The charge represents a grave matter: that Rachel Reeves may have misled UK citizens, spooking them to accept billions in extra taxes that could be funneled into higher benefits. However exaggerated, this is not usual Westminster sparring; this time, the stakes are more serious. A week ago, critics of Reeves and Keir Starmer had been calling their budget "chaotic". Now, it's denounced as lies, with Kemi Badenoch demanding the chancellor's resignation.
Such a grave accusation demands clear responses, therefore here is my assessment. Has the chancellor tell lies? On the available evidence, no. There were no blatant falsehoods. However, despite Starmer's yesterday's comments, it doesn't follow that there is no issue here and we should move on. The Chancellor did mislead the public regarding the factors informing her choices. Was this all to funnel cash to "benefits street", like the Tories claim? No, and the figures prove it.
The Chancellor has sustained another hit to her reputation, however, should facts still have anything to do with politics, Badenoch should stand down her attack dogs. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the unauthorized release of its internal documents will satisfy Westminster's appetite for scandal.
But the real story is much more unusual compared to the headlines suggest, extending broader and deeper beyond the political futures of Starmer and the 2024 intake. At its heart, this is a story about how much say you and I have in the running of the nation. This should should worry everyone.
After the OBR released last Friday a portion of the forecasts it provided to Reeves while she prepared the budget, the shock was immediate. Not merely has the OBR never done such a thing before (an "unusual step"), its numbers seemingly contradicted Reeves's statements. While rumors from Westminster suggested the grim nature of the budget was going to be, the OBR's own forecasts were getting better.
Consider the Treasury's so-called "unbreakable" fiscal rule, stating by 2030 day-to-day spending for hospitals, schools, and other services would be wholly funded by taxes: at the end of October, the OBR reckoned it would barely be met, albeit by a minuscule margin.
A few days later, Reeves held a media briefing so unprecedented it forced morning television to break from its usual fare. Several weeks prior to the real budget, the nation was warned: taxes would rise, with the main reason cited as pessimistic numbers from the OBR, specifically its conclusion that the UK had become less productive, investing more but yielding less.
And so! It happened. Notwithstanding the implications from Telegraph editorials and Tory broadcast rounds implied recently, this is essentially what transpired at the budget, that proved to be significant, harsh, and grim.
The way in which Reeves deceived us was her justification, since these OBR forecasts did not compel her actions. She might have chosen other choices; she might have given alternative explanations, including during the statement. Before last year's election, Starmer promised exactly such people power. "The promise of democracy. The power of the vote. The possibility for national renewal."
One year later, and it is powerlessness that jumps out from Reeves's pre-budget speech. Our first Labour chancellor for a decade and a half casts herself as a technocrat at the mercy of factors outside her influence: "Given the circumstances of the persistent challenges with our productivity … any chancellor of any party would be in this position today, facing the decisions that I face."
She certainly make decisions, only not the kind the Labour party cares to broadcast. From April 2029 British workers and businesses are set to be contributing another £26bn annually in tax – but the majority of this will not go towards funding improved healthcare, new libraries, nor happier lives. Whatever nonsense is spouted by Nigel Farage, Badenoch and others, it isn't getting splashed on "benefits street".
Rather than being spent, more than 50% of this extra cash will instead provide Reeves cushion against her self-imposed fiscal rules. About 25% goes on covering the administration's policy reversals. Examining the watchdog's figures and giving maximum benefit of the doubt to a Labour chancellor, only 17% of the taxes will go on genuinely additional spending, such as scrapping the two-child cap on child benefit. Removing it "costs" the Treasury only £2.5bn, because it had long been an act of theatrical cruelty from George Osborne. A Labour government could and should abolished it in its first 100 days.
The Tories, Reform along with the entire Blue Pravda have spent days railing against how Reeves fits the caricature of Labour chancellors, taxing strivers to spend on shirkers. Party MPs have been cheering her budget as a relief to their social concerns, safeguarding the most vulnerable. Both sides are 180-degrees wrong: The Chancellor's budget was largely aimed at investment funds, speculative capital and participants within the financial markets.
The government can make a compelling argument in its defence. The forecasts provided by the OBR were deemed too small for comfort, particularly given that lenders charge the UK the highest interest rate among G7 developed nations – higher than France, that recently lost its leader, and exceeding Japan which has way more debt. Combined with our policies to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue this budget enables the Bank of England to cut interest rates.
You can see why those wearing Labour badges may choose not to frame it this way next time they're on #Labourdoorstep. According to one independent adviser to Downing Street puts it, Reeves has effectively "utilised" financial markets to act as an instrument of discipline against her own party and the electorate. This is the reason Reeves can't resign, no matter what promises she breaks. It's why Labour MPs will have to fall into line and support measures to take billions off social security, as Starmer promised recently.
What is absent from this is the notion of strategic governance, of mobilising the finance ministry and the central bank to forge a new accommodation with markets. Also absent is intuitive knowledge of voters,
Elara is a seasoned gaming journalist with a passion for slot mechanics and player strategies.
