The allegation is a serious one: that Rachel Reeves may have lied to UK citizens, scaring them to accept massive additional taxes that could be used for higher welfare payments. While exaggerated, this isn't usual political sparring; this time, the stakes are more serious. A week ago, detractors of Reeves and Keir Starmer were calling their budget "disorderly". Now, it is denounced as falsehoods, and Kemi Badenoch demanding Reeves to step down.
This serious accusation requires clear responses, therefore here is my view. Has the chancellor tell lies? Based on current evidence, apparently not. There were no whoppers. However, notwithstanding Starmer's recent remarks, it doesn't follow that there's nothing to see and we can all move along. The Chancellor did mislead the public about the considerations informing her choices. Was it to funnel cash to "welfare recipients", as the Tories assert? Certainly not, as the numbers prove it.
A Reputation Takes Another Blow, Yet Truth Must Win Out
The Chancellor has sustained another hit to her reputation, however, should facts continue to have anything to do with politics, Badenoch should call off her lynch mob. Perhaps the stepping down yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will quench Westminster's appetite for scandal.
Yet the real story is far stranger than media reports indicate, and stretches wider and further than the political futures of Starmer and the 2024 intake. At its heart, herein lies a story about how much say you and I get in the governance of the nation. And it concern you.
First, on to the Core Details
After the OBR released last Friday a portion of the projections it shared with Reeves while she wrote the red book, the surprise was instant. Not merely had the OBR never done such a thing before (an "rare action"), its figures seemingly contradicted the chancellor's words. While leaks from Westminster were about the grim nature of the budget would have to be, the watchdog's forecasts were improving.
Consider the Treasury's most "unbreakable" fiscal rule, that by 2030 day-to-day spending for hospitals, schools, and other services must be completely paid for by taxes: at the end of October, the watchdog calculated this would barely be met, albeit by a minuscule margin.
A few days later, Reeves gave a media briefing so extraordinary that it caused morning television to interrupt its regular schedule. Weeks prior to the actual budget, the nation was put on alert: taxes would rise, with the main reason being pessimistic numbers from the OBR, specifically its finding suggesting the UK had become less productive, putting more in but yielding less.
And lo! It happened. Notwithstanding what Telegraph editorials and Tory broadcast rounds suggested over the weekend, this is basically what happened during the budget, that proved to be significant, harsh, and grim.
The Deceptive Justification
The way in which Reeves deceived us was her alibi, since these OBR forecasts did not compel her actions. She could have made other choices; she could have provided alternative explanations, even on budget day itself. Prior to last year's election, Starmer pledged exactly such people power. "The hope of democracy. The power of the vote. The possibility for national renewal."
A year on, yet it is a lack of agency that is evident in Reeves's pre-budget speech. The first Labour chancellor for a decade and a half casts herself to be a technocrat at the mercy of forces outside her influence: "In the context of the persistent challenges on our productivity … any chancellor of any party would be standing here today, facing the choices that I face."
She did make decisions, just not the kind Labour cares to broadcast. From April 2029 British workers as well as businesses will be contributing another £26bn annually in taxes – but most of that will not be funding better hospitals, new libraries, or enhanced wellbeing. Whatever bilge comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "welfare claimants".
Where the Money Actually Ends Up
Instead of going on services, over 50% of the extra cash will in fact give Reeves cushion for her own budgetary constraints. Approximately 25% is allocated to paying for the administration's policy reversals. Reviewing the watchdog's figures and being as generous as possible to a Labour chancellor, only 17% of the taxes will fund actual new spending, such as scrapping the limit on child benefit. Removing it "costs" the Treasury only £2.5bn, as it had long been an act of theatrical cruelty by George Osborne. A Labour government could and should have binned it in its first 100 days.
The True Audience: Financial Institutions
Conservatives, Reform along with the entire right-wing media have been barking about how Reeves fits the stereotype of left-wing finance ministers, taxing hard workers to fund shirkers. Party MPs have been cheering her budget for being a relief for their social concerns, safeguarding the disadvantaged. Each group are 180-degrees wrong: Reeves's budget was largely aimed at asset managers, hedge funds and participants within the bond markets.
The government could present a compelling argument for itself. The forecasts from the OBR were deemed too small to feel secure, particularly considering lenders charge the UK the highest interest rate among G7 rich countries – higher than France, which lost its leader, higher than Japan that carries way more debt. Coupled with the policies to hold down fuel bills, prescription charges and train fares, Starmer and Reeves argue their plan enables the central bank to reduce its key lending rate.
It's understandable why those folk with red rosettes may choose not to frame it in such terms when they're on the doorstep. According to one independent adviser to Downing Street puts it, Reeves has "utilised" the bond market to act as a tool of discipline over Labour MPs and the voters. It's why Reeves can't resign, no matter what promises are broken. It's why Labour MPs will have to knuckle down and vote to take billions off social security, as Starmer indicated recently.
A Lack of Political Vision , a Broken Promise
What's missing here is any sense of statecraft, of mobilising the Treasury and the Bank to reach a new accommodation with markets. Missing too is any innate understanding of voters,
