🔗 Share this article

This charge carries significant weight: that Rachel Reeves may have lied to the British public, frightening them into accepting massive extra taxes which could be used for increased benefits. However exaggerated, this is not usual political bickering; this time, the consequences could be damaging. A week ago, detractors aimed at Reeves and Keir Starmer were calling their budget "a shambles". Now, it's branded as falsehoods, with Kemi Badenoch calling for the chancellor's resignation.

This serious accusation requires straightforward responses, therefore here is my view. Has the chancellor tell lies? Based on the available information, no. There were no major untruths. But, despite Starmer's yesterday's comments, that doesn't mean there's no issue here and we should move on. The Chancellor did misinform the public regarding the considerations shaping her choices. Was this all to funnel cash to "welfare recipients", as the Tories claim? Certainly not, and the figures demonstrate this.

A Standing Takes Another Hit, But Facts Must Prevail

The Chancellor has sustained a further blow to her standing, however, if facts still matter in politics, Badenoch ought to stand down her lynch mob. Maybe the resignation yesterday of OBR head, Richard Hughes, over the leak of its internal documents will quench SW1's thirst for blood.

But the real story is far stranger than media reports indicate, and stretches wider and further than the political futures of Starmer and his 2024 intake. At its heart, this is an account concerning what degree of influence the public get in the running of our own country. This should concern everyone.

Firstly, on to Brass Tacks

When the OBR published last Friday some of the forecasts it shared with Reeves while she wrote the budget, the shock was instant. Not only has the OBR not acted this way before (an "unusual step"), its figures apparently contradicted Reeves's statements. Even as rumors from Westminster were about how bleak the budget would have to be, the watchdog's forecasts were improving.

Consider the Treasury's so-called "unbreakable" rule, that by 2030 daily spending on 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 only by a tiny margin.

A few days later, Reeves gave a media briefing so extraordinary that it caused morning television to interrupt its usual fare. Weeks prior to the actual budget, the country was put on alert: taxes were going up, and the primary cause cited as gloomy numbers from the OBR, in particular its conclusion that the UK had become less efficient, investing more but yielding less.

And lo! It came to pass. Notwithstanding what Telegraph editorials combined with Tory media appearances implied recently, that is basically what happened during the budget, that proved to be significant, harsh, and grim.

The Deceptive Alibi

The way in which Reeves misled us concerned her alibi, because these OBR forecasts didn't compel her actions. She might have chosen different options; she could have given alternative explanations, including during the statement. Before the recent election, Starmer pledged precisely this kind of public influence. "The promise of democracy. The strength of the vote. The possibility for national renewal."

A year on, yet it's powerlessness that jumps out from Reeves's pre-budget speech. The first Labour chancellor for a decade and a half portrays herself to be an apolitical figure at the mercy of forces beyond her control: "In the context of the long-term challenges with our productivity … any finance minister of any political stripe would be standing here today, facing the choices that I face."

She did make a choice, only not the kind the Labour party cares to publicize. From April 2029 British workers as well as businesses are set to be paying an additional £26bn a year in taxes – but the majority of this will not be spent on better hospitals, public services, or happier lives. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it is not being lavished upon "benefits street".

Where the Money Really Goes

Instead of going on services, over 50% of the additional revenue will in fact give Reeves a buffer for her self-imposed budgetary constraints. Approximately 25% is allocated to paying for the government's own policy reversals. Examining the watchdog's figures and being as generous as possible towards Reeves, only 17% of the tax take will go on genuinely additional spending, such as abolishing the limit on child benefit. Its abolition "costs" the Treasury only £2.5bn, because it was always a bit of political theatre by George Osborne. This administration should have abolished it in its first 100 days.

The Real Target: The Bond Markets

Conservatives, Reform and all of right-wing media have been barking about how Reeves conforms to the caricature of Labour chancellors, taxing strivers to fund shirkers. Labour backbenchers are cheering her budget as a relief to their troubled consciences, protecting the disadvantaged. Both sides are 180-degrees wrong: The Chancellor's budget was largely targeted towards asset managers, hedge funds and participants within the bond markets.

The government can make a compelling argument in its defence. The forecasts from the OBR were deemed insufficient to feel secure, especially considering lenders charge the UK the highest interest rate among G7 developed nations – higher than France, which lost a prime minister, higher than Japan which has way more debt. Coupled with the measures to cap fuel bills, prescription charges and train fares, Starmer and Reeves can say their plan allows the Bank of England to cut interest rates.

It's understandable that those folk with Labour badges might not frame it in such terms when they're on the doorstep. As one independent adviser for Downing Street puts it, Reeves has effectively "weaponised" financial markets to act as a tool of discipline over her own party and the electorate. This is why Reeves cannot resign, no matter what pledges are broken. It is also the reason Labour MPs must fall into line and vote to take billions off social security, as Starmer promised recently.

Missing Political Vision , an Unfulfilled Promise

What's missing here is the notion of statecraft, of mobilising the Treasury and the Bank to reach a new accommodation with investors. Also absent is any intuitive knowledge of voters,