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This allegation represents a grave matter: that Rachel Reeves may have lied to Britons, spooking them into accepting massive extra taxes which could be spent on higher welfare payments. While hyperbolic, this isn't typical political sparring; on this occasion, the stakes are higher. Just last week, critics aimed at Reeves alongside Keir Starmer had been calling their budget "a mess". Today, it's denounced as falsehoods, with Kemi Badenoch demanding the chancellor to quit.

This grave accusation demands straightforward responses, so let me provide my assessment. Has the chancellor tell lies? Based on the available evidence, apparently not. There were no whoppers. However, notwithstanding Starmer's yesterday's comments, that doesn't mean there's no issue here and we can all move along. Reeves did mislead the public regarding the factors shaping her choices. Was it to channel cash to "welfare recipients", like the Tories assert? No, and the figures demonstrate this.

A Standing Takes Another Blow, Yet Truth Should Prevail

The Chancellor has sustained another hit to her standing, however, should facts still have anything to do with politics, Badenoch ought to 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 quench SW1's appetite for scandal.

Yet the real story is far stranger compared to the headlines indicate, and stretches broader and deeper than the careers of Starmer and his class of '24. At its heart, herein lies a story concerning how much say the public get over the running of the nation. And it concern everyone.

Firstly, on to Brass Tacks

After the OBR published last Friday some of the forecasts it provided to Reeves as she wrote the budget, the shock was immediate. Not only had the OBR not done such a thing before (described as an "unusual step"), its numbers apparently went against Reeves's statements. Even as rumors from Westminster suggested how bleak the budget would have to be, the OBR's own predictions were improving.

Consider the Treasury's so-called "unbreakable" fiscal rule, that by 2030 day-to-day spending for hospitals, schools, and the rest would be wholly paid for by taxes: at the end of October, the OBR reckoned this would just about be met, albeit only by a minuscule margin.

Several days later, Reeves gave a media briefing so unprecedented it forced breakfast TV to break from its usual fare. Weeks prior to the real budget, the country was warned: taxes were going up, and the primary cause cited as pessimistic numbers from the OBR, in particular its conclusion that the UK was less efficient, investing more but getting less out.

And lo! It came to pass. Notwithstanding the implications from Telegraph editorials and Tory broadcast rounds suggested recently, that is essentially what happened at the budget, which was significant, harsh, and grim.

The Misleading Justification

Where Reeves misled us was her justification, since those OBR forecasts didn't compel her actions. She could have chosen other choices; she might have given alternative explanations, even on budget day itself. Before the recent election, Starmer promised precisely this kind of people power. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, and it is a lack of agency that jumps out from Reeves's pre-budget speech. The first Labour chancellor in 15 years portrays 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 chancellor of any political stripe would be in this position today, facing the decisions 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 contributing an additional £26bn a year in tax – but most of that will not go towards spent on better hospitals, new libraries, or happier lives. Regardless of what bilge comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "welfare claimants".

Where the Money Actually Ends Up

Rather than being spent, over 50% of this additional revenue will in fact give Reeves a buffer against her self-imposed budgetary constraints. About 25% is allocated to covering the government's own policy reversals. Examining the OBR's calculations and being as generous as possible to a Labour chancellor, a mere 17% of the tax take will go on actual new spending, such as 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. A Labour government should have have binned it immediately upon taking office.

The True Audience: The Bond Markets

The Tories, Reform and the entire Blue Pravda have spent days railing against how Reeves fits the stereotype of Labour chancellors, taxing strivers to spend on shirkers. Party MPs have been applauding her budget as balm to their troubled consciences, protecting the most vulnerable. Both sides are completely mistaken: The Chancellor's budget was primarily targeted towards investment funds, hedge funds and the others in the financial markets.

Downing Street can make a compelling argument for itself. The forecasts from the OBR were deemed too small for comfort, especially given that bond investors demand from the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, which lost its leader, and exceeding Japan which has far greater debt. Combined with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say their plan allows the central bank to reduce its key lending rate.

It's understandable that those folk with Labour badges may choose not to couch it in such terms next time they visit #Labourdoorstep. As a consultant for Downing Street says, Reeves has "weaponised" the bond market to act as a tool of discipline over her own party and the electorate. This is why the chancellor cannot resign, no matter what promises she breaks. It's why Labour MPs must knuckle down and support measures to take billions off social security, just as Starmer promised recently.

A Lack of Statecraft , a Broken Promise

What is absent here is the notion of statecraft, of mobilising the Treasury and the central bank to forge a fresh understanding with investors. Missing too is intuitive knowledge of voters,