{"id":295193,"date":"2025-12-02T16:54:08","date_gmt":"2025-12-02T16:54:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/295193\/"},"modified":"2025-12-02T16:54:08","modified_gmt":"2025-12-02T16:54:08","slug":"the-most-misleading-thing-about-rachel-reevess-budget-who-it-was-really-for-aditya-chakrabortty","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/295193\/","title":{"rendered":"The most misleading thing about Rachel Reeves\u2019s budget? Who it was really for | Aditya Chakrabortty"},"content":{"rendered":"

The charge is a grave one: that Rachel Reeves has just lied to Britons, spooking them into paying billions in extra taxes that she can splash out on higher benefits. However hyperbolic, this isn\u2019t the usual Westminster sparring; this time, someone might get hurt. A week ago, critics of Reeves and Keir Starmer were, rightly, calling their budget \u201cchaotic<\/a>\u201d. Today, it\u2019s denounced as lies, and Kemi Badenoch is demanding the chancellor quit.<\/p>\n

It\u2019s an accusation that demands straightforward answers, so let me give mine. Did the chancellor tell lies? On the available evidence, no. There were no whoppers, no falsehoods, no porkies. But despite Starmer\u2019s comments yesterday, that doesn\u2019t mean there\u2019s nothing to see here and we can all move along. Reeves did mislead the public about the factors shaping her decisions. Was it all to funnel cash to \u201cbenefits street<\/a>\u201d, as the Tories claim? No, and the figures prove it.<\/p>\n

Reeves has sustained another hit to her reputation but, if facts still have anything to do with politics, Badenoch should call off her lynch mob. Perhaps the resignation<\/a> yesterday of the Office for Budget Responsibility (OBR) chief, Richard Hughes, over the leak of its own documents will quench SW1\u2019s thirst for blood.<\/p>\n

Yet the real tale is far stranger than the headlines suggest, and stretches wider and further than the careers of Starmer and the class of \u201924. At its heart, this is a story about how much say you and I get in the running of our own country. And it should worry you.<\/p>\n

First, to brass tacks. When the OBR published <\/a>last Friday some of the forecasts it shared with Reeves as she wrote the red book, the shock was immediate. Not only had the OBR never done such a thing before (an \u201cunusual step\u201d as the watchdog wryly said), its numbers apparently contradicted the chancellor\u2019s words. Even as leaks from Westminster were about how bleak the budget would have to be, the OBR\u2019s own predictions were improving.<\/p>\n

Take the government\u2019s most \u201ciron-clad\u201d rule, that by 2030 daily spending on hospitals and schools and the rest would be wholly funded by taxes: at the end of October, the watchdog reckoned it would just about be met, albeit by a tiny margin.<\/p>\n

A few days later, Reeves gave a press conference<\/a> so extraordinary it forced breakfast TV to break from its usual fare. Weeks before the actual budget, the country was put on alert: taxes were going up, and the main reason was gloomy numbers from the OBR, in particular its finding that the UK was less productive, putting more into its economy but getting less out.<\/p>\n

And lo! It came to pass. Despite what Telegraph editorials and Tory broadcast rounds implied over the weekend, this is essentially what happened at the budget, which was big and painful and bleak.<\/p>\n

Where Reeves misled us was her alibi, because those OBR forecasts didn\u2019t force her hand. She could have made other choices; she could have given other reasons, including on budget day itself. Before last year\u2019s election, Starmer promised<\/a> exactly such people power. \u201cThe hope of democracy. The power of the vote. The potential for national renewal.\u201d <\/p>\n

A year on, and it\u2019s powerlessness that jumps out from Reeves\u2019s breakfast speech. Our first Labour chancellor in 15 years casts herself<\/a> as an apolitical figure buffeted by forces beyond her control: \u201cIn the context of the long-term challenges on our productivity \u2026 any chancellor of any party would be standing here today, facing the choices that I face.\u201d<\/p>\n

She did make a choice, just not one Labour<\/a> cares to broadcast. From April 2029 British workers and businesses will be paying another \u00a326bn a year in tax \u2013 and most of that will not be spent on better hospitals or new libraries or happier lives. Whatever bilge comes from Nigel Farage, Badenoch and others, it isn\u2019t getting splashed on \u201cbenefits street\u201d.<\/p>\n

Rather than being spent, more than 50% of the extra cash will instead give Reeves a buffer against her own fiscal rules. About 25% goes on paying for the government\u2019s own U-turns. Examining the OBR\u2019s calculations<\/a> and being as generous as possible to a Labour chancellor, only 17% of the taxes will go on actual new spending, such as scrapping the two-child cap on child benefit. Its abolition \u201ccosts\u201d the Treasury a mere \u00a32.5bn, because it was always a bit of theatrical cruelty by George Osborne. A Labour government could and should have binned it in its first 100 days (although everyone was of course very busy with Sue Gray).<\/p>\n

The Tories, Reform and the entire Blue Pravda have spent days barking about how Reeves fits the stereotype of Labour chancellors, soaking strivers to spend on shirkers. Labour backbenchers have been cheering her budget as balm for their troubled consciences, protecting the most vulnerable. Both sides are 180-degrees wrong: Reeves\u2019s budget was largely aimed at asset managers, hedge funds and the others in the bond markets.<\/p>\n

Downing Street can make a strong case for itself. The margins forecast by the OBR were too small for comfort, especially considering bond investors charge the UK the highest interest rate<\/a> of all G7 rich countries \u2013 higher than France, which lost a prime minister in October, higher than Japan which has way more debt. Coupled with our measures to hold down fuel bills, prescription charges and train fares, Starmer and Reeves can say, this budget allows the Bank of England to cut its key lending rate.<\/p>\n

skip past newsletter promotion<\/a><\/p>\n

Sign up to Matters of Opinion<\/p>\n

Guardian columnists and writers on what they\u2019ve been debating, thinking about, reading, and more<\/p>\n

Privacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com<\/a> to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n

You can see why those folk with red rosettes might not couch it in such terms next time they\u2019re on #Labourdoorstep. As one independent adviser to Downing Street says, Reeves has \u201cweaponised\u201d the bond market as an instrument of discipline against her own party and the voters. It\u2019s the reason the chancellor can\u2019t resign, no matter what promises she breaks. It\u2019s the reason Labour MPs will have to knuckle down and vote to take billions off social security, as Starmer promised yesterday.<\/p>\n

What\u2019s missing from this is any sense of statecraft, of mobilising the Treasury and the Bank to reach a new accommodation with markets. Also absent is any intuitive knowledge of voters, who were promised change. However hard the kicking given to Rishi Sunak last summer, one facet of the budget \u2013 from income-tax thresholds to the overall tax burden to our dependence on the kindness of strangers to finance our borrowing \u2013 is how far the UK remains stuck on the same sinking trajectory he set out in the wake of Brexit and Covid. Britain clings on to an exhausted 40-year-old economic model, to which it makes odd small adjustments in the hope they will change things. But they don\u2019t. Performing a Thatcherite raindance (\u00e0 la Truss) didn\u2019t alter course; acting like grown-ups and repeating the phrase \u201cworld-leading\u201d hasn\u2019t helped.<\/p>\n

When working-class Americans turned out to vote last year, many said they were protesting against \u201cthe uniparty\u201d: . However unfair the term, one understood its significance: the calcified consensus that meant Democrats and moderate Republicans couldn\u2019t respond to their needs. Just over a year into the first Labour government since 2010, the British are being shown their own uniparty: a Westminster class too removed from voters to represent them, focused instead on court politics and presenting data centres for AI as golden investment. In the US, the uniparty got beaten by Donald Trump. What replaces the British version? Just take a guess.<\/p>\n

Aditya Chakrabortty is a Guardian columnist<\/p>\n

Aditya Chakrabortty will be the writer of this week\u2019s Matters of Opinion newsletter. To find out his take on the stories that have captured his imagination \u2013 and to receive our free newsletter in your email every Saturday \u2013 sign up at theguardian.com\/newsletters<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"The charge is a grave one: that Rachel Reeves has just lied to Britons, spooking them into paying…\n","protected":false},"author":2,"featured_media":295194,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-295193","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/295193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=295193"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/295193\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/295194"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=295193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=295193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=295193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}