Kemi Badenoch: Conservatives will meet Prime Minister to deliver welfare savings in the national interest

• New offer by the Conservatives to work with the Government to cut the welfare bill
• Badenoch issues warning that the deficit is set to double over the next five years
• Conservatives recommit to the Two Child Benefit cap – the only party to do so

Kemi Badenoch will today [Tuesday 9^th September 2025]  warn that Labour are “pushing Britain closer to a bond crisis” and challenge the Prime Minister, the Chancellor and new Welfare Secretary - Pat McFadden, appointed in last week's crisis reshuffle - to meet with her, Shadow Chancellor Mel Stride and Shadow Work & Pensions Secretary Helen Whately to agree a serious plan actually to cut welfare spending.

In a speech today, Badenoch will argue that Rachel Reeves' “tax doom loop” has already left working households £1,700 worse off and she will issue a new warning that the deficit is set to double over the next five years. Badenoch will argue this shows why Britain must live within its means, protect families from tax rises this Autumn, and stop saddling future generations with debt.

She will say that without a strong economy, there can be no strong defence, strong NHS or strong schools, warning that Labour are putting all three at risk with their reckless borrowing.

This intervention follows Conservative calls yesterday for Labour's new Business and Trade Secretary, Peter Kyle, to scrap Labour's war on private enterprise - Angela Rayner's union charter, the Unemployment Rights Bill - described by the five largest business organisations as a “recipe for damaging, not raising, living standards.” That legislation is expected to cost businesses more than £5 billion a year, hitting growth and jobs at the worst possible time. The Conservatives are calling for the Government to reset its relationship with business and back Britain's makers and wealth creators to grow the economy.

The Conservative leader will also contrast her serious offer to the Government with Labour and Reform's plans to increase welfare spending. Badenoch will say that you cannot be serious about a strong economy if you expect taxpayers to fund unlimited benefits. The Conservatives are recommitting to the Two Child Benefit Cap because families on benefits should make the same choices about whether they can afford to have more children as everyone else. That is fairness - and it is why only the Conservatives have a serious plan to bring welfare under control and ensure the country lives within its means.

The Conservatives offer to the Government on new welfare savings comes after Keir Starmer was forced to scrap his limited welfare reform plans last July when his own backbenchers rebelled against them, increasing the cost of the welfare bill. Badenoch will say this again shows why the Prime Minister is too weak to make the savings on his own, and why the Conservatives are offering to help the Prime Minister get a proper savings programme package through Parliament in the national interest.

Kemi Badenoch is expected to say:

“Today I'm making the Prime Minister a serious offer.

Because the Conservative Party will always act in the national interest.

If he is serious about cutting spending, and really bringing down the welfare bill, like he tried to claim to be last week…

We will help him in the national interest.

In July, the Prime Minister was humiliated as he gutted a bill just 90 minutes before MPs were due to vote on it, leaving a £5bn hole in the Chancellor's finances.

He now has a new Welfare Secretary and a new Chief Whip.

The papers say he is gearing up to make a new attempt at welfare savings.

The backbenchers who didn't let him last time haven't gone away.

Even with a 170 seat majority, the Prime Minister is weak.

His Party is set to elect a Deputy from the left of Labour to stop him making the changes our country so desperately needs.

So, if we're to cut spending and avoid more punishing tax rises at the Budget, crushing business confidence and pushing up inflation, Keir Starmer has to change his approach.  

And to that end, the Shadow Chancellor, Shadow Welfare Secretary and I are making the him a clear offer:

Sit down with us.

Let's agree a way to bring welfare spending down.

And I will offer him the support of the Conservative Party.

This isn't a blank cheque.  

It's an offer to work together in the national interest and to find common ground and a serious plan.  

I hope the Prime Minister will put country before party and agree to work across the aisle on this.

He and Rachel Reeves have a choice.

They can hike up taxes, to borrow more.

Or for once, they can do the right thing.”

ENDS

Notes to Editors

Under Labour, the welfare bill is spiralling out of control

• The OBR forecasts that spending on health and disability benefits will hit nearly £100 billion by 2030. The OBR forecast shows that disability benefits will hit £97.7 billion in 2029-30. In this scenario, around £1 in every £4 of income tax will be spent on health and disability benefits, equivalent to almost £1,500 per year per person across the UK and more than the entire defence budget (OBR, Economic and Fiscal Outlook, October 2024, link; Policy Exchange, For Whose Benefit, 6 March 2025, link).

• There are 1.1 million more people claiming Universal Credit since Labour entered office, and nearly half of all claims had no conditionality to work. In July 2025, there were 8.0 million people claiming Universal Credit, up from 6.9 million people in July 2024. Just 46 per cent of people had  ‘no work requirements' and the proportion is continuing to increase  (DWP, Official Statistics, 12 August 2025, link).

Labour have been unable to take the tough decisions on welfare to put spending on a sustainable footing

• Labour scrapped the PIP reforms in the Welfare Bill, meaning it will make no savings at all and the total package could cost the Treasury £300 million. 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 once the PIP reforms had been removed, the package could cost the Treasury about £300 million in 2029-30 (The FT, 1 July 2025, link).

• Pat McFadden refused to rule out tax rises after the Welfare Bill collapsed, admitting there will be a ‘financial consequence'.  STUDIO: ‘Tax rises look increasingly likely, which means that you're going to have to break your promise to the electorate.' MCFADDEN: ‘Well, we'll keep our promises on tax in the manifesto that we made. I don't deny that decisions like yesterday have a financial consequence' (BBC Radio 5 Live, 2 July 2025, archived). 

• Labour have no idea if the proposals in their disability welfare Green Paper will get anyone into work. Because Labour entered office without a plan, their reforms have been chaotic – including updates made after the Green Paper was published. This means the OBR were unable to make any assessment of the impact the proposals on employment (OBR, Economic and fiscal outlook, March 2025, link).

• Labour has a £9.3 billion welfare black hole because of Keir Starmer's weakness. Abandoning the PIP reforms will cost £4.5 billion by 2029-30 and follows his other 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, collectively creating a £9.3 billion black hole (HMT, SS 2025, 26 March 2025, link; HMT, Press Release, 9 June 2025, link; Resolution Foundation, 12 May 2025, link).

• After Keir Starmer was unable to pass welfare reforms this summer, it has been reported that he will try again after his ‘reset'. The Telegraphreports that Keir Starmer will try again to drive through money-saving welfare reforms following his reshuffle, after a humiliating climb down in the middle of the Second Reading of the Universal Credit and PIP Bill where the Government was forced to abandon key reforms mid-debate (The Telegraph, 2 September 2025, link). 

Labour's choices are wrecking the jobs market 

• The Office for Budget Responsibility estimate that Labour's Jobs Tax will cost 50,000 jobs. ‘The increase in employer NICs, which we estimate will reduce the level of potential output by 0.1 per cent… We assume this lowers real wages and profits, and workers and firms reduce labour supply and demand in response, reducing labour supply by around 50,000 average-hours equivalents' (OBR, Economic and Fiscal Outlook, 30 October 2024, link). 

• The Bank of England forecast that Labour's National Insurance hike will result in lower wages and employment. ‘The NICs increase is likely to be transmitted into higher prices, lower wages and employment… There is a risk that a greater part of the adjustment to the increase in employer NICs comes through lower employment' (BoE, Monetary Policy Report, February 2025, link).

• The Government's own impact assessment suggests that by increasing the cost of employment, the Employment Rights Bill risks one in six businesses sacking workers and one in eleven cutting wages. ‘Across all businesses in the UK with 10 or more employees… responses included to reduce the number of employees (17 per cent), limit overtime hours (10 per cent) or reduce wages for other employees (9 per cent)' (DBT, Employment Rights Bill: Economic Analysis, October 2024, link).

• The unemployment rate is at its highest level in four years. In April-June 2025, the unemployment rate was 4.7 per cent, its highest rate since April-June 2021. The rate has increased or remained unchanged for the past 10 months since June-August 2024, and remains above the 4.2 per cent left by the Conservatives (ONS, Labour Market Overview, 12 August 2025, link).

• Entry-level jobs are at their lowest level in five years, as Labour's tax hikes hits younger and lower paid workers. The proportion of new entry-level jobs has declined to just over a fifth of the overall market, the lowest share since 2020, as employers cut back on lower-paid roles for younger staff to manage rising employment costs including the Jobs Tax and minimum wage increase (The Times, 26 August 2025, link).

• Real wage growth is slowing, as Labour's war on business hits the pockets of hard working people. In the three months to June 2025, real wages growth was just 1.1 per cent – down from the 2.8 per cent in the prior three months to March 2025 and below the 2.5 per cent the Conservatives left in the three months to June 2024 (ONS, Real average weekly earnings using consumer price inflation, 12 August 2025, link).

Labour have broken the economy and the public finances: 

• The National Institute of Economic and Social Research has warned that Labour's economic mismanagement has created a £41.2 billion deficit and eroded Rachel Reeves' £9.9 billion headroom – creating a £50 billion black hole. ‘But the fiscal challenge looms largest. The Government is no longer on track to meet its “stability rule”, with our forecast suggesting a current deficit of £41.2 billion in the fiscal year 2029–30' (NIESR, UK Economic Outlook, 6 August 2025, archived).

Labour's economic mismanagement is hurting working people: 

• Working people are £1,700 worse off under Labour. Because of the choices Labour has made in office, hardworking families face paying an extra £1,761 a year (CRD Analysis, 3 July 2025, available on request).