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The accusation carries significant weight: suggesting Rachel Reeves may have deceived UK citizens, frightening them into accepting billions in extra taxes that would be spent on increased welfare payments. While hyperbolic, this isn't typical political sparring; on this occasion, the stakes are higher. Just last week, detractors of Reeves and Keir Starmer were calling their budget "a shambles". Now, it's branded as lies, and Kemi Badenoch calling for the chancellor to quit.

Such a grave accusation requires straightforward responses, so let me provide my assessment. Has the chancellor tell lies? Based on current evidence, no. She told no whoppers. But, notwithstanding Starmer's yesterday's comments, it doesn't follow that there is no issue here and we can all move along. The Chancellor did misinform the public regarding the considerations informing her choices. Was this all to funnel cash to "welfare recipients", as the Tories claim? No, as the figures demonstrate it.

A Standing Takes Another Hit, But Facts Should Prevail

The Chancellor has sustained another blow to her reputation, however, should facts still have anything to do with politics, Badenoch ought to stand down her attack dogs. Maybe the resignation yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its internal documents will quench Westminster's appetite for scandal.

But the real story is much more unusual compared to media reports indicate, and stretches broader and deeper beyond the political futures of Starmer and his class of '24. At its heart, this is an account about what degree of influence you and I get over the running of our own country. And it concern you.

Firstly, on to Brass Tacks

After the OBR published last Friday a portion of the forecasts it shared with Reeves while she prepared the red book, the shock was immediate. Not only has the OBR not done such a thing before (an "rare action"), its numbers apparently went against the chancellor's words. While rumors from Westminster were about the grim nature of the budget would have to be, the OBR's own predictions were getting better.

Consider the Treasury's so-called "unbreakable" fiscal rule, stating by 2030 day-to-day spending on hospitals, schools, and other services would be completely paid for by taxes: in late October, the watchdog reckoned this would barely be met, albeit by a tiny margin.

A few days later, Reeves gave a media briefing so extraordinary that it caused morning television to break from its usual fare. Weeks prior to the real budget, the country was put on alert: taxes would rise, with the main reason being pessimistic numbers provided by the OBR, specifically its finding that the UK was less productive, investing more but getting less out.

And so! It came to pass. Despite what Telegraph editorials combined with Tory broadcast rounds suggested recently, that is essentially what happened at the budget, that proved to be significant, harsh, and grim.

The Deceptive Alibi

The way in which Reeves misled us concerned her alibi, because those OBR forecasts didn't compel her actions. She might have chosen other choices; she might have provided other reasons, including on budget day itself. Prior to last year's election, Starmer pledged exactly such people power. "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 breakfast speech. Our first Labour chancellor for a decade and a half portrays herself to be a technocrat buffeted by forces beyond her control: "In the context of the long-term challenges on our productivity … any chancellor of any political stripe would be standing here today, confronting the choices that I face."

She certainly make a choice, just not one the Labour party cares to publicize. Starting April 2029 British workers and businesses will be paying an additional £26bn a year in taxes – but most of that will not be spent on better hospitals, new libraries, or happier lives. Regardless of what bilge is spouted by Nigel Farage, Badenoch and their allies, it is not getting splashed on "benefits street".

Where the Money Actually Ends Up

Rather than going on services, over 50% of the extra cash will instead give Reeves a buffer for her self-imposed fiscal rules. About 25% is allocated to paying for the administration's policy reversals. Examining the watchdog's figures and giving maximum benefit of the doubt to Reeves, a mere 17% of the taxes will fund actual new spending, such as abolishing the limit on child benefit. Removing it "costs" the Treasury a mere £2.5bn, because it had long been a bit of theatrical cruelty by George Osborne. This administration should have have binned it immediately upon taking office.

The True Audience: The Bond Markets

The Tories, Reform and all of Blue Pravda have been railing against the idea that Reeves conforms to the stereotype of left-wing finance ministers, soaking strivers to spend on the workshy. Labour backbenchers are applauding her budget as a relief to their troubled consciences, safeguarding the most vulnerable. Both sides could be 180-degrees wrong: The Chancellor's budget was primarily aimed at investment funds, speculative capital and participants within the bond markets.

Downing Street can make a compelling argument in its defence. The forecasts from the OBR were deemed insufficient for comfort, particularly given that bond investors charge the UK the greatest borrowing cost of all G7 rich countries – higher than France, which lost its leader, and exceeding Japan which has far greater debt. Combined with our policies to hold down fuel bills, prescription charges and train fares, Starmer together with Reeves can say their plan allows the central bank to reduce its key lending rate.

It's understandable why those wearing Labour badges might not couch it in such terms when they're on the doorstep. According to one independent adviser to Downing Street puts it, Reeves has effectively "weaponised" the bond market to act as an instrument of discipline over her own party and the electorate. It's the reason Reeves cannot resign, regardless of which promises she breaks. It's the reason Labour MPs will have to knuckle down and support measures to take billions off social security, just as Starmer indicated recently.

Missing Statecraft and a Broken Promise

What is absent from this is the notion of strategic governance, of mobilising the finance ministry and the Bank to forge a new accommodation with markets. Also absent is innate understanding of voters,