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The accusation represents a grave matter: that Rachel Reeves has lied to Britons, spooking them into accepting billions in extra taxes that would be used for higher welfare payments. However hyperbolic, this is not typical political sparring; this time, the stakes could be damaging. A week ago, detractors aimed at Reeves alongside Keir Starmer had been labeling their budget "uncoordinated". Today, it's branded as falsehoods, and Kemi Badenoch calling for the chancellor to quit.

Such a serious accusation demands clear answers, therefore let me provide my view. Has the chancellor been dishonest? Based on the available information, apparently not. She told no whoppers. However, despite Starmer's recent comments, that doesn't mean there's no issue here and we should move on. The Chancellor did mislead the public regarding the considerations shaping her decisions. Was this all to channel cash to "welfare recipients", as the Tories assert? Certainly not, as the numbers prove it.

A Reputation Takes Another Hit, But Facts Should Win Out

The Chancellor has sustained another blow to her reputation, however, should facts still matter in politics, Badenoch should stand down her lynch mob. Perhaps the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the leak of its internal documents will quench SW1's appetite for scandal.

Yet the true narrative is much more unusual compared to the headlines suggest, and stretches wider and further than the careers of Starmer and his 2024 intake. At its heart, this is an account about how much say you and I get over the running of the nation. This should concern you.

First, to the Core Details

When the OBR published recently some of the projections it provided to Reeves as she wrote the red book, the surprise was instant. Not merely had the OBR not acted this way before (described as an "rare action"), its numbers seemingly went against the chancellor's words. Even as 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 "unbreakable" fiscal rule, stating by 2030 day-to-day spending for hospitals, schools, and other services would be completely funded by taxes: at the end of October, the watchdog calculated it would just about be met, albeit only by a tiny margin.

Several days later, Reeves held a press conference so extraordinary it forced morning television to break from its regular schedule. Several weeks before the real budget, the nation was warned: taxes were going up, and the primary cause being pessimistic numbers from the OBR, specifically its conclusion that the UK was less productive, investing more but yielding less.

And lo! It came to pass. Despite what Telegraph editorials combined with Tory media appearances suggested over the weekend, that is essentially what happened during the budget, which was big and painful and bleak.

The Deceptive Alibi

Where Reeves misled us was her justification, since those OBR forecasts didn't compel her actions. She might have made other choices; she might have provided other reasons, including during the statement. Prior to last year's election, Starmer pledged precisely this kind of public influence. "The promise of democracy. The strength of the vote. The potential for national renewal."

One year later, and it is a lack of agency that jumps out in Reeves's breakfast speech. The first Labour chancellor in 15 years portrays herself as a technocrat buffeted by forces outside her influence: "Given the circumstances of the long-term challenges with our productivity … any chancellor of any party would be in this position today, facing the choices that I face."

She did make decisions, only not one the Labour party cares to publicize. From April 2029 UK workers as well as businesses will be contributing an additional £26bn annually in tax – but most of that will not be spent on better hospitals, new libraries, or enhanced wellbeing. Whatever bilge comes from Nigel Farage, Badenoch and others, it isn't getting splashed on "welfare claimants".

Where the Cash Actually Ends Up

Rather than being spent, over 50% of the extra cash will in fact provide Reeves cushion for her own fiscal rules. About 25% is allocated to paying for the administration's policy reversals. Reviewing the OBR's calculations and being as generous as possible towards a Labour chancellor, only 17% of the taxes will fund genuinely additional spending, such as scrapping the limit on child benefit. Its abolition "will cost" the Treasury only £2.5bn, as it had long been a bit of theatrical cruelty by George Osborne. A Labour government could and should have binned it in its first 100 days.

The Real Target: Financial Institutions

The Tories, Reform and all of right-wing media have spent days railing against the idea that Reeves fits the caricature of left-wing finance ministers, soaking strivers to spend on shirkers. Labour backbenchers have been cheering her budget as a relief to their social concerns, protecting the most vulnerable. Both sides are 180-degrees wrong: The Chancellor's budget was largely aimed at asset managers, speculative capital and the others in the bond markets.

Downing Street could present a strong case in its defence. The forecasts from the OBR were deemed insufficient to feel secure, particularly given that bond investors charge the UK the highest interest rate among G7 developed nations – higher than France, that recently lost a prime minister, higher than Japan that carries far greater debt. Combined with our policies to hold down fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan enables the Bank of England to reduce interest rates.

You can see why those wearing Labour badges may choose not to couch it this way when they visit the doorstep. As a consultant to Downing Street puts it, Reeves has effectively "utilised" financial markets as an instrument of control against her own party and the voters. This is why Reeves cannot resign, no matter what promises she breaks. It is also the reason Labour MPs must knuckle down and vote that cut billions from social security, just as Starmer promised yesterday.

Missing Political Vision and a Broken Pledge

What's missing here is any sense of statecraft, of mobilising the Treasury and the central bank to forge a new accommodation with markets. Missing too is any innate understanding of voters,