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 Major Benefit Changes to Save £36 Billion: Britain Faces a Fierce Welfare Debate
Britain’s welfare system has become the focus of a major political confrontation after Conservative leader Kemi Badenoch unveiled an eight-point plan designed to reduce benefit spending by billions of pounds. Announced in September and October 2026, the proposals aim to save approximately £36 billion, with the Conservatives arguing that the money could help strengthen national defence, reduce government borrowing and create room for tax cuts. The plans have already placed welfare reform firmly at the centre of the debate over Britain’s economic future.
For millions of households, benefits provide essential support with housing, childcare, disability-related costs and everyday living expenses. Any major changes to the system could therefore have significant consequences, particularly for families on low incomes, people unable to work because of illness and individuals who have struggled to find employment.
Badenoch argues that the existing system requires fundamental reform to ensure that public money is used responsibly and that employment is financially worthwhile. Critics, however, are likely to question whether the proposed reductions could place additional pressure on vulnerable households and public services.
The central question is whether the Conservatives can deliver the savings they envisage while maintaining adequate protection for people who genuinely need financial assistance.
1. Bringing Back the Two-Child Benefit Limit
One of the most prominent proposals is to reverse Labour’s decision to remove the two-child limit for the child element of Universal Credit.
The Conservatives argue that reinstating the restriction would reduce welfare spending and reinforce the principle that families should consider the financial consequences of having additional children. Their plan estimates that restoring the limit could save approximately £3.1 billion annually by 2030.
The proposal has attracted attention because it directly affects families with three or more children who rely on Universal Credit to meet essential expenses.
Supporters of reinstating the limit argue that benefit policy should encourage financial responsibility and ensure that public spending remains sustainable. They also contend that taxpayers who work and support their own families should not face an increasingly expensive welfare system.
Opponents raise a different concern. They argue that children should not experience poverty because of decisions made by adults and that restricting support can make it harder for low-income households to pay for food, clothing, heating and other necessities.
The disagreement illustrates a fundamental divide in British social policy. One side prioritises limiting public expenditure and strengthening incentives to work, while the other emphasises the importance of preventing child poverty and protecting household living standards.
If the Conservatives pursue the proposal in government, its effects would depend on the detailed rules, the number of affected households and the availability of other forms of support.
2. Introducing a New Subsistence Allowance
Another major proposal would introduce a new Subsistence Allowance for certain people claiming Universal Credit who have been seeking employment for more than six months but have not made sufficient National Insurance contributions.
Under the proposed system, eligible claimants would receive an allowance worth 70 per cent of the standard Universal Credit allowance. Payments would be provided through a restricted Back to Work Card rather than unrestricted cash.
The card would prevent spending on specified items and activities, including alcohol, cigarettes and gambling, and would not permit cash withdrawals.
The Conservatives estimate that this measure could save around £500 million annually.
Badenoch’s party argues that people who are able to work should have strong incentives to find employment and contribute to the economy. The proposal is intended to distinguish between those who have contributed through the tax system and those who have spent an extended period claiming benefits without sufficient contributions.
However, the practical implications could be significant. Finding employment is not always straightforward, particularly in areas where vacancies are limited or where applicants face barriers involving transport, skills, childcare or personal circumstances.
There are also questions about how eligibility would be assessed and how people who experience temporary setbacks would be treated.
The effectiveness of the proposal would ultimately depend on whether it helps people enter sustainable employment or primarily reduces the income available to those who remain unemployed.
3. Tightening the Household Benefit Cap
The Conservatives also propose tightening the household benefit cap, which limits the total amount of certain benefits that a household can receive.
Under the existing framework, exemptions can apply in circumstances involving disability benefits and other qualifying conditions. The Conservative proposal would change the rules so that an entire household would no longer automatically be exempt simply because one person receives a qualifying disability benefit.
The party argues that the reform would make the system more consistent and limit excessive payments to households receiving multiple forms of assistance.
Yet disability campaigners and organisations supporting low-income families could raise concerns about the consequences for households containing people with significant medical needs.
A person receiving disability benefits may face additional expenses related to transport, equipment, care or everyday activities. Reducing other household support without accounting for these circumstances could create financial difficulties.
The precise impact would depend on the revised exemption rules and the households affected. The debate therefore extends beyond the overall benefit cap to the question of how the government should account for different needs when calculating assistance.
4. Ending VAT Relief for Motability Vehicles
Another proposal concerns the Motability scheme, which helps eligible disabled people obtain vehicles using qualifying mobility benefits.
The Conservatives want to remove VAT relief on vehicles leased through the scheme, estimating that the change could generate approximately £1 billion in annual savings.
The proposal reflects the party’s broader intention to examine tax reliefs and exemptions as part of its effort to reduce public spending.
However, Motability vehicles can play an important role in helping disabled people access employment, healthcare, education and community activities. For individuals who cannot rely on public transport, a suitable vehicle may be essential to maintaining independence.
Removing VAT relief could increase the cost of leasing vehicles, depending on the final arrangements and how the scheme responds.
Supporters of the change may argue that tax exemptions should be reviewed to ensure that public resources are allocated effectively. Critics may counter that increasing mobility costs could undermine opportunities for disabled people to participate fully in society.
The issue highlights the importance of examining not only the immediate savings from a policy but also its potential effects on employment, independence and other public services.
5. Reforming Housing Benefit
Housing support represents another substantial part of the Conservative plan.
The party proposes changing Local Housing Allowance rates so that they reflect rents in the cheapest 10 per cent of local properties, rather than the cheapest 30 per cent under the current framework. The rates would subsequently rise in line with local housing costs.
The Conservatives estimate that housing benefit reform could save around £4.5 billion annually.
Supporters argue that aligning assistance with lower rental costs could reduce public expenditure and encourage a more disciplined approach to housing support.
However, the availability of affordable accommodation varies considerably across Britain. In some areas, properties at the lower end of the rental market may be limited, unsuitable or located far from employment opportunities and essential services.
If housing support falls below the rent that households can realistically obtain, some claimants could face shortfalls. Depending on their circumstances, they might have to use other income to cover the difference, move to cheaper accommodation or risk falling behind on payments.
The consequences could be particularly important for families with children and people whose employment depends on remaining close to their workplace.
The success of the proposed reform would therefore depend partly on local housing conditions and whether sufficient affordable properties are available.
6. Restricting Benefits for Foreign Nationals
The Conservatives also propose ending benefit eligibility for most non-UK nationals, while stating that the rights of EU nationals protected under the Withdrawal Agreement would be respected.
The party estimates that its proposal could save approximately £9.5 billion annually.
The issue is politically sensitive because it touches on immigration, taxation, eligibility for public services and the relationship between contributions and entitlements.
Supporters argue that access to welfare should be more closely connected to citizenship and participation in the British tax system. They contend that tighter eligibility rules could reduce public expenditure and strengthen confidence in the fairness of the system.
Critics may question the breadth of the proposed restrictions and their implications for people who live and work legally in the United Kingdom. Eligibility rules can differ according to immigration status, residence rights, benefit type and applicable legal protections.
Any policy would therefore need detailed legal provisions and careful implementation. A broad political announcement cannot, by itself, establish which individuals would ultimately lose eligibility.
The proposed savings would also need to be assessed against the actual number of affected claimants and the costs associated with implementing the new rules.
7. Overhauling Sickness and Disability Benefits
Perhaps the most consequential element of the proposals concerns sickness and disability benefits.
The Conservatives want to tighten assessments and change eligibility rules, including measures aimed at preventing some people with lower-level mental health conditions from qualifying for particular disability benefits. The plan would also restore more extensive face-to-face assessments.
The party estimates that its sickness and disability reforms, together with changes affecting child disability living allowance, would generate substantial savings.
Conservative supporters argue that the system should focus resources on people with the greatest needs while ensuring that those capable of working receive appropriate assistance to enter employment.
However, determining someone’s ability to work can be complicated. Mental health conditions, chronic illnesses and disabilities can affect people differently, and their impact may vary over time.
A person might appear capable of performing certain activities while still experiencing substantial limitations in maintaining regular employment. Assessment procedures therefore need to consider individual circumstances rather than rely on assumptions about a diagnosis alone.
Disability organisations and other critics may also question whether tighter assessments could result in eligible people losing support.
The government’s challenge would be to distinguish inaccurate claims from legitimate applications without creating unnecessary hardship or excessive administrative delays.
8. Cracking Down on Fraud and Error
The final major element is a stronger effort to reduce fraud and mistakes in the welfare system.
The Conservatives estimate that improved enforcement and administration could save approximately £1 billion annually.
Fraud and incorrect payments can undermine confidence in public services and result in public money being spent inappropriately. Improving the accuracy of benefit decisions is therefore a legitimate objective for any government.
However, it is important to distinguish deliberate fraud from administrative errors and misunderstandings. Claimants may provide incorrect information unintentionally, particularly when rules are complex or personal circumstances change.
Effective enforcement would need to identify deliberate wrongdoing while ensuring that people who qualify for support are not unfairly penalised.
Better data systems, clearer communication and more efficient administration could help reduce mistakes. At the same time, safeguards and appeal procedures would remain important to prevent wrongful decisions.
The ultimate value of the reform would depend on the savings actually achieved and whether enforcement improvements reduce errors without making the system unnecessarily difficult to navigate.
Can the Conservatives Really Save £36 Billion?
The headline figure has become central to Badenoch’s argument for welfare reform. The Conservatives say the combined proposals could generate approximately £36 billion in annual savings, with the money helping to support defence spending and other priorities.
The party’s wider argument is that Britain must make difficult decisions about public expenditure rather than continue relying on borrowing and taxation.
However, the £36 billion figure represents a projected saving from proposed measures, not money already saved. The amount ultimately achieved would depend on legislation, implementation, claimant behaviour, economic conditions and the interaction between different reforms.
The proposals would also need to be evaluated individually. Some changes could reduce benefit payments directly, while others would depend on administrative improvements or changes in employment outcomes.
It would be important for independent analysts to examine the assumptions behind the estimates, including the number of people affected and whether some savings overlap.
There is also a wider economic question. Reducing benefit expenditure may improve the public finances, but reductions in household income can affect consumer spending and demand for local services. The scale of any such effects would depend on the details of the policies and the circumstances of the households concerned.
The debate is therefore not simply about whether welfare spending should rise or fall. It is about how public resources can be allocated while maintaining an effective safety net.
Conclusion: A Defining Debate Over Britain’s Welfare State
Kemi Badenoch’s eight-point plan represents a major attempt to reshape the debate over Britain’s welfare system. By proposing changes to child benefits, unemployment support, housing assistance, disability assessments and eligibility rules, the Conservatives are seeking to demonstrate that substantial reductions in public expenditure are possible.
The party argues that the resulting savings could help strengthen national defence, reduce borrowing pressures and support tax reductions. Critics, meanwhile, will focus on the potential consequences for families, disabled people, unemployed workers and households already struggling with essential costs.
Ultimately, the success of the proposals would depend on more than the headline figure. Voters would need to consider whether the projected savings are achievable, whether the changes would improve incentives to work and whether people who genuinely need assistance would continue to receive it.
Britain’s welfare debate is likely to remain contentious because it involves competing principles: financial responsibility, personal independence, fairness to taxpayers and protection against hardship.
Badenoch has placed a clear programme of reform before the public. The next stage of the debate will be whether the Conservatives can demonstrate that their plans are financially credible, legally workable and capable of achieving their stated objectives without imposing disproportionate costs on vulnerable people.