This charge carries significant weight: that Rachel Reeves may have deceived Britons, spooking them into accepting billions in extra taxes which could be used for higher welfare payments. However exaggerated, this isn't typical Westminster bickering; on this occasion, the consequences could be damaging. Just last week, detractors aimed at Reeves and Keir Starmer had been labeling their budget "uncoordinated". Now, it is denounced as lies, with Kemi Badenoch calling for Reeves to step down.
Such a serious accusation demands straightforward responses, therefore here is my view. Did the chancellor lied? On current information, apparently not. There were no whoppers. But, notwithstanding Starmer's recent remarks, it doesn't follow that there is no issue here and we should move on. Reeves did mislead the public regarding the factors informing her decisions. Was this all to funnel cash to "benefits street", as the Tories assert? No, as the numbers prove this.
A Reputation Takes Another Blow, Yet Truth Should Prevail
Reeves has sustained another hit to her reputation, however, should facts still matter in politics, Badenoch should call off her attack dogs. Maybe the resignation yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will quench SW1's thirst for blood.
Yet the true narrative is far stranger compared to media reports indicate, extending wider and further beyond the political futures of Starmer and his 2024 intake. At its heart, herein lies an account about how much say the public have over the running of the nation. And it should worry you.
First, on to Brass Tacks
When the OBR released recently some of the projections it shared with Reeves as she wrote the red book, the shock was immediate. Not merely has the OBR not done such a thing before (an "unusual step"), its numbers apparently contradicted the chancellor's words. While rumors from Westminster were about how bleak the budget would have to be, the OBR's own forecasts were getting better.
Take the government's most "unbreakable" rule, stating by 2030 day-to-day spending for hospitals, schools, and the rest must be completely funded by taxes: at the end of October, the OBR calculated this would barely be met, albeit by a minuscule margin.
A few days later, Reeves held a media briefing so extraordinary that it caused breakfast TV to break from its usual fare. Weeks prior to the real budget, the country was warned: taxes would rise, with the primary cause being gloomy numbers from the OBR, in particular its finding that the UK was less efficient, investing more but getting less out.
And so! It came to pass. Notwithstanding the implications from Telegraph editorials and Tory media appearances implied over the weekend, that is essentially what happened during the budget, that proved to be significant, harsh, and grim.
The Deceptive Alibi
Where Reeves deceived us concerned her justification, because these OBR forecasts didn't compel her actions. She could have chosen different options; she could have given other reasons, even during the statement. Prior to the recent election, Starmer promised precisely this kind of people power. "The hope of democracy. The power of the vote. The possibility for national renewal."
One year later, yet it's a lack of agency that is evident in Reeves's pre-budget speech. Our first Labour chancellor in 15 years casts herself to be an apolitical figure buffeted by forces 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 did make a choice, only not the kind the Labour party cares to broadcast. Starting April 2029 UK workers and businesses will be paying another £26bn annually in taxes – and most of that will not go towards funding improved healthcare, public services, nor happier lives. Regardless of what bilge comes from Nigel Farage, Badenoch and others, it is not being lavished upon "benefits street".
Where the Cash Really Goes
Rather than going on services, more than 50% of this extra cash will instead provide Reeves a buffer for her own budgetary constraints. About 25% is allocated to covering the administration's U-turns. Examining the watchdog's figures and being as generous as possible to a Labour chancellor, only 17% of the taxes will fund actual new spending, for example abolishing the two-child cap on child benefit. Removing it "costs" the Treasury a mere £2.5bn, as it had long been a bit of political theatre by George Osborne. A Labour government could and should have binned it immediately upon taking office.
The True Audience: Financial Institutions
Conservatives, Reform and the entire Blue Pravda have spent days barking about the idea that Reeves fits the stereotype of Labour chancellors, soaking strivers to fund the workshy. Labour backbenchers are applauding her budget as a relief for their troubled consciences, protecting the most vulnerable. Each group are 180-degrees wrong: Reeves's budget was largely aimed at investment funds, hedge funds and participants within the financial markets.
Downing Street could present a compelling argument for itself. The margins from the OBR were insufficient for comfort, especially considering bond investors demand from the UK the highest interest rate of all G7 rich countries – exceeding that of France, which lost its leader, and exceeding Japan which has way more debt. Coupled with the policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget allows the Bank of England to cut its key lending rate.
You can see that those folk with red rosettes may choose not to frame it this way when they visit #Labourdoorstep. According to a consultant for Downing Street puts it, Reeves has effectively "utilised" the bond market to act as an instrument of discipline against her own party and the electorate. This is the reason Reeves can't resign, no matter what pledges she breaks. It's why Labour MPs will have to knuckle down and vote to take billions off social security, just as Starmer promised recently.
A Lack of Statecraft and a Broken Pledge
What's missing here is any sense of statecraft, of harnessing the finance ministry and the central bank to forge a new accommodation with investors. Also absent is any intuitive knowledge of voters,
