Conservative leader Kemi Badenoch at the Conservative conference (Image: Getty)
Kemi Badenoch has set out an eight-point plan to slash welfare spending. The party argues that it’s essential to reduce the UK’s soaring benefits bill in order to find the money we need to increase defence spending – and to provide tax cuts for working people.
Under Labour, working-age welfare spending is forecast to climb from £126.4 billion in 2023-24 to £171.6 billion a year by 2029-30. Tories argue this has to stop. And they want to cut Government borrowing, which currently costs taxpayers £111.2 billion every year just in interest payments.
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Here are the eight big benefit cuts announced by Mrs Badenoch:
Bring back the two-child limit
A Conservative government would reverse Labour’s decision to scrap the two-child limit in Universal Credit, Tories say. They argue that working families have to ask whether they can afford another child, and families on benefits should face the same choice. This will save £3.1 billion per year.
Create a “Subsistence Allowance” for some people who aren’t working
Universal Credit claimants who have spent more than six months looking for work, and who have not paid enough National Insurance contributions in the past, will move onto a Subsistence Allowance worth 70% of the Universal Credit Standard Allowance. Instead of getting cash, they will receive a Back to Work Card that cannot be spent on alcohol, cigarettes, gambling or cash withdrawals. This will save half a billion pounds per year.
Tighten the household benefit cap
Conservatives would tighten the household benefit cap – which limits the total amount any household can get in benefits – and end a current rule that means the entire household is exempt if just one person receives a disability benefit. At the moment, the most anyone can receive is £2,110.25 per month if they are a single parent in London.
End VAT breaks for Motability
A Conservative Government would remove VAT relief vehicles leased under the Motability scheme, which allows people with certain disability benefits to get a car.
Reform housing benefit
Local Housing Allowance caps – which set upper limits on how much different types of families can claim in housing benefits in different areas – will be set at the cheapest 10% of local rents rather than the cheapest 30%, and then rise in line with local housing costs. In practice, this means housing benefit will be cut for some people. These reforms will save £4.5 billion per year.
End benefits for foreign nationals
Non-UK nationals will no longer be able to claim benefits. The rights of EU nationals with settled status protected by the withdrawal agreement will be honoured, so they will retain their entitlements. The welfare system should be for British citizens who have paid into it. This will save £9.5 billion per year.
Overhaul sickness and disability benefits
Conservatives will make it harder to claim some benefits, for example, by stopping people from claiming disability benefits for low-level mental health conditions. There will be more rigorous assessments of who truly needs benefits, including the return of face-to-face assessments.
Crack down on fraud and error
Conservatives say they would save a billion pounds annually by cracking down on fraud and mistakes.
Helen Whately MP, Shadow Work and Pensions Secretary, said: “The benefits bill has spiralled out of control. The Conservatives are the only party with a plan to bring down the bill and get Britain working again.
“Labour think every problem can be solved with more spending, more borrowing and higher taxes – they are opposed to any sort of welfare reform. Labour would rather tax nurses and builders to the hilt and leave our armed forces short than get a grip on our ballooning benefits bill.
“Under Kemi Badenoch’s leadership, the Conservatives will tell the truth about the choices Britain faces, live within our means and respect taxpayers’ money. This is why today we are going further and have set out £36 billion worth of savings from the welfare bill.”
Kemi Badenoch Announces Eight Huge Benefit Changes to Save £36bn as Welfare Debate Intensifies
Britain’s welfare system has become one of the most contentious battlegrounds in national politics, with growing pressure on politicians to explain how public spending can be controlled while protecting vulnerable people. A proposal attributed to Conservative leader Kemi Badenoch involving eight major benefit changes and potential savings of £36 billion has therefore raised important questions about the future of welfare, the burden on taxpayers and the government’s approach to economic reform.
For supporters of welfare reform, the central argument is straightforward: public money must be spent responsibly, and the benefits system should provide genuine support to people who need it without discouraging those who are capable of working. They argue that rising expenditure, persistent economic inactivity and concerns about fairness between taxpayers and claimants make substantial reform increasingly difficult to avoid.
Critics, however, warn that sweeping reductions could place additional pressure on disabled people, low-income households and families already struggling with the cost of living. They argue that benefit expenditure cannot be judged solely by its headline price tag because social security also protects people against poverty, unemployment and circumstances beyond their control.
The £36 billion figure is striking, but the political significance of any proposed package depends on the details. Which benefits would be affected? How would eligibility change? Over what period would the savings be achieved? And would the reforms reduce long-term costs without creating additional problems elsewhere in the public sector?
These are the questions that Badenoch and the Conservatives would need to answer if they wanted to turn a headline-grabbing proposal into a credible programme for government.
The Eight Major Changes at the Heart of Badenoch’s Plan
The Conservative proposals are intended to reduce the cost of working-age welfare and redirect public money towards defence spending and tax reductions. The party argues that the system should offer stronger incentives to work while ensuring that support is focused on those who genuinely need it. <Cite refs={[“turn392075search0″,”turn392075search1″,”turn392075search2”]}/>
Here are the eight main areas of reform associated with the package.
1. Reintroducing the two-child benefit limit
The Conservatives want to reinstate the restriction that generally prevented families from receiving additional Universal Credit or tax credit support for a third or subsequent child born after the relevant rules took effect. Labour removed the restriction in April 2026.
Supporters of restoring the limit argue that families receiving benefits should face similar financial considerations to working households when deciding whether they can afford to have more children. They also argue that removing the restriction increases government expenditure at a time when public finances are under pressure.
Opponents counter that the policy can deepen child poverty, particularly in families where parents have limited employment opportunities or face unexpected financial difficulties. The political challenge is determining how to control spending without leaving more children in hardship.
2. Introducing a restricted allowance for some long-term unemployed claimants
One of the more controversial proposals would introduce a new Subsistence Allowance for certain people who have been unemployed for more than six months and are considered capable of working.
Under the Conservatives’ plan, eligible claimants who have not contributed sufficiently through previous employment could see their Universal Credit reduced by 30 per cent. Their payments would be provided through a restricted Back to Work card, preventing spending on items such as alcohol, tobacco and gambling.
The party argues that this would encourage employment while ensuring that public money is used for essential purchases. It says people with substantial employment histories would receive greater protection, with the rules designed to distinguish between those who have contributed to the system and those who have not.
Critics question whether restricting spending would help people find jobs or instead create additional difficulties for households already struggling to meet basic expenses.
3. Tightening the household benefit cap
Another proposed change would tighten the overall limit on benefits received by certain households.
The Conservatives argue that a stronger cap would improve fairness for taxpayers and reduce the risk of households receiving substantial support without sufficient financial incentives to increase their earnings.
However, the effects would vary considerably between families. Households with several children, high housing costs or limited access to employment could be disproportionately affected. Any reform would therefore need to consider regional differences and the circumstances of vulnerable claimants.
4. Reforming housing benefit
Housing support is another major target. The Conservatives have proposed restricting housing benefit support by reference to cheaper local rents, with the aim of reducing the amount the government pays towards accommodation.
The party’s broader argument is that housing support should not expose taxpayers to continually rising costs without sufficient scrutiny. It believes that tighter limits could help bring expenditure under control.
But housing benefit operates in a market where affordable properties are not always available. If support falls below the cost of suitable accommodation, some claimants could face rent arrears, eviction or pressure to move away from employment and family support networks.
The potential savings would therefore need to be weighed against the risk of shifting costs onto councils and homelessness services.
5. Ending VAT relief on Motability vehicles
The Conservatives have also proposed ending VAT exemptions associated with vehicles obtained through the Motability scheme, a programme that enables eligible disabled people to exchange qualifying mobility benefits for a vehicle.
The party argues that removing this tax relief would generate additional revenue for the public purse.
However, the proposal has attracted concerns because access to suitable transport can be essential for disabled people who cannot rely on conventional public transport. A vehicle may enable someone to travel to work, attend medical appointments or maintain independence.
The debate is therefore not simply about tax treatment. It concerns how the government should balance the pursuit of savings with the practical needs of people living with disabilities.
6. Changing sickness and disability assessments
The Conservatives want to overhaul the way sickness and disability-related benefits are assessed, arguing that the current system needs stronger incentives for people who can work and better distinctions between different levels of need.
Supporters believe reform could reduce unnecessary expenditure and help more people return to employment where appropriate.
Yet assessments must accurately reflect the realities of fluctuating conditions, long-term illness and disabilities that may not be immediately visible. An overly restrictive system could wrongly classify people as capable of work and remove support they depend upon.
A successful reform would need reliable medical evidence, consistent decision-making and an effective appeals process.
7. Restricting benefits for some non-UK nationals
The package also includes proposals to restrict access to benefits for most non-UK nationals, subject to the precise eligibility rules and applicable legal obligations.
Conservatives argue that eligibility should reflect a person’s immigration status and contribution to the British economy. They believe tighter restrictions could reduce expenditure and strengthen public confidence in the welfare system.
However, eligibility for public support is governed by a complex combination of immigration rules, residence requirements and international obligations. The practical consequences would depend on the groups affected and the specific benefits covered.
The policy would therefore require detailed legislation and careful consideration of its effects on people who work, pay taxes and have established lives in Britain.
8. Cracking down on welfare fraud and misuse
The final major area involves stronger action against fraud and improper benefit claims.
The Conservatives argue that the government must ensure payments go to eligible recipients and investigate cases where people deliberately provide false information or conceal relevant circumstances.
Better data systems, effective checks and faster investigations could help protect public money. However, fraud prevention must be distinguished from legitimate claims made by people whose circumstances are complicated or whose eligibility is disputed.
Mistakenly accusing eligible claimants of wrongdoing can cause serious financial hardship. A fair system must therefore combine effective enforcement with safeguards against errors and opportunities to challenge incorrect decisions.
Taken together, these measures reflect the Conservatives’ ambition to reduce welfare spending and change the incentives built into the system. The precise financial impact would depend on implementation, eligibility rules and how people respond to the changes. <Cite refs={[“turn392075search1″,”turn392075search2″,”turn392075search6”]}/>
Where Would the £36 Billion in Savings Go?
Badenoch’s wider argument is that welfare reform could create room for other priorities, including stronger national defence and lower taxes for working people.
The Conservatives have separately outlined plans to increase defence spending to 3 per cent of gross domestic product by 2030. They have argued that savings from welfare changes and other measures could help finance that commitment, including an additional £10 billion a year for the Armed Forces. <Cite refs={[“turn392075search0″,”turn392075search5”]}/>
This creates a clear political choice. The Conservatives want to demonstrate that the government can increase spending in areas it considers essential without simply borrowing more money or raising taxes.
Yet a headline figure of £36 billion should not automatically be interpreted as money that can immediately be redirected elsewhere. A credible spending plan must explain whether the figure represents annual savings, savings over several years or a broader estimate of the effects of multiple policies.
It must also account for implementation costs, transitional arrangements and possible consequences elsewhere in the public sector. If changes increase demand for emergency housing, local authority assistance or other services, some of the apparent savings could be offset.
Voters deserve a transparent explanation of how the numbers have been calculated and when the money would actually become available.
Labour’s Response and the Political Battle Ahead
The proposals also place Labour under pressure to defend its approach to social security. The government must address concerns about rising expenditure while demonstrating that its policies protect people who cannot work and help those who can return to employment.
Labour has criticised aspects of the Conservatives’ proposed restrictions on unemployed claimants, questioning whether a restricted payment card would be workable. Anti-poverty campaigners have also warned that cutting benefits could intensify financial hardship without addressing the underlying barriers preventing people from finding work. <Cite refs={[“turn392075search1″,”turn392075search4”]}/>
The disagreement reflects two different approaches to welfare. Conservatives emphasise fiscal discipline, conditional support and stronger financial incentives to work. Their opponents place greater emphasis on social protection, the risk of poverty and the need to address health, childcare, housing and employment barriers.
Neither side can avoid the practical questions. A system that spends more than the country can sustainably afford creates problems for taxpayers and future governments. But a system that withdraws essential support without helping people become financially independent can generate equally serious social and economic consequences.
The success of any reform should ultimately be measured by whether it reduces unnecessary expenditure, improves employment outcomes and protects people who genuinely cannot support themselves.
Conclusion: A Defining Test for the Conservatives
Kemi Badenoch’s proposed benefit changes represent a significant attempt to establish a clear Conservative alternative to Labour’s economic and welfare policies.
By focusing on spending restraint, stricter eligibility and employment incentives, the party hopes to appeal to taxpayers who believe the welfare system has become too expensive and insufficiently focused on helping people into work.
However, the proposals also carry substantial risks. Changes affecting families, disabled people, unemployed workers and those dependent on housing support could provoke fierce opposition if they are seen as unfair or poorly designed.
The £36 billion headline will attract attention, but the credibility of the programme will depend on the detail behind it. The Conservatives must explain the calculations, demonstrate that the savings are achievable and show how vulnerable people would be protected.
Ultimately, Britain needs a welfare system that is financially sustainable, treats taxpayers fairly and provides meaningful support when people face circumstances beyond their control.
Badenoch’s challenge is to prove that these objectives can be achieved together. If the Conservatives can present a convincing plan that reduces expenditure while helping more people into secure employment, the proposals could become an important part of their political platform. If the numbers fail to add up or the human consequences are underestimated, however, the package could become another contentious battleground in Britain’s continuing debate over public spending, poverty and economic fairness.