The Most Deceptive Part of the Chancellor's Economic Statement? Its True Target Really For.

The allegation carries significant weight: that Rachel Reeves may have deceived UK citizens, frightening them to accept massive extra taxes that could be used for higher benefits. While exaggerated, this is not typical Westminster bickering; this time, the stakes are more serious. Just last week, critics of Reeves alongside Keir Starmer were labeling their budget "uncoordinated". Today, it is denounced as lies, with Kemi Badenoch demanding Reeves to step down.

Such a grave accusation demands straightforward answers, so let me provide my assessment. Has the chancellor been dishonest? Based on current evidence, no. She told no major untruths. However, despite Starmer's yesterday's comments, it doesn't follow that there is no issue here and we can all move along. The Chancellor did mislead the public regarding the factors informing her decisions. Was this all to channel cash to "benefits street", like the Tories assert? No, as the numbers demonstrate this.

A Standing Sustains 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. Perhaps the resignation recently of OBR head, Richard Hughes, due to the leak of its own documents will quench Westminster's appetite for scandal.

But the true narrative is far stranger than the headlines suggest, and stretches wider and further than the political futures of Starmer and his class of '24. At its heart, herein lies a story about what degree of influence the public have over the running of the nation. This should should worry you.

First, on to the Core Details

When the OBR published last Friday some of the projections it provided to Reeves as she prepared the budget, the surprise was instant. Not only has the OBR never done such a thing before (an "exceptional move"), its numbers apparently went against the chancellor's words. While leaks from Westminster suggested the grim nature of the budget would have to be, the watchdog's forecasts were getting better.

Take the Treasury's most "unbreakable" fiscal rule, that by 2030 daily spending on hospitals, schools, and the rest must be completely paid for by taxes: at the end of October, the OBR reckoned this would just about be met, albeit by a tiny margin.

A few days later, Reeves held a media briefing so extraordinary it forced morning television to interrupt its regular schedule. Weeks prior to the actual budget, the nation was put on alert: taxes would rise, and the main reason being gloomy numbers provided by the OBR, in particular its finding that the UK had become less efficient, putting more in but yielding less.

And lo! It came to pass. Notwithstanding what Telegraph editorials and Tory media appearances suggested over the weekend, that is essentially what happened during the budget, which was significant, harsh, and grim.

The Deceptive Justification

Where Reeves deceived us was her justification, because those OBR forecasts didn't force her hand. She could have chosen other choices; she could have provided alternative explanations, including during the statement. Before last year's election, Starmer promised precisely this kind of people power. "The hope of democracy. The power of the vote. The possibility for national renewal."

One year later, and it is a lack of agency that jumps out in Reeves's breakfast speech. Our first Labour chancellor for a decade and a half casts herself as a technocrat buffeted by factors outside her influence: "In the context of the persistent challenges with our productivity … any chancellor of any political stripe would be standing here today, facing the decisions that I face."

She did make a choice, just not the kind Labour cares to publicize. Starting April 2029 UK workers as well as businesses are set to be contributing another £26bn annually in taxes – and the majority of this will not be funding improved healthcare, public services, or happier lives. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it isn't being lavished upon "welfare claimants".

Where the Cash Actually Ends Up

Rather than being spent, over 50% of the extra cash will instead provide Reeves cushion for her own budgetary constraints. About 25% is allocated to paying for the government's own U-turns. Reviewing the watchdog's figures and giving maximum benefit of the doubt towards Reeves, a mere 17% of the taxes will go on genuinely additional spending, such as abolishing the two-child cap on child benefit. Its abolition "will cost" the Treasury only £2.5bn, because it had long been a bit of political theatre from George Osborne. This administration could and should have binned it immediately upon taking office.

The True Audience: Financial Institutions

Conservatives, Reform along with the entire right-wing media have spent days barking about the idea that Reeves fits the caricature of left-wing finance ministers, taxing hard workers to spend on the workshy. Party MPs are applauding her budget as a relief to their troubled consciences, protecting the most vulnerable. Both sides are 180-degrees wrong: The Chancellor's budget was largely targeted towards investment funds, speculative capital and the others in the financial markets.

The government could present a compelling argument in its defence. The margins from the OBR were deemed insufficient to feel secure, particularly considering lenders demand from the UK the greatest borrowing cost of all G7 rich countries – higher than France, that recently lost its leader, and exceeding Japan which has far greater debt. Combined with our policies to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget allows the Bank of England to cut its key lending rate.

It's understandable why those wearing Labour badges may choose not to couch it this way when they're on #Labourdoorstep. According to a consultant to Downing Street says, Reeves has "utilised" financial markets as an instrument of discipline over Labour MPs and the electorate. This is why Reeves cannot resign, regardless of which pledges are broken. It is also why Labour MPs will have to knuckle down and vote that cut billions from social security, as Starmer promised recently.

Missing Statecraft , a Broken Pledge

What is absent here is any sense of strategic governance, of harnessing the Treasury and the Bank to reach a fresh understanding with markets. Missing too is intuitive knowledge of voters,