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This accusation is a serious one: that Rachel Reeves may have deceived Britons, scaring them to accept billions in extra taxes which could be used for higher welfare payments. While exaggerated, this is not typical Westminster sparring; this time, the stakes are more serious. A week ago, critics of Reeves alongside Keir Starmer were labeling their budget "a mess". Now, it's denounced as lies, with Kemi Badenoch demanding the chancellor to quit.

Such a grave accusation requires clear responses, so let me provide my assessment. Did the chancellor lied? Based on the available information, apparently not. There were no blatant falsehoods. However, notwithstanding Starmer's yesterday's comments, that doesn't mean there is nothing to see and we should move on. Reeves did misinform the public about the factors informing her decisions. Was it to channel cash towards "benefits street", like the Tories assert? Certainly not, and the figures demonstrate it.

A Reputation Takes A Further Blow, But Facts Should Win Out

The Chancellor has sustained a further hit to her reputation, but, should facts still have anything to do with politics, Badenoch should stand down her attack dogs. Maybe the stepping down recently of OBR head, Richard Hughes, due to the unauthorized release of its internal documents will quench Westminster's thirst for blood.

But the real story is much more unusual than media reports indicate, extending broader and deeper than the political futures of Starmer and the 2024 intake. Fundamentally, herein lies a story about how much say the public get over the governance of our own country. And it should worry everyone.

Firstly, to the Core Details

After the OBR released last Friday some of the forecasts it shared with Reeves while she prepared the budget, the shock was immediate. Not merely has the OBR not done such a thing before (an "exceptional move"), its figures seemingly contradicted Reeves's statements. While rumors from Westminster were about how bleak the budget would have to be, the watchdog's predictions were improving.

Consider the government's so-called "iron-clad" fiscal rule, that by 2030 day-to-day spending for hospitals, schools, and the rest must be wholly paid for by taxes: at the end of October, the OBR reckoned it would barely be met, albeit by a tiny margin.

A few days later, Reeves held a press conference so unprecedented it forced breakfast TV to interrupt its usual fare. Weeks prior to the real budget, the country was put on alert: taxes would rise, with the main reason being gloomy numbers from the OBR, in particular its finding suggesting the UK had become less productive, putting more in but getting less out.

And so! It came to pass. Despite what Telegraph editorials and Tory media appearances suggested over the weekend, that is essentially what transpired during the budget, which was big and painful and bleak.

The Misleading Justification

Where Reeves deceived us concerned her alibi, since these OBR forecasts didn't force her hand. She could have made different options; she might have provided alternative explanations, including on budget day itself. Prior to the recent election, Starmer promised exactly such public influence. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, yet it is powerlessness that is evident from Reeves's breakfast speech. Our first Labour chancellor in 15 years portrays herself to be an apolitical figure at the mercy of factors beyond her control: "Given the circumstances of the long-term challenges on our productivity … any finance minister of any political stripe would be in this position today, confronting the choices that I face."

She did make decisions, only not the kind Labour wishes to broadcast. From April 2029 British workers and businesses will be contributing another £26bn annually in taxes – and most of that will not go towards funding better hospitals, public services, nor enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it is not getting splashed on "welfare claimants".

Where the Money Actually Ends Up

Rather than going on services, over 50% of the extra cash will in fact give Reeves cushion for her self-imposed fiscal rules. About 25% goes on covering the administration's policy reversals. Examining the OBR's calculations and giving maximum benefit of the doubt to Reeves, only 17% of the taxes will fund genuinely additional spending, for example abolishing the limit on child benefit. Its abolition "costs" the Treasury only £2.5bn, because it had long been a bit of political theatre by George Osborne. This administration could and should have binned it in its first 100 days.

The True Audience: The Bond Markets

Conservatives, Reform and all of right-wing media have been railing against how Reeves fits the stereotype of Labour chancellors, soaking strivers to spend on shirkers. Party MPs have been cheering her budget for being a relief to their troubled consciences, protecting the most vulnerable. Each group could be 180-degrees wrong: The Chancellor's budget was primarily aimed at investment funds, speculative capital and the others in the bond markets.

Downing Street could present a strong case in its defence. The forecasts provided by the OBR were deemed insufficient to feel secure, particularly considering lenders demand from the UK the greatest borrowing cost among G7 developed nations – higher than France, which lost its leader, and exceeding Japan which has way more debt. Combined with our measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue their plan enables the central bank to reduce its key lending rate.

You can see that those wearing red rosettes might not frame it in such terms when they're on the doorstep. According to one independent adviser for Downing Street puts it, Reeves has effectively "weaponised" financial markets to act as an instrument of discipline against her own party and the voters. This is why the chancellor can't resign, regardless of which pledges are broken. It's the reason Labour MPs must knuckle down and support measures that cut billions from social security, just as Starmer promised recently.

Missing Statecraft , a Broken Pledge

What's missing from this is the notion of statecraft, of harnessing the Treasury and the central bank to reach a new accommodation with markets. Also absent is any innate understanding of voters,