This charge is a serious one: suggesting Rachel Reeves has deceived the British public, spooking them to accept billions in additional taxes which could be used for increased welfare payments. However hyperbolic, this is not typical Westminster sparring; this time, the stakes are more serious. A week ago, critics of Reeves alongside Keir Starmer were calling their budget "disorderly". Now, it's branded as lies, with Kemi Badenoch calling for Reeves to step down.
This serious charge requires straightforward responses, so here is my view. Did the chancellor been dishonest? Based on current evidence, no. There were no blatant falsehoods. But, despite Starmer's yesterday's comments, that doesn't mean there is nothing to see and we can all move along. Reeves did misinform the public regarding the factors informing her decisions. Was this all to funnel cash towards "welfare recipients", like the Tories claim? No, and the figures demonstrate it.
Reeves has taken a further blow to her reputation, however, if facts continue to have anything to do with politics, Badenoch should call off her attack dogs. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its internal documents will quench Westminster's thirst for blood.
But the real story is much more unusual compared to the headlines suggest, and stretches wider and further than the political futures of Starmer and the 2024 intake. Fundamentally, this is an account about what degree of influence you and I have over the governance of the nation. And it concern everyone.
After the OBR released recently a portion of the forecasts it shared with Reeves as she prepared the budget, the surprise was immediate. Not merely had the OBR not done such a thing before (an "rare action"), its numbers seemingly went against the chancellor's words. Even as leaks from Westminster suggested how bleak the budget was going to be, the OBR's own forecasts were getting better.
Consider the government's so-called "iron-clad" fiscal rule, that by 2030 day-to-day spending on hospitals, schools, and other services would be wholly paid for by taxes: at the end of October, the watchdog reckoned it would barely be met, albeit by a tiny margin.
A few days later, Reeves gave a media briefing so unprecedented it forced morning television to interrupt its usual fare. Several weeks before the real budget, the nation was warned: taxes would rise, with the primary cause cited as gloomy numbers from the OBR, in particular its finding suggesting the UK had become less efficient, investing more but getting less out.
And so! It came to pass. Notwithstanding the implications from Telegraph editorials and Tory media appearances suggested recently, that is essentially what transpired at the budget, that proved to be big and painful and bleak.
Where Reeves deceived us was her alibi, since those OBR forecasts didn't force her hand. She could have made different options; she could have provided alternative explanations, including on budget day itself. Prior to the recent election, Starmer promised precisely this kind of public influence. "The hope of democracy. The strength of the vote. The potential for national renewal."
A year on, and it is powerlessness that jumps out in Reeves's breakfast speech. Our first Labour chancellor for a decade and a half portrays herself to be a technocrat at the mercy of factors outside her influence: "Given the circumstances of the persistent challenges on our productivity … any chancellor of any party would be standing here today, confronting the decisions that I face."
She did make decisions, just not the kind Labour wishes to broadcast. From April 2029 British workers as well as businesses are set to be contributing an additional £26bn annually in taxes – but most of that will not be spent on improved healthcare, new libraries, nor happier lives. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "benefits street".
Instead of being spent, more than 50% of this additional revenue will instead provide Reeves cushion against her own fiscal rules. About 25% goes on covering the administration's U-turns. Reviewing the OBR's calculations and being as generous as possible to a Labour chancellor, only 17% of the taxes will go on genuinely additional spending, such as scrapping the limit on child benefit. Removing it "costs" the Treasury only £2.5bn, as it was always a bit of political theatre by George Osborne. This administration could and should abolished it in its first 100 days.
Conservatives, Reform along with all of right-wing media have spent days railing against how Reeves conforms to the stereotype of Labour chancellors, taxing strivers to fund the workshy. Labour backbenchers are cheering her budget as balm for their social concerns, safeguarding the most vulnerable. Both sides could be 180-degrees wrong: The Chancellor's budget was primarily aimed at investment funds, hedge funds and participants within the bond markets.
The government could present a compelling argument in its defence. The forecasts provided by 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. Combined with our policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan enables the central bank to cut its key lending rate.
You can see that those wearing Labour badges might not couch it this way when they visit the doorstep. According to one independent adviser to Downing Street says, Reeves has "utilised" financial markets to act as an instrument of discipline over Labour MPs and the voters. It's the reason Reeves can't resign, regardless of which promises are broken. It is also why Labour MPs must fall into line and vote that cut billions from social security, just as Starmer promised recently.
What is absent from this is any sense of strategic governance, of harnessing the Treasury and the central bank to forge a fresh understanding with markets. Also absent is any intuitive knowledge of voters,
A tech enthusiast and gaming aficionado with over a decade of experience in digital media and content creation.
