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This allegation is a serious one: that Rachel Reeves has lied to Britons, scaring them to accept billions in additional taxes which would be used for increased benefits. However hyperbolic, this is not usual Westminster sparring; this time, the stakes could be damaging. A week ago, critics of Reeves alongside Keir Starmer had been calling their budget "a shambles". Today, it's denounced as falsehoods, with Kemi Badenoch calling for the chancellor's resignation.

Such a grave accusation requires clear responses, therefore here is my assessment. Has the chancellor lied? Based on current information, no. She told no whoppers. But, despite Starmer's yesterday's remarks, it doesn't follow that there is no issue here and we should move on. Reeves did mislead the public about the factors informing her decisions. Was it to funnel cash to "welfare recipients", as the Tories claim? No, and the numbers prove it.

A Reputation Takes Another Hit, But Facts Should Win Out

The Chancellor has taken a further blow to her standing, however, should facts continue to have anything to do with politics, Badenoch ought to call off her lynch mob. Maybe the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its own documents will satisfy SW1's thirst for blood.

But the real story is much more unusual than the headlines suggest, and stretches broader and deeper beyond the careers of Starmer and his 2024 intake. Fundamentally, herein lies a story concerning how much say you and I get in the running of the nation. And it concern you.

First, to Brass Tacks

When the OBR published last Friday a portion of the projections it provided to Reeves while she prepared the red book, the surprise was instant. Not only had the OBR not acted this way before (described as an "unusual step"), its figures apparently contradicted the chancellor's words. While rumors from Westminster were about the grim nature of the budget was going to be, the OBR's own predictions were improving.

Consider the Treasury's most "iron-clad" fiscal rule, stating by 2030 day-to-day spending on hospitals, schools, and the rest would be completely funded by taxes: in late October, the OBR 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. Several weeks before the real budget, the country was put on alert: taxes were going up, with the primary cause cited as pessimistic numbers from the OBR, in particular its conclusion that the UK had become less productive, investing more but yielding less.

And so! It happened. Despite the implications from Telegraph editorials combined with Tory broadcast rounds implied over the weekend, this is basically what transpired at the budget, that proved to be significant, harsh, and grim.

The Misleading Justification

The way in which Reeves deceived us concerned her justification, since these OBR forecasts did not force her hand. She could have made different options; she might have given alternative explanations, including during the statement. Prior to the recent election, Starmer pledged precisely this kind of people power. "The promise of democracy. The strength of the vote. The potential for national renewal."

A year on, yet it is a lack of agency that jumps out from Reeves's pre-budget speech. The first Labour chancellor for a decade and a half casts herself to be a technocrat buffeted by factors beyond her control: "Given the circumstances of the persistent challenges with our productivity … any chancellor of any party would be standing here today, facing the choices that I face."

She did make a choice, only not the kind the Labour party cares to publicize. Starting April 2029 UK workers and businesses are set to be contributing another £26bn a year in tax – but 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 isn't getting splashed on "welfare claimants".

Where the Money Actually Ends Up

Instead of going on services, more than 50% of this additional revenue will in fact provide Reeves cushion against her self-imposed budgetary constraints. About 25% goes on covering the administration's U-turns. Reviewing the watchdog's figures and giving maximum benefit of the doubt towards Reeves, only 17% of the taxes will go on genuinely additional spending, for example scrapping the two-child cap on child benefit. Removing it "costs" the Treasury only £2.5bn, as it had long been a bit of theatrical cruelty from George Osborne. A Labour government should have abolished it in its first 100 days.

The Real Target: The Bond Markets

The Tories, Reform along with all of right-wing media have been barking about how Reeves fits the stereotype of left-wing finance ministers, soaking strivers to fund shirkers. Labour backbenchers are cheering her budget for being balm to their troubled consciences, protecting the most vulnerable. Each group are completely mistaken: The Chancellor's budget was largely aimed at asset managers, hedge funds and the others in the financial markets.

The government can make a strong case for itself. The margins provided by the OBR were deemed insufficient to feel secure, particularly considering bond investors demand from the UK the greatest borrowing cost of all G7 rich countries – exceeding that of France, which lost a prime minister, higher than Japan which has far greater debt. Coupled with our measures to cap fuel bills, prescription charges and train fares, Starmer and Reeves argue this budget allows the Bank of England to reduce interest rates.

It's understandable why those folk with Labour badges may choose not to couch it this way next time they visit #Labourdoorstep. As one independent adviser to Downing Street says, Reeves has effectively "weaponised" financial markets to act as an instrument of discipline against Labour MPs and the voters. This is why Reeves can't resign, regardless of which pledges are broken. It is also why Labour MPs will have to fall into line and vote that cut billions from social security, as Starmer promised recently.

A Lack of Statecraft , a Broken Pledge

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