The Primary Deceptive Part of Chancellor Reeves's Budget? Who It Was Actually Aimed At.
The allegation represents a grave matter: that Rachel Reeves has lied to UK citizens, frightening them to accept billions in extra taxes which would be spent on higher welfare payments. However hyperbolic, this isn't typical Westminster bickering; on this occasion, the stakes are more serious. Just last week, critics of Reeves alongside Keir Starmer were labeling their budget "a shambles". Today, it is branded as falsehoods, with Kemi Badenoch calling for Reeves to step down.
Such a serious charge demands straightforward responses, therefore here is my assessment. Has the chancellor tell lies? Based on current information, apparently not. She told no major untruths. However, despite Starmer's recent remarks, it doesn't follow that there is no issue here and we can all move along. The Chancellor did misinform the public regarding the factors informing her decisions. Was it to channel cash to "benefits street", as the Tories assert? Certainly not, as the numbers demonstrate it.
A Standing Takes A Further Hit, But Facts Should Prevail
Reeves has sustained a further blow to her reputation, but, should facts continue to matter in politics, Badenoch should stand down her attack dogs. Perhaps the stepping down yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will satisfy SW1's thirst for blood.
Yet the real story is much more unusual compared to media reports indicate, extending wider and further than the careers of Starmer and the class of '24. At its heart, this is an account concerning what degree of influence you and I get in the running of the nation. This should concern everyone.
First, to the Core Details
After the OBR released recently some of the forecasts it shared with Reeves as she wrote the red book, the shock was instant. Not merely had the OBR not done such a thing before (described as an "exceptional move"), its figures seemingly contradicted the chancellor's words. Even as rumors from Westminster were about how bleak the budget was going to be, the OBR's own forecasts were improving.
Take the government's most "unbreakable" fiscal rule, that by 2030 daily spending for hospitals, schools, and the rest must be wholly funded by taxes: in late October, the watchdog calculated this would just about be met, albeit by a tiny margin.
Several days later, Reeves held a press conference so unprecedented that it caused morning television to interrupt its regular schedule. Weeks prior to the actual budget, the nation was warned: taxes were going up, with the primary cause being pessimistic numbers provided by 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. Despite what Telegraph editorials combined with Tory media appearances suggested over the weekend, this is basically what happened during the budget, which was big and painful and bleak.
The Misleading Justification
The way in which Reeves deceived us concerned her alibi, because these OBR forecasts didn't force her hand. She might have made different options; she could have given other reasons, including on budget day itself. Before last year's election, Starmer pledged precisely this kind of people power. "The promise of democracy. The strength of the vote. The possibility for national renewal."
A year on, and it is a lack of agency that is evident in Reeves's breakfast speech. Our first Labour chancellor in 15 years casts herself to be a technocrat 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 standing here today, facing the decisions that I face."
She certainly make decisions, only not one Labour wishes to publicize. From April 2029 UK workers as well as businesses are set to be contributing an additional £26bn annually in tax – but most of that will not go towards funding better hospitals, public services, or happier lives. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and others, it is not getting splashed on "welfare claimants".
Where the Money Actually Ends Up
Rather than going on services, more than 50% of this additional revenue will instead give Reeves cushion for her self-imposed budgetary constraints. About 25% goes on paying for the government's own policy reversals. Reviewing 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 limit on child benefit. Its abolition "costs" the Treasury only ÂŁ2.5bn, because it had long been an act of theatrical cruelty by George Osborne. This administration should have abolished it in its first 100 days.
The True Audience: Financial Institutions
Conservatives, Reform along with the entire Blue Pravda have been barking about the idea that Reeves conforms to the caricature of Labour chancellors, soaking strivers to spend on shirkers. Labour backbenchers are applauding her budget for being a relief for their troubled consciences, protecting the disadvantaged. Both sides could be completely mistaken: Reeves's budget was primarily targeted towards asset managers, speculative capital and participants within the bond markets.
Downing Street could present a strong case in its defence. The margins from the OBR were deemed too small to feel secure, particularly considering bond investors charge the UK the highest interest rate of all G7 developed nations – higher than France, which lost a prime minister, and exceeding Japan that carries far greater debt. Combined with the measures to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say their plan allows the Bank of England to reduce its key lending rate.
You can see that those wearing Labour badges may choose not to couch it this way when they visit #Labourdoorstep. According to a consultant for Downing Street says, Reeves has effectively "utilised" the bond market to act as a tool of discipline over Labour MPs and the voters. It's the reason the chancellor can't resign, no matter what pledges she breaks. It is also the reason Labour MPs must fall into line and support measures that cut billions from social security, just as Starmer indicated yesterday.
A Lack of Political Vision and a Broken Pledge
What's missing from this is any sense of strategic governance, of mobilising the Treasury and the central bank to forge a new accommodation with markets. Also absent is intuitive knowledge of voters,
