🔗 Share this article

The charge represents a grave matter: suggesting Rachel Reeves has lied to UK citizens, frightening them to accept billions in extra taxes which could be spent on increased welfare payments. While hyperbolic, this is not typical political sparring; on this occasion, the consequences could be damaging. A week ago, detractors aimed at Reeves alongside Keir Starmer had been labeling their budget "uncoordinated". Today, it is branded as falsehoods, and Kemi Badenoch calling for Reeves to step down.

Such a grave accusation demands clear answers, so let me provide my view. Has the chancellor lied? On current information, apparently not. She told no whoppers. However, notwithstanding Starmer's yesterday's comments, it doesn't follow that there's no issue here and we should move on. Reeves did misinform the public regarding the factors shaping her decisions. Was this all to funnel cash towards "welfare recipients", as the Tories claim? No, and the numbers demonstrate this.

A Standing Sustains Another Hit, But Facts Should Prevail

Reeves has taken another hit to her standing, however, if facts continue to matter in politics, Badenoch should stand down her attack dogs. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its own documents will quench Westminster's thirst for blood.

Yet the real story is far stranger than media reports indicate, extending broader and deeper beyond the careers of Starmer and the class of '24. Fundamentally, this is an account about how much say you and I get over the running of our own country. This should concern everyone.

First, to Brass Tacks

When the OBR released recently a portion of the projections it shared with Reeves as she prepared the red book, the shock was immediate. Not merely had the OBR never done such a thing before (described as an "unusual step"), its numbers seemingly contradicted Reeves's statements. Even as leaks from Westminster were about the grim nature of the budget would have to be, the watchdog's forecasts were improving.

Take the government's most "unbreakable" rule, that by 2030 daily spending on hospitals, schools, and the rest must be completely funded by taxes: at the end of October, the OBR reckoned it would barely be met, albeit only by a tiny margin.

A few days later, Reeves gave a media briefing so unprecedented it forced morning television to interrupt its usual fare. Weeks before the actual budget, the country was put on alert: taxes would rise, and the primary cause being pessimistic numbers from the OBR, in particular its conclusion suggesting the UK had become less efficient, putting more in but getting less out.

And so! It came to pass. Notwithstanding what Telegraph editorials and Tory media appearances implied over the weekend, this is basically what transpired during the budget, that proved to be significant, harsh, and grim.

The Misleading Justification

The way in which Reeves deceived us concerned her justification, because these OBR forecasts did not compel her actions. She could have chosen other choices; she might have given alternative explanations, even on budget day itself. Before last year's election, Starmer promised exactly such people power. "The promise of democracy. The power of the vote. The potential for national renewal."

A year on, yet it's a lack of agency that is evident from Reeves's pre-budget speech. The first Labour chancellor in 15 years portrays herself to be a technocrat buffeted by factors beyond her control: "Given the circumstances of the long-term challenges with our productivity … any chancellor of any party would be in this position today, facing the choices that I face."

She certainly make a choice, only not one the Labour party wishes to publicize. From April 2029 UK workers and businesses will be contributing an additional £26bn annually in taxes – but the majority of this will not be spent on better hospitals, new libraries, nor happier lives. Whatever bilge comes from Nigel Farage, Badenoch and others, it isn't being lavished upon "benefits street".

Where the Cash Actually Ends Up

Rather than going on services, over 50% of the extra cash will in fact give Reeves a buffer against her own fiscal rules. Approximately 25% is allocated to paying for the administration's U-turns. Examining the watchdog's figures and being as generous as possible to Reeves, a mere 17% of the taxes will go on genuinely additional spending, such as scrapping the two-child cap on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, because it was always an act of theatrical cruelty by George Osborne. A Labour government could and should abolished it in its first 100 days.

The Real Target: The Bond Markets

The Tories, Reform and all of right-wing media have been barking about the idea that Reeves conforms to the stereotype of left-wing finance ministers, taxing hard workers to fund the workshy. Labour backbenchers have been cheering her budget for being a relief to their social concerns, protecting the disadvantaged. Each group are completely mistaken: Reeves's budget was primarily targeted towards asset managers, hedge funds and the others in the financial markets.

The government could present a compelling argument for itself. The margins provided by the OBR were insufficient for comfort, particularly given that lenders charge the UK the greatest borrowing cost of all G7 developed nations – higher than France, that recently lost a prime minister, higher than Japan that carries far greater debt. Coupled with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves can say their plan enables the central bank to cut interest rates.

It's understandable that those folk with red rosettes might not frame it in such terms when they visit #Labourdoorstep. According to a consultant to Downing Street puts it, Reeves has "weaponised" financial markets as an instrument of discipline against her own party and the electorate. This is why the chancellor can't resign, regardless of which pledges are broken. It is also why Labour MPs will have to knuckle down and vote that cut billions from social security, as Starmer promised yesterday.

Missing Statecraft and a Broken Promise

What is absent from this is any sense of strategic governance, of mobilising the finance ministry and the central bank to reach a new accommodation with markets. Also absent is innate understanding of voters,