Kemi Badenoch: “Britian is becoming a welfare state with an economy attached.”

Kemi Badenoch will today [Thursday 10^th July]  issue a stark warning that Britain is “sitting on a ticking time bomb” of spiralling welfare dependency - and accuse Labour and Reform of “turning a blind eye” to a crisis that could “collapse the economy”.

In a major speech, the Leader of the Opposition will say:

• One in four pounds of income tax will soon go on sickness and disability benefits alone;
• Spending on health and disability benefits is on track to hit £100 billion by 2030 - the biggest hike in history;
• We are spending £1 billion a month on benefits for foreign nationals.

She will accuse Labour of being “beholden to left-wing MPs” and “completely unprepared for government”, with the Prime Minister already preparing to scrap the two-child benefit cap under pressure from his backbenches - as Nigel Farage vows to do the same, warning he's “not finished yet” on benefits giveaways.

“Nigel Farage pretends to be a Thatcherite Conservative but really, he's just Jeremy Corbyn with a pint and a cigarette. On welfare he shows his true colours - promising unaffordable giveaways with no plan to fix the system,” she will say.

Badenoch will warn that the Conservatives are the only party serious about welfare reform - and confirm they will force a vote in Parliament next week to defend the two-child cap. Because Conservatives believe that people on benefits should have to make the same decisions about having children as those who aren't.

“It is not fair to spend £1 billion a month on benefits for foreign nationals and on handing out taxpayer-funded cars for conditions like constipation,” she will say.

“We should be backing the makers – rewarding the people getting up every morning, working hard to build our country.

“Our welfare system should look after the most vulnerable in society – not those cheating the system”.

Yesterday the Conservatives laid amendments to the Government's welfare bill, voting to require face-to-face assessments for disability benefits; and to prevent the biggest rise in out-of-work benefits since the 1970s from taking effect unless the Government first reforms the system - including by restricting access for foreign nationals and limiting payments for less severe mental health conditions.

Badenoch will back up her warnings with analysis from the Office for Budget Responsibility, which this week confirmed Keir Starmer's failure to reform welfare pose “downside risks" to the economy - and that if no action is taken, welfare spending will be £12 billion higher by 2030.

The Leader of the Opposition will outline a clear three-point Conservative plan to fix welfare:

1. Limit benefits - ending handouts to foreign nationals and restricting sickness benefits to more serious conditions. Modelling by the Centre for Social Justice shows that tightening mental health-related claims like anxiety alone could save up to £9 billion.
2. Face to face assessments - restoring face-to-face checks and requiring proper medical evidence to stop the system being gamed.
3. Get people back to work - through retraining and early intervention. Under the last Conservative Government, unemployment halved and 800 jobs were created every single day. The Conservatives will get people back to work again.

Only the Conservatives are willing to take the tough decisions needed to make the system fairer, back working people - and stop Britain becoming a welfare state with an economy attached.

Notes to editors 

• Labour caved into their backbenchers and scrapped the PIP reforms, gutting the savings. TIMMS: ‘I can announce that we are going to remove the clause five from the Bill at committee, that we'll move straight to the wider review… and only make changes to PIP eligibility, activities and descriptors following that review. The Government is committed to concluding the review by the Autumn of next year' (Hansard, Universal Credit and Personal Independence Payment Bill, 1 July 2025, link).

Labour's record of welfare failure:

•  Under Labour, the number of working-age adults claiming Disability Living Allowance (DLA) had risen by over 40 per cent in a decade.The Disability Living Allowance increased from 1.2 million in 1997 to 1.8 million in 2009 (HM Government, State of the nation report: poverty, worklessness and welfare dependency in the UK, May 2010, link).

Scrapping all elements of disability reform will result in no savings at all, and the Bill could now cost the Treasury £300 million in 2029-30. Louise Murphy, senior economist at the Resolution Foundation, said: ‘What you're netting out at is basically no savings – it will be just around zero', adding that after all of the PIP reforms had been removed, the package would cost the Treasury £300 million in 2029-30. (The FT, 1 July 2025, link). 

• Labour has a £9.3 billion welfare black hole – because of Keir Starmer's weakness. Scrapping the PIP reforms will cost £4.5 billion by 2029-30 and follows his unfunded welfare spending commitment to reverse the winter fuel payment cut, at a cost of £1.25 billion. Scrapping the two child benefit would cost £3.5 billion by the end of the decade, his u-turns collectively creating a £9.3 billion black hole. (HMT, Spring Statement 2025, 26 March 2025, link; HMT, Press Release, 9 June 2025, link; The Resolution Foundation, 12 May 2025, link).

Under Labour, unemployment has risen to its highest rate in four years. In February-April 2025, the unemployment rate increased once again to 4.6 per cent – the highest level since July 2021. Since Labour entered government, the number of unemployed people has risen by 12 per cent to 1.64 million (ONS, Labour Market Statistics, 10 June 2025, link). 

•  Labour failed to help people who were sick or disabled back into work because they did not have a plan. By the age of 26, disabled people were almost four times as likely as non-disabled people to be out of work (DWP, The disability and health employment strategy, December 2013, link).

Yesterday's OBR Fiscal Risks and Sustainability report sets out the damage to the economy from not reforming welfare:

•  Labour's failure to reform welfare presents a 'downside' risk for the economy.'But policy announcements such as the recent announcements on increasing defence spending by 2035, reversing planned cuts in winter fuel payments, and scaling back planned welfare reforms, present new downside risks to the fiscal position. ' (OBR, Fiscal Risks and Sustainability, 8 July 2025).

•  Without reform of welfare system the downside risk to the economy would be a sustained increase of £12 billion over the forecast.'Our forecast assumes that health-related onflows will fall halfway back to pre-pandemic levels by the end of the decade. Were current onflow levels instead sustained across the forecast period, welfare spending would be roughly £12 billion higher than forecast in 2029-30' (OBR, Fiscal Risks and Sustainability, p.23, 8 July 2025).

 In Government, the Conservatives were reforming welfare to get people into work:

•  We introduced and were rolling out of Universal Credit to replace the complex legacy benefit system, creating a modern benefit system that prepares people for work and ensures work always pays. When we left office, over six million people were supported by Universal Credit which aligned six legacy benefits into one simplified, dynamic system that eliminated a binary choice between work and welfare (PMO, Press Release, 19 April 2024, link).

•  We set out a plan to get more 1.1 million more people into work by expanding employment support and toughening up work requirements, making sure it always paid more to work rather than be on benefits. Our £2.5 billion Back to Work Plan would keep more people in work and stem the flow of sickness-related inactivity, through additional work and health support, and tougher benefit sanctions for those who refuse to take up employment (HM Treasury, Autumn Statement 2023, 22 November 2023, link).

•  We published the Modernising Support for Independent Living: the Health and Disability Green Paper, setting out reforms to overhaul the disability benefits system. We consulted on reforms to the disability benefits system, including scrapping the ‘one size fits all' approach by redesigning the Personal Independence Payment (PIP) to better reflect individual needs and extra costs and reforming the PIP eligibility criteria to make it fairer and harder to exploit (DWP, Consultation, 29 April 2024, link).

Our record:

•  When we left office, there were over 33 million people in work, four million more than in 2010, as we grew the economy and create more jobs. In April to June 2024, there were over 33 million people in work in the UK, up by over 4 million since 2010, and the employment rate was estimated at 74.5 per cent, 4.2 percentage points higher than in 2010(ONS, Labour Market Overview, 13 August 2024, link).

•  When we left office, unemployment had reduced by over 1 million people since 2010,as we delivered our plan to get people into work and grow the economy. In April to June 2024, the unemployment rate was 4.2 per cent, down by 3.8 points since 2010 (ONS, Labour Market Overview, 13 August 2024, link).

•  When we left office, there were 2.6 million more disabled people in work as we overdelivered on our plan to support people with additional needs into work. When we left office in2024, there were 5.5 million disabled people in employment, 2.6 million more than in 2013. We overdelivered on our commitment to get one million more disabled people into work between 2017 and 2027, meeting the target five years early (DWP, Official Statistics, 20 November 2024, link).

•  When we left office, youth unemployment had fallen by nearly 380,000 since 2010, giving more young people the security of a fulfilling job. In April to June 2024, there were 559,000 young people out of work, down by 379,000 since 2010 when Labour left the economy in tatters (ONS, Labour Market Overview, 18 July 2024, link).