The accusation is a serious one: that Rachel Reeves may have misled the British public, scaring them into accepting billions in additional taxes that could be used for increased benefits. However exaggerated, this isn't usual Westminster bickering; on this occasion, the consequences are more serious. Just last week, detractors of Reeves alongside Keir Starmer had been labeling their budget "a mess". Now, it's denounced as falsehoods, with Kemi Badenoch calling for the chancellor's resignation.
This serious charge demands clear responses, therefore here is my assessment. Has the chancellor tell lies? Based on the available evidence, no. There were no blatant falsehoods. However, despite Starmer's yesterday's comments, it doesn't follow that there is nothing to see and we can all move along. Reeves did misinform the public regarding the considerations informing her choices. Was this all to channel cash towards "benefits street", like the Tories assert? Certainly not, as the figures prove it.
A Standing Takes A Further Hit, Yet Truth Must Prevail
The Chancellor has taken another blow to her reputation, but, should facts still have anything to do with politics, Badenoch should stand down her attack dogs. Perhaps the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its internal documents will satisfy Westminster's thirst for blood.
Yet the true narrative is much more unusual compared to the headlines suggest, and stretches wider and further beyond the careers of Starmer and the 2024 intake. Fundamentally, this is a story concerning how much say you and I get in the governance of our own country. And it should worry you.
First, to Brass Tacks
After the OBR published recently some of the projections it shared with Reeves while she prepared the red book, the shock was immediate. Not merely had the OBR never done such a thing before (an "unusual step"), its numbers apparently went against the chancellor's words. Even as leaks from Westminster were about the grim nature of the budget was going to be, the watchdog's predictions were improving.
Take the government's most "unbreakable" rule, stating by 2030 day-to-day spending for hospitals, schools, and the rest must be completely paid for by taxes: at the end of October, the OBR calculated this would barely be met, albeit only by a minuscule margin.
Several days later, Reeves gave a press conference so unprecedented it forced breakfast TV to break from its usual fare. Weeks prior to the actual budget, the country was warned: taxes would rise, and the main reason cited as gloomy numbers from the OBR, specifically its conclusion that the UK was less productive, investing more but getting less out.
And lo! It happened. Notwithstanding the implications from Telegraph editorials and Tory broadcast rounds implied recently, this is essentially what transpired during the budget, that proved to be significant, harsh, and grim.
The Deceptive Justification
Where Reeves misled us was her alibi, because those OBR forecasts did not compel her actions. She could have chosen different options; she could have given other reasons, even during the statement. Before last year's election, Starmer promised exactly such public influence. "The promise of democracy. The strength of the vote. The potential for national renewal."
One year later, and it's powerlessness that jumps out in Reeves's breakfast speech. The first Labour chancellor in 15 years casts herself as a technocrat at the mercy of forces beyond her control: "Given the circumstances of the long-term challenges with our productivity … any finance minister of any political stripe would be in this position today, facing the choices that I face."
She certainly make decisions, only not the kind Labour wishes to broadcast. Starting April 2029 UK workers and businesses will be contributing another £26bn annually in taxes – and most of that will not be funding improved healthcare, public services, nor happier lives. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and their allies, it is not getting splashed on "benefits street".
Where the Cash Really Goes
Rather than going on services, more than 50% of this additional revenue will instead give Reeves a buffer against her own fiscal rules. Approximately 25% goes on paying for the government's own policy reversals. Reviewing the watchdog's figures and being as generous as possible towards Reeves, a mere 17% of the taxes will go on genuinely additional spending, for example scrapping the two-child cap on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, because it had long been an act of political theatre by George Osborne. A Labour government could and should have binned it immediately upon taking office.
The Real Target: Financial Institutions
Conservatives, Reform and all of Blue Pravda have spent days railing against the idea that Reeves conforms to the stereotype of left-wing finance ministers, taxing hard workers to spend on shirkers. Party MPs have been applauding her budget as balm for their troubled consciences, safeguarding the disadvantaged. Both sides could be completely mistaken: Reeves's budget was largely targeted towards asset managers, speculative capital and the others in the financial markets.
Downing Street could present a compelling argument in its defence. The forecasts from the OBR were deemed too small to feel secure, particularly considering lenders demand from the UK the greatest borrowing cost among G7 rich countries – higher than France, that recently lost its leader, and exceeding Japan which has way more debt. Combined with our policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan allows the Bank of England to cut interest rates.
You can see why those wearing red rosettes might not couch it this way when they visit the doorstep. According to one independent adviser for Downing Street puts it, Reeves has effectively "utilised" the bond market as an instrument of discipline over Labour MPs and the electorate. This is the reason Reeves can't resign, regardless of which promises are broken. It is also why Labour MPs must knuckle down and vote that cut billions from social security, just as Starmer promised recently.
Missing Statecraft , a Broken Promise
What is absent from this is any sense of strategic governance, of mobilising the finance ministry and the Bank to reach a fresh understanding with investors. Missing too is intuitive knowledge of voters,
