The Biggest Inaccurate Aspect of the Chancellor's Budget? Who It Was Really Aimed At.

The allegation is a serious one: suggesting Rachel Reeves may have lied to Britons, spooking them to accept billions in extra taxes which could be used for increased welfare payments. While hyperbolic, this is not typical political sparring; on this occasion, the stakes are higher. A week ago, detractors of Reeves and Keir Starmer were labeling their budget "a shambles". Now, it's denounced as falsehoods, with Kemi Badenoch demanding the chancellor's resignation.

Such a grave accusation demands straightforward responses, so let me provide my assessment. Did the chancellor tell lies? Based on the available evidence, no. There were no whoppers. But, despite Starmer's recent remarks, it doesn't follow that there's nothing to see and we should move on. Reeves did mislead the public about the factors shaping her choices. Was it to funnel cash to "welfare recipients", like the Tories assert? Certainly not, and the numbers demonstrate it.

A Standing Takes A Further Hit, Yet Truth Must Win Out

Reeves has sustained another blow to her reputation, but, if facts still matter in politics, Badenoch should call off her attack dogs. Perhaps the stepping down yesterday of OBR head, Richard Hughes, due to the leak of its internal documents will quench Westminster's thirst for blood.

Yet the true narrative is far stranger than the headlines suggest, and stretches wider and further than the political futures of Starmer and his class of '24. Fundamentally, herein lies an account concerning how much say you and I have over the running of the nation. This should should worry everyone.

Firstly, to Brass Tacks

After the OBR published last Friday some of the forecasts it provided to Reeves as she prepared the budget, the surprise was instant. Not merely has the OBR never acted this way before (described as an "unusual step"), its figures apparently went against the chancellor's words. While leaks from Westminster were about how bleak the budget was going to be, the watchdog's predictions were improving.

Take the government's so-called "unbreakable" rule, that by 2030 daily spending for hospitals, schools, and other services would be completely paid for by taxes: at the end of October, the watchdog reckoned it would just about be met, albeit only by a minuscule margin.

A few days later, Reeves held a media briefing so unprecedented that it caused morning television to break from its regular schedule. Several weeks before the real budget, the country was put on alert: taxes were going up, with the main reason being pessimistic numbers provided by the OBR, in particular its conclusion that the UK had become less efficient, putting more in but getting less out.

And so! It happened. Despite what Telegraph editorials and Tory media appearances suggested over the weekend, that is essentially what transpired at the budget, that proved to be significant, harsh, and grim.

The Misleading Justification

Where Reeves misled us was her justification, because these OBR forecasts didn't compel her actions. She might have made different options; she might have provided alternative explanations, including during the statement. Prior to last year's election, Starmer pledged precisely this kind of public influence. "The promise of democracy. The power of the vote. The possibility for national renewal."

A year on, yet it is powerlessness that jumps out in Reeves's breakfast speech. The first Labour chancellor in 15 years portrays herself to be a technocrat buffeted by forces beyond her control: "Given the circumstances of the long-term challenges with our productivity … any finance minister of any party would be standing here today, facing the decisions that I face."

She did make decisions, only not the kind Labour wishes to broadcast. Starting April 2029 British workers as well as businesses will be contributing another £26bn a year in tax – and the majority of this will not be spent on better hospitals, public services, or enhanced wellbeing. Whatever nonsense comes from Nigel Farage, Badenoch and others, it is not getting splashed on "welfare claimants".

Where the Money Really Goes

Instead of going on services, more than 50% of the extra cash will instead provide Reeves cushion for her own budgetary constraints. Approximately 25% is allocated to covering the government's own U-turns. Reviewing the watchdog's figures and being as generous as possible towards Reeves, only 17% of the tax take will go on actual new spending, for example abolishing the limit on child benefit. Its abolition "costs" the Treasury only £2.5bn, as it had long been a bit of theatrical cruelty by George Osborne. This administration 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 been barking about the idea that Reeves fits the stereotype of Labour chancellors, taxing hard workers to spend on shirkers. Party MPs are applauding her budget for being balm to their social concerns, protecting the disadvantaged. Both sides could be 180-degrees wrong: The Chancellor's budget was primarily aimed at investment funds, hedge funds and the others in the bond markets.

Downing Street can make a compelling argument for itself. The forecasts provided by the OBR were insufficient to feel secure, particularly considering bond investors demand from the UK the greatest borrowing cost of all G7 developed nations – exceeding that of France, that recently lost its leader, and exceeding Japan that carries far greater debt. Combined with the policies to hold down fuel bills, prescription charges as well as train fares, Starmer together with Reeves can say this budget allows the central bank to reduce its key lending rate.

It's understandable why those wearing Labour badges may choose not to frame it in such terms when they visit the doorstep. According to a consultant to Downing Street says, Reeves has effectively "weaponised" financial markets to act as a tool of discipline over Labour MPs and the electorate. It's the reason the chancellor can't resign, regardless of which pledges are broken. It's the reason Labour MPs must fall into line and support measures that cut billions from social security, just as Starmer promised yesterday.

Missing Statecraft and an Unfulfilled Promise

What is absent from this is any sense of strategic governance, of harnessing the finance ministry and the central bank to reach a fresh understanding with markets. Also absent is intuitive knowledge of voters,