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This allegation is a serious one: suggesting Rachel Reeves has lied to the British public, frightening them to accept billions in extra taxes which would be funneled into higher welfare payments. While exaggerated, this isn't typical Westminster sparring; this time, the stakes are higher. A week ago, critics of Reeves alongside Keir Starmer were labeling their budget "uncoordinated". Now, it's branded as falsehoods, with Kemi Badenoch demanding the chancellor's resignation.

Such a grave charge requires straightforward answers, so let me provide my view. Did the chancellor lied? On the available information, no. She told no major untruths. But, despite Starmer's recent comments, that doesn't mean there's no issue here and we should move on. The Chancellor did mislead the public about the considerations informing her decisions. Was it to funnel cash towards "welfare recipients", as the Tories claim? Certainly not, as the numbers prove it.

A Standing Takes A Further Blow, Yet Truth Must Win Out

Reeves has sustained a further hit to her standing, however, should facts still matter in politics, Badenoch should call off her attack dogs. Perhaps the resignation recently of OBR head, Richard Hughes, over the leak of its own documents will quench Westminster's thirst for blood.

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

Firstly, on to Brass Tacks

When the OBR released last Friday some of the projections it shared with Reeves while she prepared the red book, the surprise was immediate. Not only had the OBR never acted this way before (described as an "unusual step"), its numbers seemingly contradicted Reeves's statements. While rumors from Westminster suggested the grim nature of the budget would have to be, the OBR's own forecasts were getting better.

Take the Treasury's most "unbreakable" fiscal rule, stating by 2030 day-to-day spending on hospitals, schools, and other services would be completely funded by taxes: in late October, the OBR calculated it would just about be met, albeit by a minuscule margin.

A few days later, Reeves gave a media briefing so unprecedented it forced breakfast TV to interrupt its regular schedule. Several weeks before the real budget, the nation was warned: taxes were going up, with the primary cause being gloomy numbers provided by the OBR, in particular its finding that the UK was less efficient, investing more but yielding less.

And lo! It happened. Despite what Telegraph editorials combined with Tory broadcast rounds suggested over the weekend, this is basically what happened during the budget, which was significant, harsh, and grim.

The Misleading Alibi

The way in which Reeves misled us was her alibi, since those OBR forecasts didn't force her hand. She might have made different options; she might have given other reasons, including on budget day itself. Before the recent election, Starmer pledged exactly such people power. "The hope of democracy. The strength of the vote. The possibility for national renewal."

One year later, and it is a lack of agency that jumps out in Reeves's breakfast speech. Our first Labour chancellor for a decade and a half portrays herself as an apolitical figure at the mercy of factors beyond her control: "In the context of the persistent challenges with our productivity … any chancellor of any political stripe would be standing here today, facing the choices that I face."

She did make decisions, only not one Labour cares to broadcast. Starting April 2029 British workers as well as businesses are set to be contributing another £26bn annually in taxes – but the majority of this will not go towards spent on better hospitals, public services, or enhanced wellbeing. Whatever nonsense is spouted by Nigel Farage, Badenoch and their allies, it is not being lavished upon "benefits street".

Where the Cash Really Goes

Instead of being spent, more than 50% of the additional revenue will instead provide Reeves cushion for her own budgetary constraints. About 25% goes on covering the administration's U-turns. Examining the OBR's calculations and being as generous as possible towards Reeves, a mere 17% of the taxes will go on actual new spending, for example scrapping the two-child cap on child benefit. Its abolition "costs" the Treasury only £2.5bn, as it had long been an act of political theatre from George Osborne. A Labour government should have have binned it immediately upon taking office.

The True Audience: Financial Institutions

The Tories, Reform and all of right-wing media have spent days barking about the idea that Reeves conforms to the stereotype of left-wing finance ministers, taxing hard workers to spend on the workshy. Party MPs have been applauding her budget as balm to their troubled consciences, safeguarding the most vulnerable. Both sides are 180-degrees wrong: The Chancellor's budget was primarily targeted towards asset managers, hedge funds and participants within the bond markets.

The government could present a compelling argument in its defence. The forecasts from the OBR were insufficient for comfort, especially given that lenders charge the UK the highest interest rate of all G7 rich countries – exceeding that of France, which lost a prime minister, and exceeding Japan which has far greater debt. Combined with our policies to cap fuel bills, prescription charges and train fares, Starmer and Reeves argue their plan enables the central bank to cut its key lending rate.

It's understandable that those folk with Labour badges may choose not to couch it in such terms next time they're on #Labourdoorstep. As a consultant for Downing Street puts it, Reeves has "utilised" the bond market to act as an instrument of control against her own party and the voters. This is the reason Reeves cannot resign, no matter what pledges she breaks. It's the reason Labour MPs must knuckle down and support measures that cut billions from social security, just as Starmer indicated yesterday.

A Lack of Statecraft and an Unfulfilled Pledge

What's missing here is any sense of strategic governance, of harnessing the finance ministry and the Bank to forge a new accommodation with markets. Missing too is innate understanding of voters,