Tory leader Kemi Badenoch will reveal her plan to reduce the public deficit will be a “golden rule” in a crucial speech setting out her party’s hopes to regain voters’ trust on the UK economy.
Addressing Conservative Party members on Wednesday, Badenoch is set to lay out a central mission underpinning hopes of reviving the UK economy.
She is expected to tell members that half of savings made in public expenditure will go towards reducing the deficit in order to reduce debt interest payments worth over double the defence budget and keep public finances under control.
Badenoch is expected to say: “The reason the Conservative Party is the only party in Britain who can be trusted to meet the tests of our generation is that none of this works without a strong economy.
“We are the only party with a plan to get our economy back on track.
“It starts with fiscal responsibility. We have to get the deficit down. And we must also show how every tax cut or spending increase is paid for.”
She will tell members that her “golden economic rule” where half of every pound saved will go towards reducing the UK’s public debt, which is 96.4 per cent of GDP.
The other half would be used on growth-focused measures, with the Tories already pledging tax cuts for businesses and young people.
Badenoch and allies hit out at tax rises
Badenoch will claim Chancellor Rachel Reeves is “stealing from our children and grandchildren”, claiming Shadow Chancellor Mel Stride’s £47bn savings package will help rebuild the Tories’ credibility with the bond markets and voters.
Her speech is set to draw a direct challenge to the Labour government, which faces having to plug a fiscal hole which could be worth around £30bn at this year’s Budget.
Reeves has been directly blamed for leaving herself small headroom.
Hits to the UK economy through tariffs, Labour’s U-turns on welfare reforms and volatility in bond markets have wiped out the cash she baked in according to her fiscal rules, which see public sector net financial liabilities – a more refined measure of public debt – falling in the third year of official forecasts.
Rachel Reeves has also pledged to keep day-to-day spending balanced on rolling forecast periods made by the Office for Budget Responsibility (OBR).
Tory leaders have used the party’s conference in Manchester to build its credibility in economic policy as they hope they can draw a dividing line with Reform.
Frontbenchers have branded Nigel Farage a “socialist” while fringe events have highlighted the importance of reducing the tax burden in order to grow the UK economy. Stride said business rates would be cut for pubs and shops to revive the high street under a Tory government.
Stride has hit out at the stamp duty while shadow energy secretary Claire Coutinho has criticised carbon taxes keeping energy bills high.
But looming threats to Badenoch’s leadership remains, with reports in The Times suggesting she would be forced to resign if local elections results in May go poorly for the Tories.