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The allegation represents a grave matter: suggesting Rachel Reeves has lied to the British public, spooking them to accept billions in extra taxes that could be used for higher benefits. However exaggerated, this isn't typical Westminster sparring; this time, the consequences could be damaging. A week ago, critics of Reeves alongside Keir Starmer were labeling their budget "uncoordinated". Today, it's branded as falsehoods, with Kemi Badenoch calling for Reeves to step down.

This grave accusation demands straightforward answers, therefore let me provide my view. Has the chancellor lied? On current evidence, apparently not. There were no whoppers. But, despite Starmer's yesterday's comments, it doesn't follow that there is nothing to see and we should move on. Reeves did misinform the public regarding the considerations informing her choices. Was this all to funnel cash towards "benefits street", as the Tories claim? Certainly not, and the numbers prove this.

A Standing Takes Another Blow, Yet Truth Should Win Out

The Chancellor has taken a further hit to her reputation, however, should facts still have anything to do with politics, Badenoch should stand down her attack dogs. Maybe the stepping down yesterday of OBR head, Richard Hughes, over the unauthorized release of its own documents will satisfy Westminster's appetite for scandal.

Yet the real story is far stranger than the headlines suggest, extending broader and deeper than the political futures of Starmer and the 2024 intake. At its heart, this is a story about what degree of influence you and I have in the running of the nation. And it should worry you.

First, to the Core Details

After the OBR published last Friday some of the projections it provided to Reeves while she wrote the budget, the surprise was immediate. Not only had the OBR not acted this way before (described as an "exceptional move"), its numbers seemingly went against the chancellor's words. Even as leaks from Westminster suggested how bleak the budget would have to be, the watchdog's forecasts were improving.

Take the government's so-called "iron-clad" rule, stating by 2030 day-to-day spending for hospitals, schools, and the rest must be wholly funded by taxes: in late October, the watchdog reckoned it would just about be met, albeit by a tiny margin.

A few days later, Reeves held a press conference so extraordinary it forced breakfast TV to interrupt its regular schedule. Several weeks prior to the actual budget, the country was put on alert: taxes would rise, with the primary cause cited as pessimistic numbers from the OBR, specifically its conclusion that the UK had become less productive, putting more in but getting less out.

And so! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory media appearances implied over the weekend, that is essentially what happened at the budget, that proved to be big and painful and bleak.

The Misleading Justification

The way in which Reeves misled us was her alibi, because these OBR forecasts did not force her hand. She might have chosen other choices; she might have provided alternative explanations, including during the statement. Prior to the recent election, Starmer pledged precisely this kind of public influence. "The hope of democracy. The power of the vote. The possibility for national renewal."

A year on, yet it is powerlessness that jumps out in Reeves's breakfast speech. The first Labour chancellor in 15 years casts herself to be an apolitical figure buffeted by forces beyond her control: "In the context of the long-term challenges on our productivity … any finance minister of any party would be in this position today, facing the decisions that I face."

She did make decisions, only not the kind Labour cares to broadcast. Starting April 2029 UK workers and businesses are set to be paying another £26bn a year in taxes – but the majority of this will not go towards spent on better hospitals, new libraries, or happier lives. Regardless of what nonsense is spouted by Nigel Farage, Badenoch and their allies, it is not getting splashed on "welfare claimants".

Where the Cash Really Goes

Instead of being spent, more than 50% of the extra cash will instead provide Reeves a buffer for her own fiscal rules. Approximately 25% is allocated to paying for the government's own policy reversals. Examining the watchdog's figures and being as generous as possible to a Labour chancellor, a mere 17% of the taxes will fund actual new spending, such as abolishing the limit on child benefit. Removing it "costs" the Treasury a mere £2.5bn, as it was always a bit of political theatre by George Osborne. A Labour government should have have binned it in its first 100 days.

The True Audience: Financial Institutions

Conservatives, Reform and all of right-wing media have spent days railing against how Reeves conforms to the caricature of Labour chancellors, taxing hard workers to fund the workshy. Labour backbenchers have been cheering her budget as a relief to their troubled consciences, protecting the most vulnerable. Each group could be 180-degrees wrong: The Chancellor's budget was largely targeted towards investment funds, hedge funds and the others in the bond markets.

The government can make a strong case in its defence. The forecasts from the OBR were insufficient for comfort, particularly considering bond investors demand from the UK the greatest borrowing cost among G7 rich countries – exceeding that of France, that recently lost a prime minister, and exceeding Japan that carries way more debt. Coupled with our measures to cap fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue this budget allows the central bank to cut its key lending rate.

You can see that those folk with Labour badges may choose not to frame it in such terms next time they visit #Labourdoorstep. As a consultant to Downing Street puts it, Reeves has "weaponised" financial markets as an instrument of control against her own party and the voters. It's why the chancellor can't resign, no matter what promises are broken. It is also the reason Labour MPs will have to fall into line and vote to take billions off social security, just as Starmer indicated recently.

Missing Statecraft , a Broken Pledge

What is absent here is the notion of strategic governance, of mobilising the Treasury and the central bank to reach a fresh understanding with markets. Missing too is any innate understanding of voters,