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The accusation is a serious one: that Rachel Reeves has deceived UK citizens, frightening them to accept massive additional taxes which would be spent on increased welfare payments. However exaggerated, this is not typical political bickering; on this occasion, the stakes could be damaging. Just last week, detractors aimed at Reeves alongside Keir Starmer had been labeling their budget "uncoordinated". Today, it is denounced as falsehoods, with Kemi Badenoch calling for Reeves to step down.

This serious charge requires clear responses, therefore here is my assessment. Has the chancellor lied? Based on the available information, no. There were no major untruths. But, despite Starmer's yesterday's remarks, it doesn't follow that there's nothing to see and we can all move along. Reeves did misinform the public about the factors shaping her choices. Was it to channel cash to "welfare recipients", like the Tories assert? No, and the numbers demonstrate this.

A Reputation Sustains A Further Blow, But Facts Must Prevail

Reeves has sustained a further blow to her reputation, however, if facts continue to have anything to do with politics, Badenoch should stand down her attack dogs. Maybe the resignation recently of OBR head, Richard Hughes, over the unauthorized release of its internal documents will quench SW1's thirst for blood.

But the real story is much more unusual than the headlines suggest, and stretches broader and deeper than the careers of Starmer and his 2024 intake. Fundamentally, this is an account concerning what degree of influence you and I have in the governance of our own country. And it concern you.

First, on to Brass Tacks

When the OBR published recently some of the projections it provided to Reeves while she wrote the red book, the shock was immediate. Not merely has the OBR not acted this way before (described as an "rare action"), its numbers seemingly contradicted the chancellor's words. Even as rumors from Westminster suggested the grim nature of the budget would have to be, the OBR's own forecasts were improving.

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

Several days later, Reeves held a media briefing so unprecedented it forced breakfast TV to interrupt its regular schedule. Several weeks prior to the real budget, the nation was warned: taxes would rise, with 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 so! It came to pass. Despite what Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, this is basically what happened during the budget, that proved to be big and painful and bleak.

The Misleading Alibi

The way in which Reeves deceived us was her justification, because those OBR forecasts didn't compel her actions. She could have made different options; she could have provided other reasons, even on budget day itself. Before last year's election, Starmer promised exactly such public influence. "The hope of democracy. The strength of the vote. The potential for national renewal."

A year on, and it's powerlessness that is evident from Reeves's pre-budget speech. Our first Labour chancellor for a decade and a half casts herself to be a technocrat buffeted by factors beyond her control: "In the context of the persistent challenges on our productivity … any chancellor of any political stripe would be standing here today, facing the decisions that I face."

She did make a choice, just not one Labour wishes to publicize. Starting April 2029 UK workers and businesses are set to be contributing another £26bn a year in taxes – and most of that will not go towards funding better hospitals, new libraries, or enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and their allies, it is not being lavished upon "benefits street".

Where the Cash Actually Ends Up

Instead of going on services, over 50% of this extra cash will instead give Reeves a buffer against her own budgetary constraints. About 25% is allocated to paying for the administration's policy reversals. Reviewing the OBR's calculations and being as generous as possible to Reeves, a mere 17% of the tax take will go on genuinely additional spending, such as scrapping the two-child cap on child benefit. Its abolition "will cost" the Treasury only £2.5bn, as it was always an act of political theatre from George Osborne. A Labour government should have abolished it in its first 100 days.

The Real Target: Financial Institutions

The Tories, Reform and all of Blue Pravda have spent days barking about how Reeves conforms to the stereotype of left-wing finance ministers, soaking strivers to spend on the workshy. Party MPs are cheering her budget for being a relief for their social concerns, protecting the disadvantaged. Both sides could be completely mistaken: The Chancellor's budget was largely targeted towards asset managers, speculative capital and participants within the financial markets.

Downing Street can make a strong case in its defence. The margins provided by the OBR were insufficient to feel secure, especially given that lenders charge the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, which lost its leader, and exceeding Japan that carries way more debt. Combined with the policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves can say their plan enables the Bank of England to reduce interest rates.

It's understandable why those folk with red rosettes may choose not to frame it in such terms when they're on #Labourdoorstep. According to a consultant to Downing Street puts it, Reeves has effectively "weaponised" financial markets to act as a tool of control against her own party and the electorate. This is the reason Reeves cannot resign, no matter what pledges she breaks. It is also why Labour MPs will have to fall into line and support measures to take billions off social security, just as Starmer indicated yesterday.

Missing Statecraft and a Broken Pledge

What is absent from this is any sense of strategic governance, of harnessing the finance ministry and the central bank to forge a fresh understanding with investors. Missing too is innate understanding of voters,