This accusation represents a grave matter: suggesting Rachel Reeves has deceived the British public, frightening them into accepting massive extra taxes that would be spent on increased benefits. However hyperbolic, this is not usual Westminster sparring; on this occasion, the stakes could be damaging. Just last week, detractors of Reeves alongside Keir Starmer were labeling their budget "disorderly". Now, it's denounced as lies, with Kemi Badenoch demanding the chancellor's resignation.
Such a grave charge requires clear answers, therefore let me provide my view. Did the chancellor been dishonest? On the available evidence, apparently not. She told no whoppers. However, notwithstanding Starmer's yesterday's comments, it doesn't follow that there is nothing to see and we should move on. The Chancellor did misinform the public about the considerations shaping her choices. Was it to funnel cash towards "welfare recipients", like the Tories assert? Certainly not, as the figures demonstrate this.
A Standing Takes A Further Blow, Yet Truth Must Win Out
Reeves has sustained another hit to her reputation, but, if facts continue to have anything to do with politics, Badenoch ought to stand down her attack dogs. Perhaps the stepping down recently of OBR head, Richard Hughes, due to the leak of its internal documents will satisfy SW1's appetite for scandal.
But the true narrative is much more unusual compared to the headlines indicate, extending broader and deeper than the political futures of Starmer and his 2024 intake. Fundamentally, this is a story about how much say the public get over the governance of our own country. And it concern you.
Firstly, to the Core Details
When the OBR published last Friday some of the projections it shared with Reeves as she wrote the budget, the surprise was immediate. Not only has the OBR not done such a thing before (described as an "rare action"), its numbers seemingly went against Reeves's statements. While leaks from Westminster suggested the grim nature of the budget was going to be, the watchdog's predictions were getting better.
Consider the Treasury's so-called "unbreakable" fiscal rule, that by 2030 day-to-day spending on hospitals, schools, and other services must be wholly funded by taxes: at the end of October, the watchdog reckoned this would barely be met, albeit only by a tiny margin.
A few days later, Reeves held a press conference so unprecedented that it caused breakfast TV to break from its usual fare. Several weeks before the actual budget, the country was warned: taxes were going up, and the primary cause being pessimistic numbers from the OBR, in particular its finding suggesting the UK had become less productive, putting more in but yielding less.
And lo! It happened. Despite the implications from Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, this is essentially what happened during the budget, that proved to be big and painful and bleak.
The Deceptive Alibi
The way in which Reeves deceived us was her justification, since those OBR forecasts didn't force her hand. She could have chosen different options; she might have provided alternative explanations, including during the statement. Before the recent election, Starmer pledged precisely this kind of public influence. "The hope of democracy. The strength of the vote. The possibility for national renewal."
One year later, and it is powerlessness that jumps out from Reeves's breakfast speech. The first Labour chancellor for a decade and a half casts herself as a technocrat 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 standing here today, facing the decisions that I face."
She certainly make a choice, just not the kind the Labour party wishes to publicize. From April 2029 UK workers and businesses are set to be contributing an additional £26bn annually in tax – and the majority of this will not be funding improved healthcare, public services, or enhanced wellbeing. Whatever bilge is spouted by Nigel Farage, Badenoch and others, it is not getting splashed on "benefits street".
Where the Cash Actually Ends Up
Rather than going on services, more than 50% of this extra cash will instead provide Reeves cushion for her self-imposed budgetary constraints. About 25% goes on 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 taxes will fund genuinely additional spending, such as scrapping the two-child cap on child benefit. Removing it "costs" the Treasury a mere £2.5bn, because it had long been a bit of political theatre 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 along with the entire right-wing media have been barking about how Reeves conforms to the stereotype of Labour chancellors, soaking strivers to spend on the workshy. Labour backbenchers have been cheering her budget as a relief to their troubled consciences, protecting the most vulnerable. Both sides could be 180-degrees wrong: Reeves's budget was primarily aimed at asset managers, speculative capital and participants within the bond markets.
Downing Street could present a strong case in its defence. The margins provided by the OBR were too small for comfort, particularly considering bond investors demand from the UK the highest interest rate among G7 developed nations – higher than France, that recently lost a prime minister, and exceeding Japan that carries way more debt. Combined with our measures to cap fuel bills, prescription charges and train fares, Starmer and Reeves can say their plan enables the central bank to cut interest rates.
You can see why those wearing red rosettes might not couch it this way when they're on #Labourdoorstep. According to a consultant 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. It's the reason Reeves can't resign, regardless of which promises she breaks. It's the reason Labour MPs must fall into line and support measures to take billions off social security, as Starmer indicated yesterday.
Missing Political Vision , a Broken Pledge
What is absent from this is any sense of statecraft, of harnessing the finance ministry and the central bank to forge a new accommodation with markets. Missing too is intuitive knowledge of voters,
