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This accusation is a serious one: suggesting Rachel Reeves may have misled the British public, spooking them to accept billions in extra taxes which could be funneled into increased benefits. While exaggerated, this isn't typical political bickering; this time, the consequences are higher. A week ago, detractors aimed at Reeves alongside Keir Starmer had been calling their budget "disorderly". Now, it is denounced as lies, and Kemi Badenoch calling for the chancellor to quit.

Such a grave accusation requires clear answers, so here is my assessment. Has the chancellor tell lies? Based on the available evidence, no. There were no whoppers. But, despite Starmer's recent remarks, that doesn't mean there is no issue here and we can all move along. Reeves did mislead the public regarding the considerations informing her decisions. Was this all to channel cash to "welfare recipients", like the Tories claim? No, as the figures demonstrate this.

A Reputation Takes Another Hit, But Facts Should Prevail

The Chancellor has taken another blow to her reputation, but, if facts continue to matter in politics, Badenoch ought to call off her lynch mob. Maybe the stepping down yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the unauthorized release of its internal documents will satisfy Westminster's thirst for blood.

Yet the true narrative 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 get in the running of the nation. This should should worry you.

First, to the Core Details

When the OBR released recently a portion of the projections it provided to Reeves while she prepared the budget, the surprise was immediate. Not only has the OBR never done such a thing before (described as an "exceptional move"), its numbers apparently contradicted Reeves's statements. Even as leaks from Westminster suggested the grim nature of the budget was going to be, the watchdog's forecasts were improving.

Consider the government's most "iron-clad" fiscal rule, that by 2030 day-to-day spending on hospitals, schools, and the rest must be completely funded by taxes: at the end of October, the OBR reckoned this would barely be met, albeit by a tiny margin.

Several days later, Reeves gave a press conference so extraordinary that it caused breakfast TV to interrupt its regular schedule. Several weeks prior to the real budget, the nation was warned: taxes were going up, and the primary cause being pessimistic numbers provided by the OBR, specifically its finding suggesting the UK had become less efficient, putting more in but getting less out.

And lo! It came to pass. Despite what Telegraph editorials and Tory broadcast rounds suggested recently, that is basically what happened at the budget, that proved to be significant, harsh, and grim.

The Misleading Alibi

Where Reeves misled us was her justification, since those OBR forecasts didn't compel her actions. She might have made different options; she could have given other reasons, including during the statement. Before the recent election, Starmer pledged exactly such public influence. "The hope of democracy. The power of the vote. The possibility for national renewal."

A year on, yet it is a lack of agency that is evident from Reeves's breakfast speech. The first Labour chancellor for a decade and a half portrays herself as an apolitical figure at the mercy of forces beyond her control: "In the context of the persistent challenges on our productivity … any chancellor of any party would be standing here today, confronting the choices that I face."

She did make decisions, only not one Labour wishes to publicize. From April 2029 UK workers and businesses will be paying an additional £26bn annually in tax – but the majority of this will not go towards spent on improved healthcare, public services, or happier lives. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it is not getting splashed on "welfare claimants".

Where the Cash Actually Ends Up

Instead of going on services, more than 50% of this additional revenue will instead provide Reeves a buffer against her own fiscal rules. About 25% goes on covering the administration's U-turns. Examining the OBR's calculations and giving maximum benefit of the doubt to a Labour chancellor, a mere 17% of the taxes will fund actual new spending, such as abolishing the limit on child benefit. Its abolition "will cost" the Treasury only £2.5bn, because it had long been a bit of theatrical cruelty by George Osborne. A Labour government could and should abolished it immediately upon taking office.

The True Audience: Financial Institutions

The Tories, Reform along with all of Blue Pravda have been barking about the idea that Reeves conforms to the caricature of left-wing finance ministers, taxing strivers to spend on shirkers. Party MPs have been applauding her budget as a relief to their social concerns, protecting the disadvantaged. Each group could be 180-degrees wrong: The Chancellor's budget was primarily targeted towards investment funds, speculative capital and participants within the bond markets.

The government can make a strong case in its defence. The forecasts from the OBR were too small for comfort, particularly considering lenders demand from the UK the greatest borrowing cost of all G7 developed nations – higher than France, that recently lost a prime minister, higher than Japan which has way more debt. Coupled with our policies to hold down fuel bills, prescription charges and train fares, Starmer and Reeves argue this budget allows the Bank of England to cut its key lending rate.

You can see why those folk with Labour badges might not frame it this way next time they visit #Labourdoorstep. As one independent adviser to Downing Street puts it, Reeves has "utilised" financial markets as a tool of discipline against Labour MPs and the voters. This is the reason Reeves cannot resign, regardless of which promises are broken. It is also the reason Labour MPs will have to knuckle down and vote to take billions off social security, just as Starmer indicated recently.

Missing Statecraft and an Unfulfilled Promise

What is absent here is the notion of strategic governance, of harnessing the Treasury and the Bank to reach a new accommodation with markets. Also absent is any intuitive knowledge of voters,