This accusation carries significant weight: suggesting Rachel Reeves may have deceived UK citizens, frightening them to accept massive additional taxes that would be spent on increased benefits. However exaggerated, this is not typical Westminster bickering; on this occasion, the stakes are more serious. Just last week, critics of Reeves alongside Keir Starmer were labeling their budget "uncoordinated". Now, it is denounced as lies, with Kemi Badenoch demanding the chancellor to quit.
This serious accusation demands clear answers, therefore here is my view. Did the chancellor lied? On current information, apparently not. She told no blatant falsehoods. But, despite Starmer's yesterday's remarks, that doesn't mean there's nothing to see and we can all move along. The Chancellor did mislead the public regarding the factors shaping her decisions. Was this all to channel cash towards "welfare recipients", like the Tories claim? Certainly not, as the figures prove it.
A Reputation Sustains A Further Blow, Yet Truth Must Prevail
Reeves has sustained a further blow to her reputation, however, if facts still have anything to do with politics, Badenoch ought to call off her lynch mob. Perhaps the stepping down recently of OBR head, Richard Hughes, over the unauthorized release of its own documents will quench Westminster's appetite for scandal.
But the true narrative is much more unusual than the headlines indicate, extending wider and further than the political futures of Starmer and the 2024 intake. At its heart, this is an account about how much say the public have in the governance of our own country. This should should worry you.
Firstly, to Brass Tacks
After the OBR published last Friday some of the forecasts it provided to Reeves while she wrote the budget, the shock was immediate. Not only has the OBR never done such a thing before (an "unusual step"), its numbers apparently went against Reeves's statements. While rumors from Westminster were about the grim nature of the budget would have to be, the OBR's own forecasts were improving.
Take the Treasury's so-called "unbreakable" fiscal rule, stating by 2030 daily spending for hospitals, schools, and other services must be completely funded by taxes: at the end of October, the OBR calculated 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 interrupt its usual fare. Weeks before the real budget, the country was warned: taxes were going up, and the main reason cited as gloomy numbers from the OBR, in particular its finding that the UK was less productive, investing more but getting less out.
And lo! It came to pass. Despite the implications from Telegraph editorials and Tory media appearances implied recently, this is essentially what happened during the budget, which was big and painful and bleak.
The Misleading Justification
Where Reeves deceived us was her justification, since those OBR forecasts did not force her hand. She might have made different options; she could have given other reasons, including during the statement. Before the recent election, Starmer promised exactly such people power. "The hope of democracy. The power of the vote. The possibility for national renewal."
A year on, and it's a lack of agency that jumps out from Reeves's pre-budget speech. Our first Labour chancellor for a decade and a half casts herself as a technocrat buffeted by factors beyond her control: "Given the circumstances of the persistent challenges with our productivity … any chancellor of any party would be in this position today, facing the choices that I face."
She did make a choice, only not one the Labour party cares to publicize. From April 2029 UK workers and businesses are set to be paying another £26bn annually in taxes – and most of that will not go towards funding improved healthcare, public services, nor enhanced wellbeing. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "benefits street".
Where the Money Actually Ends Up
Rather than being spent, more than 50% of this additional revenue will instead give Reeves cushion for her self-imposed fiscal rules. About 25% goes on paying for the administration's policy reversals. Reviewing the OBR's calculations and giving maximum benefit of the doubt towards a Labour chancellor, a mere 17% of the taxes will fund actual new spending, for example scrapping the two-child cap on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, because it was always an act of political theatre from George Osborne. This administration could and should abolished it in its first 100 days.
The Real Target: Financial Institutions
The Tories, Reform and the entire Blue Pravda have spent days railing against the idea that Reeves conforms to the stereotype of left-wing finance ministers, soaking strivers to spend on shirkers. Party MPs have been applauding her budget for being a relief for their troubled consciences, safeguarding the most vulnerable. Each group are 180-degrees wrong: Reeves's budget was largely aimed at asset managers, speculative capital and the others in the bond markets.
The government could present a strong case in its defence. The margins provided by the OBR were insufficient for comfort, particularly given that lenders demand from the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, which lost a prime minister, and exceeding Japan that carries far greater debt. Coupled with the policies to cap fuel bills, prescription charges and train fares, Starmer and Reeves can say this budget enables the central bank to cut its key lending rate.
It's understandable that those wearing Labour badges might not couch it this way next time they're on the doorstep. According to one independent adviser to Downing Street puts it, Reeves has "utilised" financial markets to act as a tool of discipline over Labour MPs and the voters. This is the reason Reeves can't resign, regardless of which promises she breaks. It is also the reason Labour MPs will have to knuckle down and support measures to take billions off social security, as Starmer promised recently.
A Lack of Political Vision , a Broken Promise
What is absent from this is any sense of statecraft, of harnessing the finance ministry and the Bank to forge a new accommodation with markets. Missing too is innate understanding of voters,
