Budget Leak, Lies, and the Labour Crisis: The UK Government’s Epic Cock-Up

On last week’s Makin Sense we parodied the United Kingdom (UK) budget, presented to the UK House of Commons a few hours earlier, delivering it in the way (we hoped) an honest person would. Because Rachel Reeves, the UK’s equivalent of a finance minister, is not honest: she has lied about being a chess prodigy and she has lied about her career as an “investment banker” – which was actually a position at the help desk of a retail bank (there’s nothing wrong with that – she’d have endeared herself to her fellow citizens far more had she been transparent).

Her willingness to economise her own truth saw skeletons burst from closets. Earlier in the year, a former lead at the same bank at which she had worked explained that Reeves frequently left the office to the point where bosses became suspicious and instructed a scout to tail her. The scout discovered that Reeves was in fact canvassing for Labour during an absence she had requested for a “dentist appointment”.

But the tax rises in the budget we presented, in defiance of previous promises not to raise them, are not the story here. Neither is the perilous state of the UK economy, only fit to live in presently if you are uninclined toward work. This government’s squalid inheritance from its predecessor and the evidently pre-orchestrated chaos that erupted during Liz Truss’s brief administration does not feature.

Instead, the story is now about leaks, lies, power, stupidity, greed, ineptitude, and hubris. It is possibly one of the most epic cock-ups in modern government finance history.

Office of Budget Responsibility

To understand what has happened, one first has to grasp the function of the Office for Budget Responsibility (OBR), then travel back to last year.

In 2010, the omni-sneering then-Chancellor of the Exchequer George Osborne created the new independent watchdog as one response to the global financial crisis of the previous years. The OBR’s mandate was thus to assist the government’s budgeting process in calculating, trouble-shooting, and forecasting, particularly when it came to spending.

On 30 October last year, Reeves, began her maiden budget statement with a whopping claim: the previous government (Conservatives) had left a “£22 billion black hole in the economy” due to erratic and uncontrolled spending. Reeves claimed she was going to fix it but fixing it meant hitting people where it hurt most – their wallets. Afterwards she promised never to do it again.

This announcement made the OBR look ridiculous: what could possibly be the purpose of its existence if it was partial to such a monumental oversight? But very quickly the chairperson of the OBR, a man called Richard Hughes, got himself in front of a Treasury Select Committee hearing and flatly contradicted Reeves’s claim about the “black hole”. According to his painfully polite testimony, the “black hole” only emerged when Labour rocked up with its own unbudgeted spending commitments  – chiefly to civil servants who were rewarded with pay rises and bonuses for their alignment to the right kind of politics.

Politicians Say Stupid Things

So politicians say stupid things. Move on. Not here: despite Hughes’s appearance at the hearing, despite a letter that followed from the OBR warning the Treasury that because it hadn’t been afforded visibility of Labour’s planned spending (revealed at around £9.5 billion) it could not guarantee accuracy in its forecasting (basically, indemnifying itself), Reeves continued with the claim up and down the spine of her country to November 2025.

This brings us to last Wednesday.

Moments before she is due to deliver her Autumn Statement, Reeves is passed a phone by one of the flunkies seated behind her. On that phone she reads that the budget has been leaked, and is currently sitting on the OBR’s website. When it is time for Reeves to speak, she makes sure to mention the leak in her opening statements: this is a very serious error without precedent. But she doesn’t mention that it could be interpreted as market manipulation – in the right hands on the right trading floors, this kind of information has the ability to turn lucrative rapidly.

Not Inadvertent

So what the hell happened? Leaking a budget before its delivery? The constant and secretive meetings and briefings with media pets and Treasury officials?

These are not serious people.

There’s nothing inadvertent about it: if you’ve misled the markets, you’ve also manipulated them. Whether you’re stupid, clumsy, or slippery – the net result speaks for itself.

Assuming – probably irresponsibly – that Reeves is reasonably lucid, one needs to examine potential motives which can be found in the broader Labour crisis, where the far-left of the party now frequently accuse the left (the group within which Reeves sits) of actually being right.

It's chaotic there. Increasingly, Labour and Labour-adjacent profiles emerge to say, “Oh, to hell with the markets” – or even “Eff the markets”. Were that position to be entertained, the market could respond to Eddie Dempsey, general secretary of the rail and transport union RMT with: “Well, thanks, Eddie, appreciate you’ve put a lot of thought into that, now… if we just have your proposal detailing exactly how you hope to repay the £2.9 trillion you’re in the red for, that would be helpful.”

But Reeves wasn’t about eff-ing the markets as much as she was about eff-ing the OBR, pleasing or appeasing her financially illiterate backbenchers at the same time as trying to convince the former there’s a huge amount of cash coming in – dependent upon, of course, acceptance of and submission to the lie that the need for it exists.

Contrary to what you may expect, disbelief at the events of the past week, including the resignation of Richard Hughes on Monday night, has not prompted the outrage it warrants. Perhaps because it's so laced with regret: the UK’s economy and its management were seen as the gold standard bearers, and this has been torched in the name of political expediency by a government that now habitually dismisses all critics as far-right racists (or, in Reeves’ case, misogynists).

But ultimately the issue won’t be decided by voters. Instead that will be done by forces that are tame and efficient on the basis you’re straight with them. When markets conclude something untrustworthy, well, you know what happens.