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The charge represents a grave matter: suggesting Rachel Reeves may have misled UK citizens, spooking them to accept billions in additional taxes that could be spent on increased welfare payments. However hyperbolic, this isn't usual political bickering; this time, the consequences are higher. Just last week, detractors of Reeves and Keir Starmer were calling their budget "uncoordinated". Now, it is branded as falsehoods, with Kemi Badenoch demanding the chancellor to quit.

This serious charge requires straightforward answers, therefore let me provide my view. Did the chancellor tell lies? On the available information, no. She told no whoppers. However, notwithstanding Starmer's yesterday's comments, it doesn't follow that there is nothing to see and we can all move along. The Chancellor did misinform the public regarding the considerations shaping her decisions. Was this all to funnel cash to "welfare recipients", like the Tories assert? No, and the numbers demonstrate this.

A Reputation Takes A Further Blow, Yet Truth Should Win Out

Reeves has taken a further blow to her standing, however, if facts continue to matter in politics, Badenoch should call off her lynch mob. Perhaps the stepping down yesterday of OBR head, Richard Hughes, over the leak of its own documents will satisfy Westminster's thirst for blood.

Yet the real story is far stranger than media reports suggest, extending wider and further than the careers of Starmer and his class of '24. At its heart, this is an account concerning how much say you and I have over the governance of our own country. This should should worry everyone.

First, to the Core Details

After the OBR released recently some of the forecasts it provided to Reeves as she wrote the red book, the shock was instant. Not merely has the OBR not acted this way before (described as an "unusual step"), its numbers apparently went against the chancellor's words. Even as leaks from Westminster suggested how bleak the budget would have to be, the OBR's own predictions were getting better.

Consider the Treasury's most "unbreakable" fiscal rule, that by 2030 day-to-day spending on hospitals, schools, and the rest must be wholly funded by taxes: in late October, the OBR calculated this would barely be met, albeit only by a minuscule margin.

Several days later, Reeves gave a press conference so extraordinary it forced breakfast TV to interrupt its usual fare. Weeks prior to the actual budget, the country was warned: taxes were going up, with the main reason cited as pessimistic numbers provided by the OBR, specifically its finding suggesting the UK had become less efficient, investing more but yielding less.

And lo! It happened. Despite what Telegraph editorials and Tory media appearances suggested over the weekend, that is basically what happened during the budget, which was significant, harsh, and grim.

The Misleading Justification

Where Reeves deceived us was her alibi, since these OBR forecasts did not force her hand. She could have made different options; she might have provided other reasons, including on budget day itself. Prior to last year's election, Starmer pledged exactly such people power. "The hope of democracy. The strength of the vote. The potential for national renewal."

A year on, yet it is a lack of agency that jumps out in Reeves's breakfast speech. Our first Labour chancellor for a decade and a half portrays herself to be a technocrat at the mercy of 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, confronting the choices that I face."

She did make a choice, just not one Labour wishes to publicize. From April 2029 British workers as well as businesses are set to be contributing an additional £26bn annually in tax – and most of that will not go towards funding improved healthcare, public services, or enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and others, it isn't getting splashed on "benefits street".

Where the Cash Actually Ends Up

Rather than going on services, over 50% of this additional revenue will instead provide Reeves a buffer against her self-imposed budgetary constraints. About 25% goes on covering the administration's policy reversals. Examining the OBR's calculations and being as generous as possible towards a Labour chancellor, a mere 17% of the tax take will go on genuinely additional spending, for example abolishing the two-child cap on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, because it had long been a bit of political theatre by George Osborne. This administration could and should abolished it immediately upon taking office.

The True Audience: Financial Institutions

Conservatives, Reform along with the entire right-wing media have been barking about how Reeves fits the stereotype of left-wing finance ministers, soaking hard workers to spend on shirkers. Labour backbenchers have been cheering her budget as balm to their social concerns, safeguarding the most vulnerable. Each group could be completely mistaken: Reeves's budget was largely aimed at asset managers, speculative capital and participants within the financial markets.

The government can make a strong case for itself. The forecasts from the OBR were too small to feel secure, particularly considering lenders demand from the UK the highest interest rate of all G7 developed nations – higher than France, that recently lost its leader, and exceeding Japan that carries way more debt. Combined with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue this budget allows the Bank of England to reduce its key lending rate.

It's understandable why those folk with red rosettes may choose not to frame it in such terms when they're on the doorstep. As a consultant to Downing Street puts it, Reeves has effectively "utilised" the bond market as an instrument of discipline against her own party and the electorate. It's the reason Reeves cannot resign, regardless of which promises she breaks. It is also the reason Labour MPs will have to knuckle down and support measures that cut billions from social security, as Starmer indicated recently.

A Lack of Statecraft , a Broken Pledge

What's missing from this is the notion of statecraft, of harnessing the finance ministry and the central bank to forge a fresh understanding with investors. Missing too is innate understanding of voters,