The Most Deceptive Part of the Chancellor's Fiscal Plan? The Real Audience Really For.

This accusation carries significant weight: suggesting Rachel Reeves has misled Britons, spooking them to accept billions in extra taxes that would be funneled into increased benefits. While exaggerated, this isn't typical Westminster sparring; on this occasion, the stakes are more serious. A week ago, detractors of Reeves alongside Keir Starmer had been labeling their budget "a shambles". Today, it's denounced as lies, and Kemi Badenoch calling for the chancellor to quit.

This serious accusation demands clear responses, so let me provide my assessment. Did the chancellor tell lies? On the available information, apparently not. She told no blatant falsehoods. However, despite Starmer's yesterday's comments, that doesn't mean there is nothing to see and we should move on. Reeves did misinform the public about the factors informing her decisions. Was it to funnel cash to "welfare recipients", as the Tories assert? No, and the numbers prove it.

A Reputation Takes A Further Blow, But Facts Must Win Out

Reeves has sustained another blow to her reputation, however, should facts still matter in politics, Badenoch ought to call off her lynch mob. Maybe the resignation recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its own documents will quench SW1's thirst for blood.

Yet the true narrative is far stranger compared to the headlines suggest, extending wider and further beyond the political futures of Starmer and the 2024 intake. At its heart, this is a story concerning what degree of influence the public get over the running of our own country. And it concern everyone.

Firstly, to Brass Tacks

When the OBR published last Friday some of the projections it provided to Reeves while she wrote the budget, the surprise was instant. Not only has the OBR not acted this way before (an "rare action"), its numbers apparently contradicted Reeves's statements. While leaks from Westminster were about the grim nature of the budget was going to be, the watchdog's forecasts were getting better.

Consider the government's so-called "iron-clad" rule, that by 2030 daily spending for hospitals, schools, and the rest would be completely paid for by taxes: at the end of October, the OBR reckoned it would just about be met, albeit by a tiny margin.

Several days later, Reeves gave a media briefing so unprecedented it forced morning television to break from its usual fare. Several weeks prior to the real budget, the country was put on alert: taxes were going up, and the primary cause cited as gloomy numbers from the OBR, specifically its conclusion that the UK was less efficient, putting more in but yielding less.

And so! It came to pass. Notwithstanding the implications from Telegraph editorials and Tory media appearances implied recently, this is essentially what happened during the budget, that proved to be significant, harsh, and grim.

The Deceptive Justification

Where Reeves misled us concerned her justification, because these OBR forecasts did not compel her actions. She could have chosen other choices; she might have given other reasons, even during the statement. Before last year's election, Starmer pledged exactly such public influence. "The hope of democracy. The strength of the vote. The potential for national renewal."

One year later, and it is powerlessness that jumps out in Reeves's breakfast speech. The first Labour chancellor in 15 years casts herself as an apolitical figure at the mercy of forces outside her influence: "Given the circumstances of the persistent challenges with our productivity … any finance minister of any political stripe would be in this position today, facing the choices that I face."

She did make a choice, just not one Labour cares to broadcast. From April 2029 UK workers and businesses will be contributing an additional £26bn annually in taxes – but the majority of this will not go towards funding better hospitals, public services, nor happier lives. Whatever nonsense is spouted by Nigel Farage, Badenoch and their allies, it isn't being lavished upon "welfare claimants".

Where the Money Actually Ends Up

Rather than being spent, more than 50% of the additional revenue will in fact give Reeves a buffer for her own fiscal rules. Approximately 25% goes on paying for the government's own U-turns. Reviewing the watchdog's figures and being as generous as possible to Reeves, a mere 17% of the taxes will go on actual new spending, for example 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 by George Osborne. A Labour government could and should have binned it in its first 100 days.

The True Audience: The Bond Markets

Conservatives, Reform along with the entire Blue Pravda have been barking about how Reeves fits the stereotype of Labour chancellors, taxing hard workers to spend on the workshy. Labour backbenchers have been cheering her budget for being balm to their troubled consciences, safeguarding the disadvantaged. Each group are completely mistaken: Reeves's budget was largely targeted towards investment funds, speculative capital and participants within the bond markets.

The government can make a compelling argument for itself. The forecasts provided by the OBR were deemed insufficient for comfort, particularly given that bond investors demand from the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, which lost a prime minister, higher than Japan which has far greater debt. Coupled with the policies to hold down fuel bills, prescription charges and train fares, Starmer and Reeves can say their plan enables the Bank of England to cut interest rates.

You can see why those wearing red rosettes may choose not to frame it this way when they visit #Labourdoorstep. As a consultant for Downing Street puts it, Reeves has "weaponised" financial markets as a tool of control against Labour MPs and the electorate. This is the reason the chancellor cannot resign, regardless of which pledges she breaks. It is also the reason Labour MPs must fall into line and support measures that cut billions from social security, just as Starmer indicated recently.

Missing Statecraft , a Broken Pledge

What's missing from this is any sense of strategic governance, of mobilising the finance ministry and the central bank to reach a new accommodation with investors. Also absent is intuitive knowledge of voters,