The Most Misleading Part of Rachel Reeves's Fiscal Plan? Who It Was Actually For.

This accusation represents a grave matter: that Rachel Reeves has deceived Britons, scaring them into accepting massive additional taxes that would be used for higher benefits. However exaggerated, this is not usual political sparring; this time, the consequences are higher. Just last week, detractors of Reeves and Keir Starmer were calling their budget "chaotic". Now, it's branded as lies, and Kemi Badenoch calling for the chancellor's resignation.

This serious accusation demands clear answers, so let me provide my view. Did the chancellor lied? Based on current information, no. There were no major untruths. However, notwithstanding Starmer's recent remarks, that doesn't mean there's nothing to see and we can all move along. Reeves did misinform the public about the factors shaping her choices. Was this all to channel cash towards "welfare recipients", as the Tories assert? No, as the figures demonstrate it.

A Standing Takes A Further Hit, But Facts Must Win Out

Reeves has sustained 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 resignation yesterday of OBR head, Richard Hughes, due to the leak of its own documents will satisfy Westminster's thirst for blood.

But the real story is much more unusual than media reports suggest, and stretches wider and further beyond the careers of Starmer and his class of '24. At its heart, this is an account concerning what degree of influence you and I get over the running of our own country. And it should worry you.

Firstly, to the Core Details

When the OBR released recently some of the forecasts it provided to Reeves while she prepared the red book, the shock was instant. Not merely has the OBR never acted this way before (described as an "exceptional move"), its figures seemingly went against Reeves's statements. Even as leaks from Westminster suggested the grim nature of the budget was going to be, the watchdog's forecasts were getting better.

Take the government's most "iron-clad" fiscal rule, stating by 2030 daily spending on 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 only by a tiny margin.

A few days later, Reeves gave a press conference so extraordinary it forced breakfast TV to interrupt its regular schedule. Several weeks before the real budget, the country was warned: taxes were going up, and the main reason being gloomy numbers provided by the OBR, in particular its conclusion suggesting the UK was less efficient, putting more in but getting less out.

And so! It came to pass. Notwithstanding the implications from Telegraph editorials combined with Tory broadcast rounds implied over the weekend, that is basically what transpired at the budget, that proved to be significant, harsh, and grim.

The Misleading Alibi

The way in which Reeves misled us concerned her justification, since these OBR forecasts did not compel her actions. She could have made other choices; she might have given alternative explanations, even during the statement. Before the recent election, Starmer pledged exactly such people power. "The promise of democracy. The strength of the vote. The potential for national renewal."

A year on, and it's powerlessness that is evident from Reeves's breakfast speech. The first Labour chancellor in 15 years portrays herself as a technocrat at the mercy of factors beyond her control: "Given the circumstances of the persistent challenges with our productivity … any finance minister of any party would be in this position today, confronting the choices that I face."

She certainly make decisions, just not the kind the Labour party cares to broadcast. Starting April 2029 British workers and businesses are set to be paying an additional £26bn a year in taxes – and the majority of this will not go towards funding better hospitals, new libraries, or happier lives. Whatever bilge comes from Nigel Farage, Badenoch and their allies, it isn't getting splashed on "benefits street".

Where the Money Actually Ends Up

Rather than going on services, more than 50% of the additional revenue will instead provide Reeves a buffer for her own budgetary constraints. About 25% goes on covering the government's own policy reversals. Reviewing the OBR's calculations and being as generous as possible towards a Labour chancellor, a mere 17% of the taxes will go on actual new spending, such as abolishing the limit on child benefit. Its abolition "will cost" the Treasury only £2.5bn, because it had long been an act of political theatre from George Osborne. This administration should have abolished it immediately upon taking office.

The True Audience: Financial Institutions

The Tories, Reform and all of Blue Pravda have been barking about the idea that Reeves fits the stereotype of left-wing finance ministers, taxing strivers to fund the workshy. Party MPs have been applauding her budget for being a relief for their troubled consciences, safeguarding the most vulnerable. Each group are completely mistaken: Reeves's budget was largely aimed at asset managers, speculative capital and the others in the bond markets.

The government could present a strong case for itself. The margins from the OBR were deemed insufficient to feel secure, particularly given that bond investors demand from the UK the highest interest rate of all G7 rich countries – higher than France, which lost a prime minister, higher than 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 enables the Bank of England to reduce its key lending rate.

You can see why those folk with red rosettes might not frame it in such terms when they visit the doorstep. As a consultant for Downing Street puts it, Reeves has "weaponised" the bond market to act as a tool of control against her own party and the voters. It's why the chancellor can't resign, regardless of which pledges are broken. It is also why Labour MPs will have to fall into line and vote that cut billions from social security, just as Starmer promised yesterday.

A Lack of Statecraft and an Unfulfilled Pledge

What's missing from this is the notion of strategic governance, of mobilising the Treasury and the central bank to forge a new accommodation with markets. Also absent is intuitive knowledge of voters,