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This allegation represents a grave matter: suggesting Rachel Reeves has misled Britons, spooking them into accepting billions in additional taxes that could be spent on increased benefits. While exaggerated, this isn't typical Westminster sparring; this time, the consequences are more serious. A week ago, detractors of Reeves alongside Keir Starmer had been labeling their budget "a mess". Today, it is denounced as lies, and Kemi Badenoch calling for the chancellor to quit.

This serious accusation demands clear answers, so here is my assessment. Has the chancellor tell lies? On the available evidence, apparently not. She told no blatant falsehoods. However, despite Starmer's recent comments, it doesn't follow that there's nothing to see and we can all move along. The Chancellor did mislead the public regarding the considerations shaping her choices. Was this all to channel cash to "benefits street", as the Tories claim? Certainly not, and the numbers prove it.

A Reputation Sustains Another Blow, But Facts Must Prevail

The Chancellor has taken a further blow to her reputation, however, should facts still have anything to do with politics, Badenoch ought to call off her lynch mob. Perhaps 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 media reports indicate, and stretches wider and further beyond the political futures of Starmer and the 2024 intake. Fundamentally, this is an account about how much say you and I have over the governance of the nation. And it concern everyone.

Firstly, on to Brass Tacks

After the OBR published recently a portion of the projections it provided to Reeves while she prepared the budget, the shock was instant. Not only has the OBR never acted this way before (described as an "unusual step"), its numbers apparently contradicted the chancellor's words. While rumors from Westminster suggested the grim nature of the budget was going to be, the OBR's own forecasts were getting better.

Take the Treasury's most "unbreakable" fiscal rule, that by 2030 daily spending for hospitals, schools, and other services would be wholly paid for by taxes: at the end of October, the watchdog reckoned it would just about be met, albeit only by a minuscule margin.

Several days later, Reeves gave a media briefing so extraordinary it forced breakfast TV to interrupt its regular schedule. Several weeks before the actual budget, the nation was put on alert: taxes were going up, and the primary cause cited as pessimistic numbers from the OBR, in particular its conclusion that the UK was less productive, putting more in but getting less out.

And so! It happened. Notwithstanding what Telegraph editorials combined with Tory broadcast rounds implied recently, that is basically what transpired during the budget, which was big and painful and bleak.

The Misleading Justification

Where Reeves misled us was her justification, because these OBR forecasts didn't force her hand. She could have chosen other choices; she might have provided other reasons, including during the statement. Prior to last year's election, Starmer promised precisely this kind of public influence. "The promise of democracy. The strength of the vote. The potential for national renewal."

A year on, yet it is powerlessness that jumps out in Reeves's pre-budget speech. The first Labour chancellor for a decade and a half casts 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 party would be in this position today, facing the choices that I face."

She did make decisions, just not the kind Labour wishes to publicize. Starting April 2029 British workers and businesses will be paying another £26bn a year in taxes – but most of that will not go towards spent on better hospitals, new libraries, or enhanced wellbeing. Regardless of what bilge comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "welfare claimants".

Where the Cash Really Goes

Instead of being spent, more than 50% of this additional revenue will instead provide Reeves cushion for her own budgetary constraints. About 25% goes on paying for the government's own U-turns. Reviewing the OBR's calculations and giving maximum benefit of the doubt towards Reeves, only 17% of the taxes will fund actual new spending, for example scrapping the two-child cap on child benefit. Removing it "will cost" the Treasury only £2.5bn, because it was always a bit of theatrical cruelty by George Osborne. This administration should have abolished it in its first 100 days.

The True Audience: Financial Institutions

The Tories, Reform along with all of right-wing media have been barking about the idea that Reeves conforms to the caricature of Labour chancellors, taxing strivers to fund shirkers. Labour backbenchers are cheering her budget as a relief for their social concerns, protecting the disadvantaged. Both sides could be completely mistaken: The Chancellor's budget was primarily targeted towards investment funds, speculative capital and participants within the bond markets.

The government could present a strong case for itself. The margins provided by the OBR were deemed insufficient for comfort, especially given that bond investors demand from the UK the greatest borrowing cost of all G7 rich countries – higher than France, which lost its leader, and exceeding Japan that carries way more debt. Coupled with the policies to cap fuel bills, prescription charges and train fares, Starmer together with Reeves can say their plan enables the central bank to cut interest rates.

You can see that those wearing red rosettes may choose not to couch it in such terms next time they visit the doorstep. As a consultant to Downing Street says, Reeves has "weaponised" financial markets as a tool of control against Labour MPs and the voters. This is why the chancellor can't resign, regardless of which pledges she breaks. It's why Labour MPs will have to fall into line and support measures that cut billions from social security, as Starmer promised recently.

Missing Political Vision and an Unfulfilled Promise

What is absent from this is the notion of statecraft, of harnessing the Treasury and the Bank to reach a new accommodation with markets. Missing too is any innate understanding of voters,