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This accusation represents a grave matter: that Rachel Reeves may have misled the British public, scaring them into accepting massive additional taxes which could be spent on increased welfare payments. However exaggerated, this isn't usual political sparring; this time, the stakes are higher. A week ago, critics of Reeves and Keir Starmer had been calling their budget "uncoordinated". Today, it's branded as lies, with Kemi Badenoch demanding the chancellor's resignation.

Such a serious charge requires straightforward responses, so let me provide my assessment. Has the chancellor lied? Based on the available information, no. She told no whoppers. But, despite Starmer's yesterday's comments, that doesn't mean there's nothing to see and we should move on. The Chancellor did misinform the public regarding the considerations informing her decisions. Was this all to funnel cash towards "benefits street", like the Tories assert? Certainly not, as the numbers demonstrate it.

A Reputation Takes Another Blow, But Facts Should Prevail

Reeves has taken another hit to her reputation, however, if facts continue to matter in politics, Badenoch should call off her attack dogs. Perhaps the resignation yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will quench Westminster's appetite for scandal.

But the real story is far stranger than the headlines indicate, extending broader and deeper than the careers of Starmer and the class of '24. At its heart, this is a story concerning what degree of influence you and I get in the governance of the nation. This should should worry everyone.

First, on to the Core Details

After the OBR published recently a portion of the forecasts it shared with Reeves as she wrote the red book, the shock was immediate. Not merely has the OBR never acted this way before (described as an "rare action"), its figures seemingly went against the chancellor's words. Even as rumors from Westminster suggested the grim nature of the budget would have to be, the watchdog's predictions were improving.

Take the government's most "unbreakable" rule, stating by 2030 day-to-day spending for hospitals, schools, and other services would be wholly paid for by taxes: in late October, the watchdog reckoned it would just about be met, albeit only by a minuscule margin.

A few days later, Reeves gave a press conference so unprecedented that it caused breakfast TV to interrupt its usual fare. Weeks before the actual budget, the country was put on alert: taxes would rise, and the main reason cited as pessimistic numbers from the OBR, specifically its finding that the UK had become less productive, putting more in but yielding less.

And lo! It happened. Despite what Telegraph editorials combined with Tory broadcast rounds implied recently, that is essentially what transpired during the budget, which was significant, harsh, and grim.

The Misleading Justification

The way in which Reeves deceived us was her alibi, because these OBR forecasts didn't compel her actions. She could have made different options; she might have provided other reasons, even during the statement. Prior to the recent election, Starmer promised precisely this kind of people power. "The promise of democracy. The strength of the vote. The possibility for national renewal."

A year on, yet it is powerlessness that is evident in Reeves's pre-budget speech. The first Labour chancellor in 15 years portrays herself as a technocrat at the mercy of forces beyond her control: "In the context of the long-term challenges on our productivity … any finance minister of any party would be standing here today, confronting the choices that I face."

She certainly make decisions, only not one Labour cares to publicize. Starting April 2029 British workers and businesses are set to be contributing another £26bn a year in tax – and the majority of this will not be funding improved healthcare, new libraries, nor happier lives. Regardless of what bilge is spouted by Nigel Farage, Badenoch and others, it is not getting splashed on "welfare claimants".

Where the Money Really Goes

Rather than being spent, more than 50% of this extra cash will in fact provide Reeves a buffer against her self-imposed budgetary constraints. About 25% goes on covering the government's own policy reversals. Reviewing the OBR's calculations and giving maximum benefit of the doubt to a Labour chancellor, a mere 17% of the tax take will fund genuinely additional 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 political theatre by George Osborne. A Labour government should have abolished it immediately upon taking office.

The True Audience: Financial Institutions

Conservatives, Reform and all of right-wing media have been railing against the idea that Reeves fits the stereotype of Labour chancellors, taxing strivers to fund shirkers. Labour backbenchers have been cheering her budget as a relief to their troubled consciences, protecting the disadvantaged. Both sides could be 180-degrees wrong: Reeves's budget was largely aimed at investment funds, hedge funds and the others in the financial markets.

The government can make a strong case in its defence. The forecasts provided by the OBR were insufficient for comfort, especially given that bond investors charge 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 measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue this budget allows 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're on #Labourdoorstep. According to one independent adviser for Downing Street puts it, Reeves has effectively "utilised" the bond market to act as a tool of discipline over her own party and the voters. It's the reason Reeves cannot resign, regardless of which promises are broken. It is also the reason Labour MPs will have to knuckle down and support measures to take billions off social security, just as Starmer indicated yesterday.

A Lack of Statecraft , an Unfulfilled Pledge

What is absent from this is the notion of strategic governance, of harnessing the finance ministry and the Bank to reach a fresh understanding with investors. Missing too is intuitive knowledge of voters,