank of England to cut its key lending rate.
You can see why those wearing red rosettes may choose not to couch it this way next time they visit the doorstep. According to a consultant to Downing Street puts it, Reeves has "utilised" financial markets as a tool of control over her own party and the voters. This is why the chancellor can't resign, regardless of which pledges she breaks. It's why Labour MPs must knuckle down and vote that cut billions from social security, as Starmer indicated yesterday.
Missing Political Vision , a Broken Pledge
What is absent from this is the notion of statecraft, of mobilising the finance ministry and the central bank to reach a new accommodation with markets. Also absent is intuitive knowledge of voters,
