The Biggest Misleading Part of Chancellor Reeves's Budget? The Real Audience Truly For.

This accusation represents a grave matter: suggesting Rachel Reeves has deceived the British public, scaring them to accept massive additional taxes that would be used for increased welfare payments. While exaggerated, this is not usual political sparring; this time, the stakes are higher. A week ago, detractors aimed at Reeves alongside Keir Starmer had been calling their budget "a shambles". Now, it is branded as falsehoods, and Kemi Badenoch demanding the chancellor's resignation.

Such a serious accusation requires clear responses, therefore let me provide my assessment. Did the chancellor been dishonest? On the available information, apparently not. She told no blatant falsehoods. But, notwithstanding Starmer's recent comments, that doesn't mean there's nothing to see and we should move on. Reeves did misinform the public regarding the factors informing her choices. Was this all to funnel cash to "benefits street", as the Tories claim? No, as the figures prove it.

A Reputation Sustains Another Hit, Yet Truth Must Prevail

The Chancellor has sustained a further hit to her reputation, however, if facts continue to have anything to do with politics, Badenoch ought to call off her lynch mob. Maybe the resignation yesterday of OBR head, Richard Hughes, due to the leak of its internal documents will satisfy SW1's appetite for scandal.

Yet the true narrative is much more unusual compared to the headlines suggest, and stretches broader and deeper beyond the careers of Starmer and his 2024 intake. At its heart, this is a story about what degree of influence the public have over the running of our own country. And it concern everyone.

First, on to the Core Details

When the OBR published recently some of the projections it provided to Reeves as she wrote the budget, the surprise was immediate. Not merely had the OBR not acted this way before (an "unusual step"), its numbers seemingly contradicted Reeves's statements. While rumors from Westminster suggested the grim nature of the budget was going to be, the OBR's own forecasts were improving.

Take the Treasury's so-called "iron-clad" rule, stating by 2030 daily spending for hospitals, schools, and other services must be completely paid for by taxes: in late October, the OBR calculated it would barely be met, albeit by a minuscule margin.

A few days later, Reeves held a media briefing so unprecedented it forced breakfast TV to break from its regular schedule. Several weeks prior to the actual budget, the nation was warned: taxes would rise, and the main reason cited as pessimistic numbers provided by the OBR, specifically its finding that the UK was less productive, investing more but getting less out.

And lo! It happened. Notwithstanding the implications from Telegraph editorials combined with Tory media appearances implied recently, that is basically what transpired during the budget, that proved to be big and painful and bleak.

The Misleading Alibi

The way in which Reeves misled us concerned her alibi, because those OBR forecasts did not compel her actions. She might have chosen other choices; she might have given alternative explanations, even on budget day itself. Prior to last year's election, Starmer promised 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 is evident from Reeves's pre-budget speech. The first Labour chancellor in 15 years casts herself to be an apolitical figure at the mercy of forces outside her influence: "In the context of the persistent challenges with our productivity … any finance minister of any party would be standing here today, facing the decisions that I face."

She did make a choice, just not one the Labour party wishes to broadcast. Starting April 2029 UK workers and businesses will be paying an additional £26bn annually in taxes – but the majority of this will not be spent on better hospitals, public services, nor enhanced wellbeing. Regardless of what nonsense comes from Nigel Farage, Badenoch and their allies, it isn't being lavished upon "benefits street".

Where the Money Actually Ends Up

Instead of going on services, over 50% of this additional revenue will instead provide Reeves cushion against her self-imposed budgetary constraints. Approximately 25% is allocated to paying for the administration's policy reversals. Examining the OBR's calculations and being as generous as possible towards Reeves, a mere 17% of the taxes will go on actual new spending, such as scrapping the two-child cap on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, as it had long been a bit of political theatre from George Osborne. This administration could and should abolished it immediately upon taking office.

The Real Target: The Bond Markets

The Tories, Reform and the entire Blue Pravda have been railing against how Reeves fits the caricature of Labour chancellors, taxing strivers to spend on the workshy. Party MPs are applauding her budget as balm for their social concerns, protecting the disadvantaged. Each group are 180-degrees wrong: Reeves's budget was largely aimed at asset managers, speculative capital and participants within the financial markets.

Downing Street can make a compelling argument in its defence. The forecasts from the OBR were deemed insufficient to feel secure, particularly given that lenders demand from the UK the highest interest rate among G7 developed nations – exceeding that of France, that recently lost a prime minister, and exceeding Japan that carries way more debt. Coupled with our measures to hold down fuel bills, prescription charges and train fares, Starmer together with Reeves argue this budget allows the central bank to cut interest rates.

You can see that those folk with red rosettes might not couch it this way next time they're on #Labourdoorstep. According to one independent adviser to Downing Street says, Reeves has effectively "weaponised" financial markets to act as a tool of discipline against her own party and the voters. This is the reason the chancellor cannot resign, regardless of which pledges are broken. It is also the reason Labour MPs must fall into line and vote to take billions off social security, just as Starmer indicated recently.

Missing Statecraft and a Broken Pledge

What is absent here is any sense of statecraft, of mobilising the finance ministry and the central bank to forge a new accommodation with markets. Also absent is any innate understanding of voters,