Badenoch vows to scrap inheritance tax on family homes and cut welfare spending

The Conservative leader said the next election will be a “battle for the soul of the nation” as she promised her party would focus on letting people “keep more of what they earn” if it returned to office.

In a speech to the Tories’ annual conference in Birmingham, she accused Andy Burnham’s Labour of being “addicted to welfare” and treating income and savings as “theirs to take and hand out”.

She said: “The Labour Party think it is selfish to pass on what you have earned to your children. We don’t.”

Party officials say the move would be funded by measures including the reintroduction of the two-child benefit cap and cuts to out-of-work welfare payments and universal credit.

Mrs Badenoch said it would mean the number of families paying inheritance tax would fall by more than half, and couples could leave behind an additional £1 million tax-free.

The existing levy is charged on the value of estates above £325,000, with the nil-rate band rising to £500,000 for those who leave their main home to direct descendants.

Pitching the Tories as the “no-nonsense” party to take on Labour, she said they would adopt a “tough love” approach to slash the benefits bill and get more young people into employment.

“We need to put the fair back in welfare,” Mrs Badenoch said.

“It is morally wrong to tell people suffering bouts of mild anxiety that they are disabled and cannot work.”

As she seeks to reverse the Tories’ fortunes following their 2024 electoral rout, she insisted she is “not someone who gets written off” and “neither is the Conservative Party”.

She added: “We are going to win, not for ourselves, but for our country. For every hard-working person out there, for everyone who wants to see common sense restored, for everyone who wants to see Britain working again.

“We are going to win for everyone who wants to see our great country united.”

Echoing former Conservative prime minister Margaret Thatcher, she said the party, which is behind Labour and narrowly trailing Reform in opinion polls, offers “the right way” to deliver growth and a “stronger country”.

The Tories have put the economy top of the agenda at their conference this autumn, focusing less on the so-called “culture wars” that dominated previous years as they seek to draw clear battle lines with the ruling party.

Labour in turn said the Conservatives’ new policy platform showed they were “prioritising the wealthiest” and doing nothing to help “ordinary families” while Reform UK accused them of “offering handouts to multi-millionaires.”

Attacking the Burnham Government, Mrs Badenoch said: “It’s the same old high tax, high spend Labour. No common sense.

“Addicted to welfare. Drowning our country in debt. Choking our economy with taxes.”

Reviving the economy would be the “central organising principle” of a future Conservative administration, she said.

Claiming the party is united after an “export boom of drama queens” who have defected to Reform UK, she again ruled out forming a pact with Nigel Farage’s party to avoid splitting the right-wing vote at the next election.

Mrs Badenoch was given a standing ovation by Tory politicians and delegates gathered in the main hall as she suggested Reform UK would take the country “backwards”, adding: “To those who say ‘unite the right’, we are not uniting with that.”

Along with promising to cut inheritance tax, the Tories have used the conference to announce a raft of new policy pledges including:

– Halving the rate of employer national insurance on earnings for people aged between 21 to 24.

– Blocking school leavers from moving straight on to out-of-work benefits in what they describe as a “tough love” approach to boost youth employment.

– Scrapping the so-called “mansion tax” on properties in England with a value higher than £2 million due to come into effect in 2028.

– Cutting red tape and abolishing arms-length bodies including Natural England in a bid to speed up development and reduce the cost of new homes for buyers.

– Investing £10 billion over 10 years in a new “Britannia Shield”, a defence system which would seek to protect Britain and its overseas bases from drone and missile attacks.

Political opponents have accused the Conservatives of playing “fantasy economics” by understating the cost of their plans, which the Tories insist are fully funded.

The party estimates it has made £83 billion worth of savings, including through slashing overseas aid, cutting welfare and “reprioritising” public money by making changes like ending the Chagos Islands deal with Mauritius.

According to Conservative analysis, the inheritance tax plans would cost around £6 billion as of the 2029-30 financial year.

Questions also linger over the Tories’ long-term commitment to the triple lock, which Prime Minister Mr Burnham has pledged to adjust in order to help fund a new national care service.

Mrs Badenoch has said current Conservative policy is to keep the state pension guarantee but that it would be “difficult” to commit to reinstating the policy if Labour changed or scrapped it.

Responding to her speech, Labour Party chairwoman Bridget Phillipson said: “The Tories haven’t changed.

“Kemi Badenoch has shown that the Tories’ choice is to do nothing to help ordinary families struggling with the cost of social care, prioritising the wealthiest instead.

“Only Labour will build a national care service, with free personal care for all older people who need it.

“Kemi Badenoch’s Tories wouldn’t take this country the ‘right way’. They would put Britain into reverse with the same Tory failures that crashed our economy and left public services crumbling. That’s not a future anyone wants to see.

“Andy Burnham is bringing back hope to Britain, by driving good growth in every postcode, giving people vital breathing space on the cost of living, and by putting power back into people’s hands right across the country.”

Reform UK claimed only 2% of British households would benefit from the Tory plans to scrap inheritance tax on family homes.

The party pointed to analysis by the estate agent Savills, which also says the majority of homeowners who would benefit from the change would be based in London, to support its claim.

Reform Treasury spokesman Robert Jenrick said: “As usual, Kemi has chickened out of doing anything big. Presumably, it’s because she couldn’t match Reform’s pledge to resign if she doesn’t deliver on her promises.

“While the Tory Party is offering handouts to multi-millionaires, Reform will give everyone a £500 tax cut by raising the tax-free personal allowance to £15,000.

“The Tory Party is looking after its own in Kensington, Reform is looking after the country.

“She’s for the 2%, we’re for 98%.”

The Liberal Democrats said there was a £33 billion “black hole” in the Tories’ policy pledges.

Leader Sir Ed Davey said: “This £33 billion black hole proves that ‘Kemistry’ is just Trussonomics 2.0.

“Kemi Badenoch is lecturing the country on fiscal responsibility while making tens of billions in unfunded promises – a dangerous experiment destined to blow up the public finances.

“The British people are sick to death of paying the price for Conservative financial failure – with higher taxes, skyrocketing mortgage rates, crumbling public services, and an economy being throttled by their failure of a Brexit deal. It’s clear the Conservative Party has learned nothing.

“Liberal Democrats will stand up and fight a shameless Conservative Party steeped in fiscal irresponsibility, and we will act as the firewall stopping Badenoch from handing the keys of Number 10 to Nigel Farage.”