Badenoch Outlines Plan to Curb Borrowing, Pave Way for Tax Cuts
MANCHESTER, UK – Conservative Leader Kemi Badenoch is set to deliver a keynote speech outlining a new fiscal rule focused on reducing public sector net borrowing (PSNB) as a pathway to future tax cuts, amidst a challenging economic landscape and declining poll numbers for her party. The move signals a intentional shift towards fiscal conservatism, echoing policies of past Conservative governments and distancing the party from the economic approach of former Prime Minister Liz Truss.
Badenoch’s plan comes as the Conservatives attempt to reclaim the narrative of economic competence from Labor, which has positioned itself as the party of sound money since entering power. The Conservative strategy centers on lowering PSNB - the difference between government spending and tax revenue – and controlling the associated interest payments on national debt.
The party has already committed to £9 billion in spending, including a £5,000 tax rebate for young people and the abolition of business rates for High Street shops. However, Badenoch’s speech will emphasize the need for fiscal discipline to enable further tax reductions.
The government faces important hurdles in achieving these goals. A recent Labour-led rebellion derailed a plan to save billions on welfare spending, and economists suggest tax increases might potentially be necessary for Chancellor Rachel reeves to meet her borrowing targets and fund public services. The Office for Budget duty (OBR) currently forecasts PSNB to fall from £137.3 billion (4.8% of GDP) this year to £74 billion (2.1% of GDP) by 2029-30, a projection Conservative sources view with skepticism.
This renewed focus on deficit reduction harkens back to the economic policies implemented during the coalition and subsequent Conservative governments led by David Cameron from 2010. badenoch’s language and approach are reportedly reminiscent of former Chancellor George Osborne, who oversaw years of spending cuts aimed at reducing the deficit.
The Conservative strategy also includes pointed attacks on Reform UK,despite the party currently leading in UK-wide opinion polls. Conservatives have criticized Reform UK’s spending promises – including increases for the NHS and defense – and labelled their proposals to increase spending and nationalize industries as “socialist.”
Badenoch’s leadership has faced scrutiny at the Conservative conference in Manchester, her first since being elected following the party’s defeat in the 2024 general election. Recent local election results have been unfavorable, and the Conservatives have consistently trailed both Reform UK and Labour in polling data.
Despite these challenges, Badenoch remains optimistic. “I’m not losing. I’m going to be winning,” she told the BBC ahead of her speech, signaling a determination to turn the party’s fortunes around through a renewed commitment to fiscal responsibility.
