Kemi Badenoch warns Labour's addiction to welfare will 'bankrupt Britain' - and even the IMF may not have enough money to bail us out!
Labour's addiction to welfare will ‘bankrupt’ Britain, Kemi Badenoch has warned – as she accused Rachel Reeves of plotting fresh tax hikes to fund higher benefit handouts.
In a stark pre-Budget assessment, the Conservative leader said Keir Starmer’s retreats on welfare would trigger higher taxes for workers in next week’s Budget.
Mrs Badenoch said Labour’s U-turn on welfare reform had blown a £5 billion hole in the public finances. And she said plans to scrap the two-child benefit cap would cost taxpayers a further £3.5 billion a year.
The combined cost is equal to what will be raised by the Chancellor’s expected decision to freeze tax thresholds for another two years – a move Ms Reeves ruled out last year as a breach of Labour’s manifesto.
Mrs Badenoch said claims by Ms Reeves that the public finances had been knocked off course since last year’s Budget by Brexit and the previous Tory government were ‘nonsense’.
‘Labour will put up people’s taxes to spend more money on benefits,’ she said. ‘Everything else is a smokescreen.’
Accusing the Chancellor of plotting a ‘stealth tax bombshell’, she added: ‘If Rachel Reeves comes back for more taxes without having serious cuts in public spending, especially on welfare, then she is going to ruin our economy.’
She accused Labour of ‘hiking taxes on people in work to give handouts to people out of work – probably the last people that might vote Labour.’
Kemi Badenoch warned that Rachel Reeves is plotting a 'stealth tax bombshell' after failing to cut welfare spending
Speaking at a press conference in London, Mrs Badenoch said: ‘If you ask me, is it possible to avoid bankruptcy without cutting welfare? It's a simple question, it will be a simple answer: No, it is not.’
She added that she was ‘not sure’ the International Monetary Fund ‘has enough money’ to bail out the UK as it did in the 1970s, given Labour's current plans.
The Conservatives have set out plans for sweeping welfare cuts, including ending claims from people with ‘mild’ mental health issues like anxiety and depression.
Mrs Badenoch also confirmed that a future Conservative government would reinstate the two-child benefit cap, describing the measure as an example of ‘fairness’.
She said allowing the benefits bill to spiral was ‘not the Christian thing to do’.
And she said large families on welfare were being put ‘on notice’ that the Tories would cut their benefits, as the reintroduction of the benefit cap would be made retrospective.
The Conservatives have already published plans to slash £47 billion from state spending. But Mrs Badenoch suggested she could go much further, saying the state of the public finances is such that ‘we may have to do something really revolutionary, that is what we are working on’.
She said that public spending had continued to rise during the Tory ‘austerity’ strategy that followed the 2008 financial crash, adding: ‘I think that was a mistake. We need to go further.’
The Conservatives have committed to maintaining the pension triple lock at the next election. But Mrs Badenoch later hinted that a future Tory government could return to the issue at some point.
‘That moment is not now,’ she told Sky News. ‘And I don't want people to be confused about what our policy is right now. Our policy is to keep the triple lock. Let us focus on welfare, that is the picture of what we mean by right now."
Asked how long that would be her position for, Ms Badenoch replied: ‘Well, let's see what this budget leaves. Let's see what mess Reeves leaves for us.’
In one of the biggest-ticket Budget revenue-raisers, Ms Reeves is poised to keep the long-running freeze on thresholds in place for another two years.
The policy would net the Treasury more than £8billion a year.
Chancellor Rachel Reeves is scrambling for ways of raising tens of billions of pounds next week after humiliatingly abandoning plans to hike income tax
But the boost to the government's coffers would come at a huge cost for Britons, with more than 10 million people facing paying the top rate of tax by the end of the decade. Some couples' tax bill will be £1,300 higher than if the policy finished as previously scheduled.
The worse-off will also be hammered, with a full-time worker earning the minimum wage seeing their annual tax bill rise £137 relative to the current policy of increasing thresholds in line with inflation.
For the first time, all pensioners will be hit with tax on the full state pension in 2027-28 - so the state is effectively giving with one hand and taking with the other.
In a direct barb at her Reform rival, Mrs Badenoch said: 'Right now, Nigel Farage and Zia Yusuf are holding a press conference on how they would save money, but in reality they want to increase benefits by scrapping the two-child benefit cap.
'They just don't get it.'
She accused Mr Farage of deceiving voters with his suggestion of stripping welfare payments from European Union (EU) citizens who have settled status in post-Brexit Britain.
She said: 'It would be a bad idea because we spent a lot of time negotiating those rights, not just for EU citizens in this country, but British citizens in other countries of the EU.
'You start unpicking that and you start unpicking all of the work that was done, year after year after year, with a lot of pain and effort during those years when we were negotiating Brexit.'
It was 'completely ridiculous' for Mr Farage to say he would just renegotiate that settlement.
'This man does not know what he's talking about,' she said. 'I'm a former trade secretary. Even with friendly countries, trade negotiations are very, very difficult.'
She added: 'It is wrong of him to deceive people, lie to them and make them think this is going to be easy.'
