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This allegation represents a grave matter: suggesting Rachel Reeves may have lied to UK citizens, scaring them into accepting massive additional taxes which could be funneled into higher benefits. While hyperbolic, this is not usual political sparring; on this occasion, the consequences are more serious. A week ago, detractors of Reeves and Keir Starmer were calling their budget "a shambles". Today, it's branded as lies, and Kemi Badenoch demanding Reeves to step down.

This grave accusation requires clear answers, so let me provide my view. Did the chancellor tell lies? Based on the available evidence, no. She told no whoppers. But, notwithstanding Starmer's recent comments, it doesn't follow that there's nothing to see and we can all move along. Reeves did mislead the public regarding the factors shaping her choices. Was this all to funnel cash to "benefits street", like the Tories assert? Certainly not, and the numbers demonstrate it.

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

The Chancellor has sustained a further hit to her reputation, however, should facts still matter in politics, Badenoch ought to call off her attack dogs. Maybe the stepping down recently of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the unauthorized release of its internal documents will satisfy Westminster's appetite for scandal.

But the true narrative is much more unusual than media reports indicate, extending broader and deeper than the political futures of Starmer and his class of '24. At its heart, this is an account concerning what degree of influence the public get over the running of our own country. And it concern everyone.

Firstly, on to the Core Details

After the OBR published recently a portion of the forecasts it provided to Reeves as she prepared the red book, the surprise was instant. Not only has the OBR not done such a thing before (an "rare action"), its figures seemingly went against Reeves's statements. While leaks from Westminster were about how bleak the budget was going to be, the watchdog's forecasts were getting better.

Consider the government's most "iron-clad" fiscal rule, that by 2030 daily spending on hospitals, schools, and the rest must be completely funded by taxes: at the end of October, the watchdog reckoned this would barely be met, albeit by a tiny margin.

Several days later, Reeves held a press conference so extraordinary that it caused breakfast TV to interrupt its usual fare. Weeks prior to the real budget, the country was warned: taxes would rise, with the primary cause cited as gloomy numbers from the OBR, specifically its conclusion suggesting the UK had become less productive, investing more but yielding less.

And so! It happened. Notwithstanding the implications from Telegraph editorials and Tory broadcast rounds implied over the weekend, this is basically what happened during the budget, that proved to be big and painful and bleak.

The Misleading Alibi

Where Reeves misled us concerned her alibi, since those OBR forecasts did not compel her actions. She might have chosen other choices; she could have given other reasons, even during the statement. Prior to last year's election, Starmer pledged precisely this kind of people power. "The hope of democracy. The strength of the vote. The possibility for national renewal."

A year on, and it's powerlessness that is evident in Reeves's breakfast speech. Our first Labour chancellor in 15 years casts herself to be a technocrat buffeted by factors beyond her control: "In the context of the long-term challenges on our productivity … any chancellor of any party would be in this position today, facing the decisions that I face."

She certainly make decisions, only not one Labour wishes to publicize. Starting April 2029 British workers and businesses are set to be paying another £26bn annually in taxes – and most of that will not go towards funding improved healthcare, new libraries, or enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and others, it isn't getting splashed on "benefits street".

Where the Money Actually Ends Up

Instead of being spent, over 50% of the extra cash will instead provide Reeves cushion for her self-imposed fiscal rules. Approximately 25% is allocated to paying for the administration's U-turns. Examining the OBR's calculations and giving maximum benefit of the doubt towards Reeves, only 17% of the tax take will go on actual new spending, for example scrapping the two-child cap on child benefit. Its abolition "will cost" the Treasury only £2.5bn, because it had long been a bit of political theatre from George Osborne. A Labour government could and should abolished it immediately upon taking office.

The True Audience: The Bond Markets

The Tories, Reform and all of Blue Pravda have been railing against the idea that Reeves fits the stereotype of left-wing finance ministers, soaking hard workers to spend on the workshy. Party MPs are applauding her budget as balm to their troubled consciences, safeguarding the most vulnerable. Both sides could be 180-degrees wrong: The Chancellor's budget was primarily aimed at asset managers, hedge funds and the others in the bond markets.

Downing Street can make a strong case in its defence. The margins from the OBR were deemed too small to feel secure, especially considering bond investors demand from the UK the highest interest rate of all G7 rich countries – higher than France, that recently lost a prime minister, higher than Japan that carries way more debt. Combined with the measures to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves argue their plan enables the central bank to cut its key lending rate.

You can see why those folk with red rosettes might not frame it this way next time they visit #Labourdoorstep. As a consultant to Downing Street puts it, Reeves has "utilised" financial markets to act as an instrument of discipline over Labour MPs and the electorate. It's the reason the chancellor can't resign, no matter what promises are broken. It's the reason Labour MPs must fall into line and support measures that cut billions from social security, as Starmer indicated recently.

A Lack of Statecraft and an Unfulfilled Promise

What is absent from this is any sense of statecraft, of mobilising the Treasury and the central bank to forge a new accommodation with investors. Also absent is any innate understanding of voters,