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This accusation is a serious one: that Rachel Reeves may have deceived UK citizens, frightening them into accepting billions in additional taxes that would be used for increased benefits. While hyperbolic, this isn't usual Westminster sparring; this time, the stakes could be damaging. A week ago, detractors of Reeves and Keir Starmer had been calling their budget "uncoordinated". Now, it's denounced as falsehoods, and Kemi Badenoch demanding the chancellor's resignation.

Such a grave charge requires straightforward answers, so here is my assessment. Has the chancellor tell lies? Based on current information, no. She told no blatant falsehoods. But, notwithstanding Starmer's yesterday's comments, that doesn't mean there's no issue here and we can all move along. Reeves did misinform the public regarding the factors shaping her decisions. Was this all to funnel cash towards "benefits street", like the Tories assert? Certainly not, as the figures prove this.

A Standing Takes Another Hit, But Facts Must Prevail

The Chancellor has taken another blow to her reputation, but, if facts continue to matter in politics, Badenoch should stand down her attack dogs. Maybe the resignation yesterday 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.

Yet the true narrative is much more unusual compared to media reports suggest, extending wider and further than the political futures of Starmer and his 2024 intake. At its heart, this is a story about what degree of influence you and I have in the governance of the nation. This should concern everyone.

First, on to Brass Tacks

After the OBR released last Friday a portion of the projections it shared with Reeves while she prepared the red book, the shock was immediate. Not merely had the OBR not done such a thing before (an "unusual step"), its numbers seemingly contradicted the chancellor's words. While rumors from Westminster suggested how bleak the budget was going to be, the watchdog's predictions were improving.

Take the government's so-called "unbreakable" fiscal rule, stating by 2030 daily spending for hospitals, schools, and the rest must be wholly funded by taxes: at the end of October, the OBR calculated this would just about be met, albeit by a minuscule margin.

A few days later, Reeves held a media briefing so extraordinary it forced morning television to break from its regular schedule. Weeks before the real budget, the country was warned: taxes were going up, and the main reason being gloomy numbers provided by the OBR, in particular its finding that the UK was less efficient, investing more but yielding less.

And so! It happened. Notwithstanding what Telegraph editorials and Tory media appearances implied recently, that is basically what transpired during the budget, that proved to be big and painful and bleak.

The Deceptive Alibi

The way in which Reeves misled us was her justification, since those OBR forecasts did not compel her actions. She might have made other choices; she could have given other reasons, even during the statement. Before last year's election, Starmer pledged precisely this kind of public influence. "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 is evident from Reeves's pre-budget speech. Our first Labour chancellor in 15 years casts herself as a technocrat at the mercy of factors beyond her control: "Given the circumstances of the persistent challenges on our productivity … any chancellor of any political stripe would be in this position today, facing the decisions that I face."

She certainly make decisions, only not one the Labour party cares to publicize. Starting April 2029 UK workers as well as businesses will be paying another £26bn a year in taxes – but most of that will not go towards funding improved healthcare, new libraries, nor enhanced wellbeing. Whatever bilge comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "welfare claimants".

Where the Money Really Goes

Instead of being spent, over 50% of this extra cash will instead give Reeves cushion against her self-imposed fiscal rules. Approximately 25% goes on covering the administration's policy reversals. Reviewing the OBR's calculations and giving maximum benefit of the doubt to a Labour chancellor, only 17% of the taxes will go on genuinely additional spending, such as abolishing the two-child cap on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, because it had long been a bit of political theatre by George Osborne. A Labour government could and should have binned it in its first 100 days.

The True Audience: Financial Institutions

Conservatives, Reform and the entire right-wing media have spent days barking about how Reeves fits the stereotype of left-wing finance ministers, soaking hard workers to fund shirkers. Labour backbenchers are cheering her budget as a relief to their social concerns, protecting the disadvantaged. Both sides are completely mistaken: The Chancellor's budget was primarily targeted towards asset managers, speculative capital and the others in the financial markets.

Downing Street can make a strong case for itself. The forecasts from the OBR were too small for comfort, especially considering bond investors demand from the UK the greatest borrowing cost among G7 developed nations – exceeding that of France, that recently lost a prime minister, and exceeding Japan which has far greater debt. Combined with the policies to hold down fuel bills, prescription charges and train fares, Starmer and Reeves can say their plan allows the Bank of England to cut interest rates.

You can see why those wearing Labour badges might not frame it this way when they're on the doorstep. As a consultant for Downing Street says, Reeves has "weaponised" the bond market as an instrument of discipline against Labour MPs and the voters. It's the reason the chancellor can't resign, regardless of which pledges are broken. It is also the reason Labour MPs will have to knuckle down and vote that cut billions from social security, as Starmer promised recently.

A Lack of Statecraft and a Broken Pledge

What is absent from this is the notion of strategic governance, of mobilising the finance ministry and the central bank to reach a new accommodation with investors. Also absent is any innate understanding of voters,