The Biggest Misleading Element of the Chancellor's Budget? Its True Target Actually Aimed At.

This allegation carries significant weight: that Rachel Reeves may have lied to the British public, frightening them into accepting billions in extra taxes that could be spent on higher welfare payments. While hyperbolic, this is not usual political bickering; on this occasion, the stakes could be damaging. Just last week, critics aimed at Reeves alongside Keir Starmer had been labeling their budget "a shambles". Today, it is branded as falsehoods, with Kemi Badenoch calling for Reeves to step down.

Such a serious charge requires straightforward responses, so let me provide my view. Did the chancellor tell lies? On the available evidence, apparently not. She told no major untruths. But, despite Starmer's recent remarks, that doesn't mean there's nothing to see and we can all move along. Reeves did misinform the public regarding the factors informing her choices. Was it to channel cash towards "welfare recipients", like the Tories claim? No, and the numbers demonstrate this.

A Reputation Takes A Further Hit, But Facts Should Prevail

The Chancellor has taken another blow to her standing, but, should facts still have anything to do with politics, Badenoch should call off her attack dogs. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its own documents will satisfy Westminster's thirst for blood.

But the true narrative is far stranger compared to media reports indicate, extending wider and further beyond the political futures of Starmer and his 2024 intake. Fundamentally, this is an account about how much say you and I get in the running of the nation. This should concern you.

Firstly, on to Brass Tacks

After the OBR published last Friday some of the projections it provided to Reeves as she wrote the red book, the surprise was immediate. Not only has the OBR not done such a thing before (an "unusual step"), its numbers apparently went against Reeves's statements. While leaks from Westminster were about the grim nature of the budget would have to be, the watchdog's forecasts were getting better.

Take the Treasury's so-called "iron-clad" rule, that by 2030 daily spending on hospitals, schools, and the rest must be completely funded by taxes: at the end of October, the watchdog calculated it would barely be met, albeit by a minuscule margin.

A few days later, Reeves held a press conference so extraordinary that it caused morning television 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 gloomy numbers from the OBR, in particular its conclusion that the UK had become less efficient, putting more in but getting less out.

And so! It came to pass. Notwithstanding what Telegraph editorials and Tory broadcast rounds suggested over the weekend, that is essentially what transpired during the budget, that proved to be big and painful and bleak.

The Deceptive Alibi

The way in which Reeves misled us concerned her alibi, because those OBR forecasts didn't compel her actions. She could have chosen different options; she might have provided other reasons, even during the statement. Before the recent election, Starmer promised precisely this kind of public influence. "The promise of democracy. The strength of the vote. The potential for national renewal."

One year later, yet it's a lack of agency that jumps out in Reeves's pre-budget speech. The first Labour chancellor in 15 years casts herself to be a technocrat at the mercy of factors beyond her control: "Given the circumstances of the long-term challenges with our productivity … any finance minister of any party would be in this position today, confronting the choices that I face."

She did make decisions, just not one the Labour party cares to publicize. Starting April 2029 British workers as well as businesses will be contributing an additional £26bn a year in tax – but the majority of this will not be funding better hospitals, public services, nor enhanced wellbeing. Whatever bilge comes from Nigel Farage, Badenoch and others, it is not getting splashed on "welfare claimants".

Where the Cash Really Goes

Rather than being spent, more than 50% of this additional revenue will instead provide Reeves a buffer against her own fiscal rules. About 25% goes on paying for the government's own policy reversals. Examining the OBR's calculations and giving maximum benefit of the doubt towards Reeves, only 17% of the tax take will fund genuinely additional spending, for example scrapping the two-child cap on child benefit. Its abolition "will cost" the Treasury only £2.5bn, as it was always an act of political theatre from George Osborne. This administration could and should have binned it immediately upon taking office.

The True Audience: The Bond Markets

Conservatives, Reform and all of Blue Pravda have been railing against the idea that Reeves fits the caricature of left-wing finance ministers, taxing strivers to spend on the workshy. Labour backbenchers have been applauding her budget for being a relief to their social concerns, protecting the most vulnerable. Both sides are 180-degrees wrong: Reeves's budget was largely aimed at investment funds, hedge funds and the others in the bond markets.

The government could present a strong case in its defence. The forecasts from the OBR were too small to feel secure, particularly given that lenders demand from the UK the highest interest rate of all G7 developed nations – higher than France, that recently lost a prime minister, higher than Japan that carries far greater debt. Combined with the measures to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget enables the central bank to cut its key lending rate.

It's understandable that those wearing red rosettes might not couch it in such terms next time they visit #Labourdoorstep. According to a consultant for Downing Street puts it, Reeves has "weaponised" the bond market as an instrument of discipline against Labour MPs and the voters. It's why the chancellor can't resign, regardless of which pledges are broken. It's why Labour MPs must knuckle down and support measures that cut billions from social security, as Starmer indicated yesterday.

A Lack of Political Vision and a Broken Pledge

What's missing here is the notion of statecraft, of mobilising the finance ministry and the central bank to forge a new accommodation with markets. Missing too is innate understanding of voters,