The charge represents a grave matter: that Rachel Reeves may have misled the British public, frightening them to accept massive additional taxes which would be used for higher benefits. However hyperbolic, this isn't usual Westminster bickering; this time, the stakes could be damaging. Just last week, detractors aimed at Reeves and Keir Starmer had been labeling their budget "a shambles". Today, it is branded as lies, with Kemi Badenoch demanding Reeves to step down.
Such a grave accusation demands straightforward answers, so here is my view. Did the chancellor been dishonest? Based on the available information, apparently not. There were no blatant falsehoods. But, notwithstanding Starmer's yesterday's remarks, that doesn't mean there is nothing to see and we can all move along. Reeves did mislead the public regarding the considerations informing her choices. Was it to funnel cash to "benefits street", like the Tories assert? No, and the figures prove it.
A Standing Takes A Further Blow, Yet Truth Should Win Out
Reeves has sustained a further hit to her reputation, but, should facts still matter in politics, Badenoch should call off her attack dogs. Perhaps the resignation yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its internal documents will satisfy Westminster's thirst for blood.
But the true narrative is far stranger compared to media reports suggest, and stretches broader and deeper than the careers of Starmer and his class of '24. At its heart, herein lies a story about how much say the public get over the running of the nation. This should should worry everyone.
Firstly, on to Brass Tacks
After the OBR released last Friday a portion of the forecasts it provided to Reeves while she wrote the budget, the surprise was instant. Not merely has the OBR never done such a thing before (an "rare action"), its numbers seemingly contradicted the chancellor's words. Even as leaks from Westminster suggested the grim nature of the budget would have to be, the watchdog's forecasts were improving.
Consider the government's most "iron-clad" fiscal rule, stating by 2030 daily spending for hospitals, schools, and other services would be completely funded by taxes: at the end of October, the OBR calculated this would just about be met, albeit only by a minuscule margin.
A few days later, Reeves gave a press conference so unprecedented that it caused breakfast TV to interrupt its usual fare. Several weeks prior to the real budget, the country was put on alert: taxes were going up, with the primary cause cited as pessimistic numbers provided by the OBR, specifically its conclusion that the UK had become less productive, putting more in but getting less out.
And lo! It happened. Despite the implications from Telegraph editorials and Tory broadcast rounds suggested over the weekend, that is essentially what happened at the budget, that proved to be significant, harsh, and grim.
The Deceptive Justification
Where Reeves misled us was her justification, since those OBR forecasts didn't force her hand. She might have chosen other choices; she might have given alternative explanations, even on budget day itself. Prior to last year's election, Starmer pledged exactly such people power. "The promise of democracy. The strength 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. The first Labour chancellor in 15 years portrays herself to be an apolitical figure buffeted by factors outside her influence: "Given the circumstances of the long-term challenges with our productivity … any chancellor of any political stripe would be in this position today, facing the decisions that I face."
She did make a choice, only not the kind Labour cares to broadcast. From April 2029 British workers and businesses will be contributing an additional £26bn annually in taxes – but the majority of this will not go towards spent on improved healthcare, public services, or enhanced wellbeing. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "benefits street".
Where the Money Actually Ends Up
Instead of being spent, more than 50% of the extra cash will in fact provide Reeves cushion against her own fiscal rules. Approximately 25% is allocated to covering the government's own U-turns. Reviewing the OBR's calculations and giving maximum benefit of the doubt to a Labour chancellor, a mere 17% of the tax take will go on actual new spending, for example abolishing the limit on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, because it was always an act of theatrical cruelty by George Osborne. A Labour government could and should abolished it immediately upon taking office.
The True Audience: Financial Institutions
The Tories, Reform along with the entire Blue Pravda have been railing against how Reeves conforms to the stereotype of left-wing finance ministers, taxing hard workers to fund shirkers. Labour backbenchers have been cheering her budget as a relief for their social concerns, protecting the disadvantaged. Both sides are completely mistaken: Reeves's budget was primarily targeted towards investment funds, hedge funds and the others in the financial markets.
Downing Street can make a compelling argument in its defence. The margins from the OBR were deemed insufficient to feel secure, particularly given that lenders demand from the UK the greatest borrowing cost among G7 developed nations – higher than France, which lost its leader, and exceeding Japan that carries far greater debt. Coupled with our policies to hold down fuel bills, prescription charges and train fares, Starmer together with Reeves can say this budget allows the Bank of England to reduce its key lending rate.
You can see that those wearing red rosettes might not frame it this way when they visit the doorstep. As a consultant for Downing Street says, Reeves has "utilised" the bond market as a tool of control against her own party and the voters. It's the reason the chancellor cannot resign, regardless of which promises are broken. It's the reason Labour MPs must knuckle down and support measures that cut billions from social security, just as Starmer promised recently.
Missing Political Vision and an Unfulfilled Pledge
What is absent here is the notion of statecraft, of mobilising the Treasury and the central bank to forge a new accommodation with investors. Also absent is any intuitive knowledge of voters,
