The Most Deceptive Part of the Chancellor's Budget? Its True Target Really For.

The accusation carries significant weight: suggesting Rachel Reeves has lied to the British public, spooking them to accept massive additional taxes that could be used for increased benefits. While exaggerated, this is not typical political sparring; this time, the consequences are higher. Just last week, critics aimed at Reeves alongside Keir Starmer were labeling their budget "a mess". Today, it's branded as lies, and Kemi Badenoch demanding Reeves to step down.

This serious accusation demands clear responses, therefore here is my assessment. Did the chancellor tell lies? On the available evidence, no. She told no blatant falsehoods. However, notwithstanding Starmer's yesterday's remarks, that doesn't mean there's nothing to see and we should move on. Reeves did mislead the public regarding the considerations shaping her decisions. Was this all to channel cash towards "welfare recipients", as the Tories assert? Certainly not, and the figures prove this.

A Reputation Takes Another Blow, But Facts Should Prevail

The Chancellor has sustained another blow to her reputation, but, should facts continue to matter in politics, Badenoch should stand down her attack dogs. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its internal documents will satisfy SW1's appetite for scandal.

Yet the real story is much more unusual compared to the headlines indicate, extending wider and further beyond the careers of Starmer and the 2024 intake. At its heart, this is a story concerning what degree of influence you and I get in the running of the nation. And it concern you.

First, to the Core Details

After the OBR published recently some of the forecasts it provided to Reeves while she prepared the red book, the shock was immediate. Not only had the OBR never acted this way before (described as an "exceptional move"), its figures seemingly went against Reeves's statements. Even as leaks from Westminster suggested the grim nature of the budget was going to be, the OBR's own predictions were getting better.

Take the Treasury's so-called "iron-clad" fiscal rule, that by 2030 daily spending for hospitals, schools, and other services must be wholly funded by taxes: at the end of October, the OBR calculated this would barely be met, albeit by a tiny margin.

A few days later, Reeves gave a media briefing so unprecedented it forced breakfast TV to break from its usual fare. Several weeks prior to the real budget, the country was put on alert: taxes would rise, and the main reason being pessimistic numbers from the OBR, in particular its finding suggesting the UK was less productive, investing more but yielding less.

And so! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory broadcast rounds suggested recently, this is essentially what transpired during the budget, that proved to be significant, harsh, and grim.

The Deceptive Alibi

The way in which Reeves deceived us concerned her alibi, since these OBR forecasts did not compel her actions. She might have made different options; she could have provided alternative explanations, including on budget day itself. Before the recent election, Starmer promised precisely this kind of public influence. "The hope of democracy. The power of the vote. The potential for national renewal."

One year later, and it's powerlessness that is evident in Reeves's pre-budget speech. Our first Labour chancellor in 15 years portrays herself as a technocrat buffeted by forces outside her influence: "In the context of the long-term challenges on our productivity … any chancellor of any party would be standing here today, confronting the choices that I face."

She did make a choice, only not the kind Labour wishes to publicize. Starting April 2029 UK workers as well as businesses are set to be paying another £26bn a year in taxes – but the majority of this will not be funding improved healthcare, public services, nor enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and others, it is not being lavished upon "benefits street".

Where the Cash Actually Ends Up

Rather than going on services, over 50% of this extra cash will instead give Reeves a buffer against her own budgetary constraints. About 25% is allocated to covering the government's own policy reversals. Reviewing the watchdog's figures and giving maximum benefit of the doubt towards Reeves, a mere 17% of the tax take will fund actual new spending, such as scrapping the limit on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, as it had long been an act of political theatre from George Osborne. A Labour government could and should have binned it immediately upon taking office.

The True Audience: The Bond Markets

Conservatives, Reform along with all of right-wing media have been railing against the idea that Reeves fits the stereotype of Labour chancellors, soaking hard workers to fund shirkers. Labour backbenchers are cheering her budget as a relief to their troubled consciences, safeguarding the disadvantaged. Each group could be 180-degrees wrong: Reeves's budget was primarily targeted towards investment funds, hedge funds and participants within the bond markets.

The government could present a compelling argument for itself. The forecasts from the OBR were deemed insufficient to feel secure, especially given that lenders demand from the UK the greatest borrowing cost among G7 rich countries – exceeding that of France, that recently lost a prime minister, higher than Japan that carries far greater debt. Coupled with our policies to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say their plan enables the Bank of England to cut interest rates.

It's understandable that those wearing Labour badges may choose not to couch it in such terms next time they visit #Labourdoorstep. As one independent adviser to Downing Street puts it, Reeves has "utilised" the bond market as an instrument of control against her own party and the electorate. This is why Reeves cannot resign, no matter what pledges she breaks. It is also why Labour MPs will have to fall into line and support measures that cut billions from social security, just as Starmer promised yesterday.

Missing Political Vision and a Broken Pledge

What is absent here is the notion of strategic governance, of mobilising the finance ministry and the central bank to forge a new accommodation with markets. Missing too is innate understanding of voters,