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This allegation represents a grave matter: that Rachel Reeves may have deceived UK citizens, scaring them to accept billions in extra taxes that could be spent on increased benefits. However hyperbolic, this isn't typical political sparring; this time, the consequences are more serious. Just last week, detractors of Reeves and Keir Starmer were labeling their budget "a shambles". Today, it is denounced as lies, with Kemi Badenoch calling for Reeves to step down.

This serious accusation requires straightforward answers, therefore let me provide my view. Did the chancellor tell lies? Based on current information, apparently not. She told no blatant falsehoods. However, notwithstanding Starmer's yesterday's comments, it doesn't follow that there's nothing to see and we can all move along. The Chancellor did misinform the public regarding the factors informing her choices. Was this all to channel cash to "welfare recipients", like the Tories assert? Certainly not, as the figures prove it.

A Reputation Takes Another Hit, Yet Truth Should Win Out

The Chancellor has sustained another blow to her standing, however, should facts continue to have anything to do with politics, Badenoch should stand down her attack dogs. Maybe the stepping down yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, due to the unauthorized release of its internal documents will quench SW1's appetite for scandal.

But the true narrative is far stranger than media reports suggest, and stretches wider and further than the political futures of Starmer and the 2024 intake. At its heart, herein lies a story concerning what degree of influence you and I have in the running of the nation. This should should worry you.

First, on to Brass Tacks

After the OBR published recently a portion of the projections it shared with Reeves while she prepared the budget, the surprise was immediate. Not merely had the OBR never done such a thing before (described as an "unusual step"), its figures apparently contradicted the chancellor's words. While leaks from Westminster were about the grim nature of the budget was going to be, the OBR's own predictions were getting better.

Consider the government's most "iron-clad" rule, stating by 2030 day-to-day spending on hospitals, schools, and other services would be wholly paid for by taxes: at the end of October, the OBR calculated it would just about be met, albeit by a tiny margin.

Several days later, Reeves gave a media briefing so extraordinary it forced breakfast TV to break from its usual fare. Several weeks prior to the actual budget, the country was put on alert: taxes would rise, with the main reason cited as pessimistic numbers from the OBR, in particular its conclusion that the UK had become less productive, putting more in but yielding less.

And lo! It happened. Notwithstanding the implications from Telegraph editorials combined with Tory media appearances suggested recently, this is basically what happened during the budget, that proved to be big and painful and bleak.

The Misleading Justification

Where Reeves misled us was her alibi, because these OBR forecasts didn't compel her actions. She could have chosen different options; she might have given other reasons, including during the statement. Before the recent election, Starmer promised precisely this kind of public influence. "The hope of democracy. The power of the vote. The potential for national renewal."

A year on, yet it's powerlessness that jumps out in Reeves's pre-budget speech. Our first Labour chancellor in 15 years casts herself to be a technocrat at the mercy of forces outside her influence: "Given the circumstances of the persistent challenges on our productivity … any finance minister of any party would be in this position today, confronting the decisions that I face."

She did make decisions, just not the kind the Labour party wishes to broadcast. Starting April 2029 British workers and businesses will be contributing an additional £26bn a year in taxes – and most of that will not be funding improved healthcare, public services, or enhanced wellbeing. Regardless of what bilge comes from Nigel Farage, Badenoch and others, it is not getting splashed on "benefits street".

Where the Money Really Goes

Instead of being spent, more than 50% of the additional revenue will instead give Reeves a buffer against her own budgetary constraints. Approximately 25% goes on covering the government's own U-turns. Examining the watchdog's figures and giving maximum benefit of the doubt towards a Labour chancellor, only 17% of the taxes will go on genuinely additional spending, for example scrapping the limit on child benefit. Its abolition "costs" the Treasury only £2.5bn, because it was always a bit of theatrical cruelty by George Osborne. A Labour government should have abolished it immediately upon taking office.

The Real Target: Financial Institutions

Conservatives, Reform and the entire right-wing media have been railing against the idea that Reeves fits the caricature of left-wing finance ministers, taxing strivers to spend on shirkers. Party MPs have been cheering her budget as balm for their social concerns, safeguarding the disadvantaged. Each group could be 180-degrees wrong: The Chancellor's budget was largely aimed at investment funds, speculative capital and the others in the financial markets.

The government could present a compelling argument in its defence. The forecasts provided by the OBR were too small for comfort, especially considering lenders charge the UK the highest interest rate of all G7 developed nations – higher than France, that recently lost a prime minister, and exceeding Japan which has far greater debt. Coupled with the policies to cap fuel bills, prescription charges as well as train fares, Starmer and Reeves argue their plan enables the Bank of England to reduce interest rates.

It's understandable why those wearing Labour badges might not couch it in such terms next time they visit the doorstep. According to a consultant for Downing Street puts it, Reeves has "weaponised" the bond market to act as an instrument of control over her own party and the voters. This is why the chancellor cannot resign, no matter what promises she breaks. It's why Labour MPs will have to knuckle down and vote that cut billions from social security, as Starmer indicated recently.

Missing Statecraft and an Unfulfilled Promise

What's missing here is the notion of statecraft, of mobilising the finance ministry and the central bank to forge a fresh understanding with markets. Missing too is intuitive knowledge of voters,