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This accusation is a serious one: suggesting Rachel Reeves may have deceived UK citizens, frightening them to accept billions in extra taxes that would be funneled into higher welfare payments. While hyperbolic, this isn't typical Westminster sparring; on this occasion, the stakes are more serious. Just last week, critics aimed at Reeves and Keir Starmer had been labeling their budget "chaotic". Now, it's denounced as lies, and Kemi Badenoch calling for the chancellor's resignation.

Such a serious accusation requires clear answers, therefore here is my view. Has the chancellor lied? On current information, no. She told no whoppers. But, notwithstanding Starmer's recent remarks, it doesn't follow that there is no issue here and we can all move along. Reeves did misinform the public regarding the factors informing her choices. Was it to funnel cash to "welfare recipients", as the Tories assert? Certainly not, as the numbers demonstrate this.

A Reputation Sustains A Further Hit, But Facts Must Prevail

Reeves has taken another blow to her reputation, however, if facts still matter in politics, Badenoch should stand down her lynch mob. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its internal documents will quench SW1's thirst for blood.

Yet the real story is far stranger compared to media reports indicate, and stretches wider and further than the careers of Starmer and his 2024 intake. Fundamentally, this is a story about what degree of influence the public have over the running of our own country. This should concern everyone.

First, to Brass Tacks

When the OBR published recently some of the projections it shared with Reeves while she wrote the budget, the shock was immediate. Not only has the OBR never done such a thing before (described as an "unusual step"), its numbers apparently went against the chancellor's words. Even as rumors from Westminster were about the grim nature of the budget would have to be, the watchdog's predictions were improving.

Take the government's most "iron-clad" fiscal rule, stating by 2030 daily spending on hospitals, schools, and the rest would be wholly funded by taxes: at the end of October, the OBR reckoned it would just about be met, albeit by a minuscule margin.

A few days later, Reeves held a press conference so extraordinary that it caused breakfast TV to interrupt its usual fare. Several weeks prior to the actual budget, the country was warned: taxes were going up, and the primary cause cited as gloomy numbers from the OBR, in particular its conclusion that the UK was less efficient, investing more but yielding less.

And so! It happened. Despite the implications from Telegraph editorials combined with Tory broadcast rounds implied over the weekend, this is basically what happened during the budget, which was big and painful and bleak.

The Deceptive Justification

Where Reeves misled us concerned her justification, since these OBR forecasts did not force her hand. She might have made different options; she might have given alternative explanations, including during the statement. Prior to last year's election, Starmer promised precisely this kind of public influence. "The hope of democracy. The strength of the vote. The possibility for national renewal."

One year later, yet it's powerlessness that jumps out in Reeves's pre-budget speech. Our first Labour chancellor for a decade and a half casts herself to be an apolitical figure at the mercy of forces outside her influence: "Given the circumstances of the long-term challenges with our productivity … any chancellor of any party would be in this position today, facing the choices that I face."

She did make decisions, just not one Labour wishes to broadcast. From April 2029 UK workers and businesses are set to be paying another £26bn annually in taxes – and most of that will not go towards funding better hospitals, new libraries, nor enhanced wellbeing. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and their allies, it is not being lavished upon "welfare claimants".

Where the Money Actually Ends Up

Rather than going on services, more than 50% of the extra cash will in fact provide Reeves a buffer against her self-imposed budgetary constraints. About 25% is allocated to paying for the government's own U-turns. Reviewing the OBR's calculations and being as generous as possible to a Labour chancellor, a mere 17% of the tax take will go on genuinely additional spending, such as scrapping the two-child cap on child benefit. Removing it "will cost" the Treasury a mere £2.5bn, because it had long been a bit of theatrical cruelty from George Osborne. This administration could and should have binned it immediately upon taking office.

The Real Target: Financial Institutions

Conservatives, Reform and all of Blue Pravda have spent days barking about the idea that Reeves fits the caricature of Labour chancellors, taxing strivers to spend on shirkers. Labour backbenchers have been applauding her budget for being balm for their social concerns, protecting the disadvantaged. Each group could be completely mistaken: The Chancellor's budget was primarily aimed at investment funds, speculative capital and participants within the bond markets.

The government could present a compelling argument for itself. The margins from the OBR were insufficient for comfort, particularly considering bond investors demand from the UK the highest interest rate of all G7 developed nations – exceeding that of France, which lost a prime minister, and exceeding Japan which has way more debt. Combined with our policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan enables the Bank of England to reduce interest rates.

It's understandable that those folk with red rosettes might not frame it in such terms next time they visit #Labourdoorstep. As one independent adviser for Downing Street says, Reeves has effectively "weaponised" financial markets to act as a tool of discipline over Labour MPs and the voters. It's why the chancellor cannot resign, no matter what pledges she breaks. It is also why Labour MPs must knuckle down and vote to take billions off social security, as Starmer promised yesterday.

A Lack of Statecraft and an Unfulfilled Pledge

What's missing here is the notion of statecraft, of harnessing the finance ministry and the Bank to forge a new accommodation with investors. Missing too is innate understanding of voters,