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The charge is a serious one: that Rachel Reeves has misled Britons, spooking them into accepting massive additional taxes that could be funneled into increased welfare payments. While hyperbolic, this is not usual political sparring; this time, the stakes are higher. Just last week, detractors aimed at Reeves and Keir Starmer had been labeling their budget "uncoordinated". Now, it's denounced as lies, and Kemi Badenoch demanding the chancellor's resignation.

Such a serious accusation requires straightforward answers, so let me provide my assessment. Did the chancellor tell lies? On current evidence, no. There were no blatant falsehoods. But, notwithstanding Starmer's yesterday's comments, that doesn't mean there's no issue here and we should move on. Reeves did misinform the public regarding the factors shaping her decisions. Was it to funnel cash to "welfare recipients", as the Tories assert? Certainly not, and the numbers prove this.

A Reputation Sustains A Further Hit, But Facts Should Win Out

The Chancellor has taken another hit to her reputation, but, should facts continue to have anything to do with politics, Badenoch ought to call off her lynch mob. Perhaps the resignation yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its own documents will quench SW1's appetite for scandal.

Yet the real story is far stranger compared to the headlines indicate, extending wider and further beyond the political futures of Starmer and the 2024 intake. At its heart, herein lies an account about what degree of influence the public get in the running of our own country. And it should worry everyone.

First, on to Brass Tacks

When the OBR released last Friday a portion of the projections it shared with Reeves as she wrote the budget, the surprise was instant. Not merely has the OBR never done such a thing before (an "unusual step"), its numbers apparently went against the chancellor's words. Even as leaks from Westminster were about how bleak the budget was going to be, the watchdog's predictions were getting better.

Consider the Treasury's so-called "unbreakable" fiscal rule, that by 2030 day-to-day spending on hospitals, schools, and other services must be completely paid for by taxes: in late October, the OBR reckoned this would just about be met, albeit only by a minuscule margin.

Several days later, Reeves gave a media briefing so extraordinary that it caused breakfast TV to break from its regular schedule. Several weeks before the actual budget, the country was warned: taxes would rise, and the primary cause being gloomy numbers provided by the OBR, in particular its finding suggesting the UK was less productive, investing more but yielding less.

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

The Misleading Alibi

The way in which Reeves misled us concerned her alibi, since these OBR forecasts didn't force her hand. She might have chosen different options; she might have given other reasons, even during the statement. Before last year's election, Starmer pledged precisely this kind of people power. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, yet it is powerlessness that is evident from Reeves's breakfast speech. The first Labour chancellor for a decade and a half portrays herself to be an apolitical figure buffeted by factors outside her influence: "In the context of the long-term challenges with our productivity … any finance minister of any party would be in this position today, confronting the decisions that I face."

She certainly make decisions, just not one the Labour party cares to broadcast. Starting April 2029 British workers as well as businesses are set to be contributing another £26bn a year in taxes – and most of that will not be funding better hospitals, public services, or enhanced wellbeing. Regardless of what bilge is spouted by Nigel Farage, Badenoch and others, it is not getting splashed on "welfare claimants".

Where the Cash Really Goes

Rather than being spent, over 50% of this additional revenue will in fact give Reeves cushion against her own budgetary constraints. Approximately 25% goes on covering the government's own policy reversals. Reviewing the OBR's calculations and being as generous as possible towards Reeves, a mere 17% of the taxes will go on genuinely additional spending, such as abolishing the limit on child benefit. Its abolition "will cost" the Treasury a mere £2.5bn, as it was always an act of political theatre from George Osborne. A Labour government could and should abolished it in its first 100 days.

The True Audience: The Bond Markets

The Tories, Reform along with all of right-wing media have spent days railing against how Reeves conforms to the caricature of left-wing finance ministers, taxing strivers to fund shirkers. Labour backbenchers have been applauding her budget as a relief to their social concerns, protecting the disadvantaged. Both sides could be 180-degrees wrong: Reeves's budget was largely aimed at investment funds, speculative capital and participants within the bond markets.

The government can make a compelling argument in its defence. The forecasts from the OBR were too small for comfort, especially given that lenders demand from the UK the greatest borrowing cost of all G7 rich countries – higher than France, that recently lost a prime minister, higher than Japan which has far greater debt. Combined with our policies to cap fuel bills, prescription charges and train fares, Starmer and Reeves can say their plan enables the central bank to cut interest rates.

You can see that those folk with Labour badges might not frame it in such terms when they're on #Labourdoorstep. As one independent adviser to Downing Street says, Reeves has "utilised" the bond market to act as an instrument of control against Labour MPs and the electorate. This is why Reeves cannot resign, regardless of which pledges are broken. It's why Labour MPs must knuckle down and support measures that cut billions from social security, just as Starmer indicated yesterday.

A Lack of Political Vision and a Broken Pledge

What's missing from this is any sense of strategic governance, of harnessing the finance ministry and the Bank to reach a new accommodation with investors. Missing too is any intuitive knowledge of voters,