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The accusation represents a grave matter: suggesting Rachel Reeves has lied to Britons, spooking them into accepting billions in extra taxes that would be used for increased welfare payments. While exaggerated, this is not usual Westminster bickering; on this occasion, the consequences are higher. Just last week, detractors aimed at Reeves and Keir Starmer had been labeling their budget "a shambles". Now, it is denounced as lies, and Kemi Badenoch calling for Reeves to step down.

This serious accusation demands straightforward answers, therefore let me provide my assessment. Did the chancellor lied? On the available information, apparently not. She told no blatant falsehoods. But, notwithstanding Starmer's recent remarks, that doesn't mean there is nothing to see and we can all move along. Reeves did mislead the public regarding the factors informing her decisions. Was this all to funnel cash towards "welfare recipients", like the Tories assert? No, as the numbers demonstrate it.

A Standing Sustains Another Hit, But Facts Must Prevail

Reeves has sustained a further blow to her standing, but, should facts still have anything to do with politics, Badenoch ought to call off her attack dogs. Perhaps the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its internal documents will quench SW1's appetite for scandal.

Yet the real story is far stranger compared to media reports suggest, and stretches wider and further than the careers of Starmer and his 2024 intake. At its heart, this is a story concerning what degree of influence the public get over the running of the nation. This should concern everyone.

First, to Brass Tacks

After the OBR released last Friday some of the forecasts it provided to Reeves as she wrote the red book, the shock was immediate. Not only had the OBR never acted this way before (described as an "rare action"), its numbers seemingly contradicted the chancellor's words. Even as leaks from Westminster were about the grim nature of the budget would have to be, the OBR's own predictions were getting better.

Take the Treasury's most "unbreakable" rule, that by 2030 daily spending for hospitals, schools, and other services must be completely paid for by taxes: in late October, the watchdog calculated it would just about be met, albeit by a minuscule margin.

Several days later, Reeves gave a press conference so unprecedented it forced breakfast TV to interrupt its regular schedule. Weeks prior to the actual budget, the nation was put on alert: taxes were going up, and the main reason being pessimistic numbers provided by the OBR, specifically its finding that the UK had become less productive, investing more but getting less out.

And lo! It came to pass. Despite what Telegraph editorials and Tory media appearances suggested over the weekend, this is essentially what transpired during the budget, that proved to be significant, harsh, and grim.

The Deceptive Justification

The way in which Reeves misled us concerned her alibi, because these OBR forecasts didn't compel her actions. She might have made other choices; she could have provided other reasons, including during the statement. Prior to the recent election, Starmer promised precisely this kind of people power. "The promise of democracy. The power of the vote. The potential for national renewal."

One year later, and it is powerlessness that is evident from Reeves's pre-budget speech. Our first Labour chancellor in 15 years portrays herself as a technocrat at the mercy of forces outside her influence: "In the context of the persistent challenges on our productivity … any chancellor of any party would be standing here today, facing the choices that I face."

She did make a choice, just not one the Labour party wishes to broadcast. From April 2029 British workers and businesses are set to be paying another £26bn annually in taxes – but most of that 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 getting splashed on "benefits street".

Where the Cash Actually Ends Up

Instead of being spent, more than 50% of this additional revenue will in fact give Reeves a buffer against her self-imposed fiscal rules. Approximately 25% is allocated to paying for the administration's policy reversals. Reviewing the watchdog's figures and giving maximum benefit of the doubt towards a Labour chancellor, a mere 17% of the tax take will go on actual new spending, for example abolishing the limit on child benefit. Removing it "costs" the Treasury only £2.5bn, because it was always a bit of theatrical cruelty by George Osborne. This administration should have have binned it immediately upon taking office.

The True Audience: The Bond Markets

The Tories, Reform along with the entire Blue Pravda have been barking about how Reeves conforms to the stereotype of Labour chancellors, taxing strivers to spend on the workshy. Party MPs have been cheering her budget for being balm for their social concerns, safeguarding the most vulnerable. Both sides are 180-degrees wrong: The Chancellor's budget was primarily aimed at asset managers, speculative capital and the others in the financial markets.

The government can make a strong case for itself. The margins from the OBR were insufficient for comfort, especially given that bond investors charge the UK the greatest borrowing cost of all G7 developed nations – higher than France, that recently lost its leader, higher than Japan that carries far greater debt. Coupled with the measures to cap fuel bills, prescription charges and train fares, Starmer and Reeves can say this budget enables the Bank of England to reduce interest rates.

You can see why those wearing red rosettes may choose not to couch it this way when they visit the doorstep. According to a consultant for Downing Street puts it, Reeves has effectively "weaponised" the bond market to act as a tool of discipline over Labour MPs and the voters. It's why the chancellor cannot resign, no matter what pledges are broken. It's why Labour MPs must knuckle down and support measures to take billions off social security, just as Starmer promised recently.

A Lack of Statecraft , an Unfulfilled Promise

What is absent here is the notion of statecraft, of harnessing the Treasury and the central bank to forge a new accommodation with markets. Also absent is any intuitive knowledge of voters,