This accusation carries significant weight: that Rachel Reeves may have deceived UK citizens, frightening them into accepting massive extra taxes that would be funneled into increased benefits. However exaggerated, this is not usual political sparring; on this occasion, the stakes are more serious. Just last week, detractors aimed at Reeves and Keir Starmer had been labeling their budget "a mess". Now, it is branded as falsehoods, with Kemi Badenoch calling for the chancellor to quit.
This grave accusation requires straightforward answers, therefore let me provide my assessment. Did the chancellor been dishonest? Based on the available evidence, no. She told no whoppers. However, notwithstanding Starmer's yesterday's remarks, it doesn't follow that there's no issue here and we should move on. The Chancellor did mislead the public about the considerations shaping her choices. Was this all to channel cash to "benefits street", as the Tories claim? Certainly not, and the numbers demonstrate this.
A Reputation Sustains A Further Hit, Yet Truth Should Prevail
The Chancellor has sustained a further blow to her standing, however, should facts still matter in politics, Badenoch ought to stand down her attack dogs. Maybe the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its own documents will satisfy Westminster's thirst for blood.
But the true narrative is far stranger compared to the headlines indicate, extending wider and further beyond the political futures of Starmer and his 2024 intake. At its heart, this is a story concerning what degree of influence you and I get in the governance of our own country. This should concern everyone.
Firstly, to the Core Details
After the OBR released last Friday some of the projections it provided to Reeves while she prepared the red book, the shock was immediate. Not only has the OBR never done such a thing before (an "unusual step"), its figures apparently went against the chancellor's words. While rumors from Westminster suggested how bleak the budget was going to be, the watchdog's forecasts were improving.
Take the government's most "unbreakable" fiscal rule, stating by 2030 daily spending on hospitals, schools, and the rest would be wholly paid for by taxes: at the end of October, the watchdog calculated it would barely be met, albeit only by a tiny margin.
Several days later, Reeves gave a media briefing so extraordinary it forced breakfast TV to break from its regular schedule. Several weeks prior to the real budget, the country was warned: taxes were going up, and the main reason being pessimistic numbers from the OBR, in particular its finding suggesting the UK had become less productive, investing more but getting less out.
And so! It happened. Despite the implications from Telegraph editorials and Tory broadcast rounds suggested over the weekend, this is essentially what happened at the budget, which was significant, harsh, and grim.
The Misleading Alibi
The way in which Reeves deceived us was her justification, because those OBR forecasts didn't force her hand. She might have made different options; she could have given other reasons, including on budget day itself. Prior to the recent election, Starmer pledged exactly such people power. "The hope of democracy. The power of the vote. The potential for national renewal."
A year on, and it is a lack of agency that jumps out from Reeves's pre-budget speech. Our first Labour chancellor in 15 years portrays 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 political stripe would be standing here today, confronting the decisions that I face."
She certainly make a choice, just not the kind the Labour party cares to publicize. Starting April 2029 British workers and businesses are set to be contributing another £26bn annually in taxes – and the majority of this will not be spent on better hospitals, new libraries, nor enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it is not being lavished upon "welfare claimants".
Where the Money Actually Ends Up
Instead of being spent, over 50% of this additional revenue will instead provide Reeves cushion for her self-imposed budgetary constraints. Approximately 25% goes on covering the administration's policy reversals. Examining the OBR's calculations and giving maximum benefit of the doubt towards Reeves, a mere 17% of the taxes will go on genuinely additional spending, for example scrapping the two-child cap on child benefit. Removing it "costs" the Treasury a mere £2.5bn, because it was always an act of political theatre from George Osborne. This administration could and should abolished it in its first 100 days.
The Real Target: Financial Institutions
The Tories, Reform and the entire right-wing media have spent days railing against the idea that Reeves conforms to the caricature of left-wing finance ministers, taxing strivers to fund shirkers. Party MPs have been cheering her budget for being balm for their troubled consciences, safeguarding the disadvantaged. Each group could be completely mistaken: Reeves's budget was primarily aimed at asset managers, hedge funds and participants within the financial markets.
The government could present a strong case for itself. The margins provided by the OBR were insufficient to feel secure, especially given that lenders charge the UK the highest interest rate of all G7 developed nations – higher than France, which lost its leader, higher than Japan which has far greater debt. Coupled with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue this budget enables the Bank of England to reduce interest rates.
It's understandable why those wearing red rosettes may choose not to couch it this way when they're on #Labourdoorstep. As a consultant to Downing Street puts it, Reeves has "utilised" the bond market to act as an instrument of control over her own party and the voters. It's why Reeves can't resign, regardless of which pledges she breaks. It's why Labour MPs must knuckle down and vote to take billions off social security, as Starmer indicated yesterday.
A Lack of Statecraft , a Broken Promise
What is absent here is the notion of statecraft, of mobilising the Treasury and the Bank to reach a fresh understanding with markets. Also absent is intuitive knowledge of voters,
