🔗 Share this article

This accusation represents a grave matter: suggesting Rachel Reeves has misled UK citizens, frightening them to accept massive extra taxes that would be funneled into increased benefits. While hyperbolic, this isn't usual Westminster bickering; this time, the consequences are higher. A week ago, detractors of Reeves and Keir Starmer were labeling their budget "a shambles". Now, it is branded as lies, and Kemi Badenoch demanding the chancellor to quit.

This grave charge demands straightforward responses, therefore let me provide my assessment. Has the chancellor been dishonest? Based on current information, apparently not. There were no whoppers. However, despite Starmer's yesterday's comments, that doesn't mean there is no issue here and we can all move along. The Chancellor did misinform the public about the factors informing her choices. Was it to funnel cash to "welfare recipients", like the Tories assert? No, and the numbers prove this.

A Reputation Takes Another Blow, But Facts Should Win Out

Reeves has taken another hit to her reputation, however, if facts continue to matter in politics, Badenoch should call off her attack dogs. Maybe the resignation recently of OBR head, Richard Hughes, over the leak of its own documents will quench Westminster's appetite for scandal.

Yet the real story is far stranger compared to the headlines suggest, extending broader and deeper than the careers of Starmer and his 2024 intake. At its heart, herein lies a story concerning what degree of influence you and I have in the running of our own country. This should concern you.

Firstly, to the Core Details

After the OBR released last Friday some of the projections it shared with Reeves as she wrote the red book, the surprise was instant. Not only had the OBR not acted this way before (described as an "exceptional move"), its figures seemingly went against the chancellor's words. Even as rumors from Westminster suggested how bleak the budget was going to be, the OBR's own forecasts were improving.

Take the government's so-called "unbreakable" fiscal rule, stating by 2030 daily spending for hospitals, schools, and other services would be wholly 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 held a press conference so unprecedented it forced breakfast TV to break from its regular schedule. Several weeks before the actual budget, the country was put on alert: taxes would rise, with the main reason cited as gloomy numbers provided by the OBR, in particular its finding that the UK was less productive, putting more in but yielding less.

And so! It came to pass. Notwithstanding what Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, this is basically what happened at the budget, that proved to be significant, harsh, and grim.

The Misleading Alibi

Where Reeves deceived us concerned her justification, since these OBR forecasts did not compel her actions. She could have made different options; she could have given alternative explanations, including on budget day itself. Prior to last year's election, Starmer pledged precisely this kind of public influence. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, and it is powerlessness that is evident from Reeves's breakfast speech. The first Labour chancellor for a decade and a half portrays herself as an apolitical figure buffeted by factors beyond her control: "In the context of the long-term challenges with our productivity … any chancellor of any political stripe would be in this position today, confronting the choices that I face."

She did make a choice, just not one the Labour party cares to publicize. From April 2029 UK workers and businesses will be contributing another £26bn a year in taxes – but most of that will not go towards spent on better hospitals, new libraries, or enhanced wellbeing. Whatever bilge comes from Nigel Farage, Badenoch and their allies, it is not getting splashed on "welfare claimants".

Where the Money Actually Ends Up

Rather than being spent, more than 50% of this additional revenue will instead provide Reeves a buffer against her own fiscal rules. Approximately 25% goes on covering the government's own policy reversals. Examining the OBR's calculations and being as generous as possible towards Reeves, a mere 17% of the tax take will fund actual new spending, for example abolishing the limit on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, as it had long been a bit of theatrical cruelty from George Osborne. A Labour government could and should have binned it in its first 100 days.

The True Audience: Financial Institutions

The Tories, Reform along with all of right-wing media have been railing against the idea that Reeves fits the stereotype of left-wing finance ministers, soaking hard workers to spend on the workshy. Labour backbenchers are cheering her budget as a relief for their social concerns, protecting the disadvantaged. Both sides are completely mistaken: The Chancellor's budget was primarily aimed at investment funds, speculative capital and the others in the financial markets.

Downing Street could present a strong case for itself. The margins provided by the OBR were too small for comfort, particularly given that lenders charge the UK the highest interest rate among G7 developed nations – higher than France, that recently lost a prime minister, and exceeding Japan which has far greater debt. Combined with our measures to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say this budget enables the central bank to reduce interest rates.

You can see why those folk with Labour badges might not frame it in such terms when they visit the doorstep. According to a consultant to Downing Street says, Reeves has "weaponised" financial markets as an instrument of control over Labour MPs and the voters. It's why the chancellor cannot resign, regardless of which promises she breaks. It's why Labour MPs will have to fall into line and support measures that cut billions from social security, as Starmer indicated yesterday.

A Lack of Political Vision , a Broken Pledge

What is absent here is any sense of strategic governance, of harnessing the Treasury and the Bank to forge a fresh understanding with investors. Also absent is innate understanding of voters,