The allegation represents a grave matter: that Rachel Reeves may have deceived Britons, spooking them to accept massive extra taxes that would be spent on increased welfare payments. However exaggerated, this is not typical political bickering; this time, the consequences could be damaging. Just last week, detractors aimed at Reeves alongside Keir Starmer had been calling their budget "uncoordinated". Now, it is denounced as lies, and Kemi Badenoch calling for the chancellor to quit.
Such a grave accusation demands straightforward responses, so here is my view. Did the chancellor lied? On the available evidence, no. She told no whoppers. However, despite Starmer's recent remarks, it doesn't follow that there's nothing to see and we can all move along. The Chancellor did misinform the public about the considerations informing her decisions. Was this all to channel cash towards "benefits street", like the Tories claim? Certainly not, and the figures demonstrate it.
A Standing Takes Another Hit, Yet Truth Should Win Out
Reeves has sustained another hit to her reputation, however, if facts continue to matter in politics, Badenoch ought to call off her lynch mob. Perhaps the resignation recently of OBR head, Richard Hughes, over the unauthorized release of its internal documents will quench SW1's thirst for blood.
Yet the real story is much more unusual compared to the headlines indicate, extending wider and further than the political futures of Starmer and the class of '24. At its heart, herein lies an account about how much say you and I have in the governance of our own country. And it should worry you.
First, on to Brass Tacks
When the OBR released last Friday a portion of the projections it shared with Reeves while she wrote the red book, the surprise was immediate. Not merely has the OBR not done such a thing before (described as an "exceptional move"), its numbers seemingly went against Reeves's statements. While rumors from Westminster were about how bleak the budget was going to be, the watchdog's forecasts were getting better.
Consider the government's most "unbreakable" fiscal rule, that by 2030 daily spending for hospitals, schools, and the rest would be completely funded by taxes: at the end of October, the watchdog reckoned this would barely be met, albeit by a tiny margin.
Several days later, Reeves gave a press conference so extraordinary that it caused morning television to interrupt its regular schedule. Several weeks before the real budget, the country was put on alert: taxes would rise, and the main reason being gloomy numbers from the OBR, in particular its conclusion that the UK had become less efficient, putting more in but yielding less.
And so! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory media appearances implied over the weekend, that is basically what happened during the budget, which was big and painful and bleak.
The Deceptive Alibi
The way in which Reeves misled us was her justification, because those OBR forecasts did not force her hand. She might have chosen different options; she might have provided alternative explanations, including on budget day itself. Prior to the recent election, Starmer promised exactly such people power. "The promise of democracy. The strength of the vote. The potential for national renewal."
A year on, and it's a lack of agency that jumps out from Reeves's breakfast speech. The first Labour chancellor for a decade and a half portrays herself to be an apolitical figure buffeted by forces beyond her control: "Given the circumstances of the long-term challenges with our productivity … any finance minister of any party would be standing here today, confronting the decisions that I face."
She certainly make a choice, only not one the Labour party wishes to publicize. From April 2029 British workers and businesses are set to be contributing an additional £26bn annually in taxes – and most of that will not be funding better hospitals, public services, nor enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and others, it is not getting splashed on "benefits street".
Where the Cash Really Goes
Instead of going on services, over 50% of this extra cash will in fact provide Reeves cushion for her own budgetary constraints. About 25% goes on paying for the government's own policy reversals. Reviewing the watchdog's figures and being as generous as possible to a Labour chancellor, a mere 17% of the taxes will fund genuinely additional spending, for example scrapping the two-child cap on child benefit. Its abolition "costs" the Treasury only £2.5bn, as 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: The Bond Markets
The Tories, Reform along with all of Blue Pravda have been barking about the idea that Reeves fits the caricature of Labour chancellors, taxing hard workers to spend on the workshy. Party MPs are applauding her budget for being a relief to their troubled consciences, safeguarding the most vulnerable. Each group are 180-degrees wrong: Reeves's budget was largely targeted towards asset managers, speculative capital and participants within the bond markets.
Downing Street can make a compelling argument in its defence. The margins from the OBR were too small for comfort, particularly considering lenders demand from the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, that recently lost a prime minister, higher than Japan which has way more debt. Coupled with our measures to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget allows the Bank of England to reduce interest rates.
You can see that those wearing red rosettes may choose not to couch it this way when they're on #Labourdoorstep. According to a consultant for Downing Street says, Reeves has "utilised" financial markets as a tool of control over her own party and the electorate. This is the reason Reeves cannot resign, regardless of which pledges she breaks. It's why Labour MPs must fall into line and support measures that cut billions from social security, just as Starmer indicated yesterday.
A Lack of Political Vision and a Broken Promise
What's missing from this is any sense of statecraft, of harnessing the Treasury and the central bank to forge a fresh understanding with investors. Missing too is any intuitive knowledge of voters,
