The only possible explanation for the speech Kemi Badenoch delivered today is that she suffers from an acute case of political split personality disorder.
On the one hand, we have an old-fashioned fiscal conservative who wants the country to live within its means. On the other, we have a half-drunk festival organiser, firing-off multiple rounds of electoral confetti – countless tax cuts and spending commitments, paid for by illusionary savings.
The first version of Kemi Badenoch was presumably appalled by the things the second version of Kemi Badenoch was proposing, but she seemed blissfully unaware that this other version of her personality was operating out there on the conference stage. Perhaps somewhere deep inside she was mortified by the words that were coming out her mouth. Or perhaps she simply blacked out whenever the other version spoke, only to awaken blissfully unaware of what she’d just promised.
The Tory leader told her party conference that the “fundamental problem” we have as a country is that we are “running out of money”. This is at the core of our national malaise. “Almost every other problem,” she said, “stems from this.” The solution was fiscal rectitude – a concerted effort to balance the national books, pay down the deficit and stimulate growth. She criticised Andy Burnham for “making a promise he cannot deliver with sums which do not add up”. Under a Conservative government, the country would start “living within our means”.
The argument is rather uninspiring. Badenoch spent a great deal of time criticising Burnham for living in the past, but she herself sounded entirely unchanged from the Conservatives of the 1980s. There was not one idea in this speech which would have felt out of place in a Thatcher-era conference address. It all just felt a bit knackered: ideologically, intellectually, even emotionally.
She’s correct that our current economic situation is extremely precarious, but she misrepresents why this situation has happened. She never mentioned the root causes of our troubles – Brexit, Liz Truss, Covid, Ukraine, Iran, the US deficit, and a protectionist demagogue in the White House starting multiple trade wars. And because she is unwilling to recognise these things, she is unable to solve them.
But that, in the great scheme of things, is a minor problem. The much greater difficulty is that she is intent on worsening the conditions she claims to want to solve. Instead of fiscal rectitude, she has spent most of this conference showering Conservative members with very expensive promises. Everyone gets a sweetie.
It is now Conservative policy to give free childcare to couples earning over £100,000, scrap the mansion tax, increase defence spending, add 50,000 prison places, abolish stamp duty and introduce a Britannia Shield air defence system. During the speech, she made a further very expensive promise – to remove inheritance tax on the family home and allow couples to leave their kids an additional million quid tax free.
Some of these decisions are sensible. The childcare cliff edge means that the marginal tax rate at £100,000 effectively spirals into infinity. Nothing good comes from that kind of severe tax threshold. It mutilates incentives and mangles any sense of justice in the tax system. Stamp duty is also a poor tax, which prevents older couples downsizing, young families upsizing, and generally obstructs assets finding their way into the hands of those who will use them most productively.
Other decisions are deeply, deeply silly. Laughable in fact. The Britannia Shield – which, it’s worth mentioning, might be the stupidest name given to a policy in decades – emulates the Iron Dome we see in Israel, which is designed to stop short-range missiles and drones. But unless we are about to go war with France and worried about short-range missiles, it is not the kind of thing you would prioritise in a harsh spending environment. It’s these kinds of inane eye-grabbing policies, designed to secure headlines rather than solve real problems, which drive up government spending in the first place.
How is the party going to pay for all this? It keeps citing £70bn in savings which it has apparently found across government. It likes to suggest that this comes from overly cushioned mental health provisions in the benefit system or the end of the two-child benefit cap. But these are imaginary numbers which exist in an imaginary universe.
According to the Institute for Fiscal Studies, the savings from a two-child benefit cap would add up to £2.5bn a year. Compare that to the cost of increasing defence spending to 3.5 per cent of GDP by 2035, which is what most observers believe Britain requires to be safe in a Putin-era. According to the Office of Budget Responsibility, this would cost an additional £40bn. That’s the Home Office and Ministry of Justice budget combined. The pledge to eradicate stamp duty would cost an additional £9bn, according to the Tories own figures. The pledge to increase prison places at least £2bn. God knows how much the inheritance tax pledge would cost. It all adds up.
The welfare budget cannot withstand that degree of attention the Conservatives want to pay to it. The only way to achieve the kind of sums they’re talking about would be to raid the state pension, which stands at £146bn, and health and disability benefits, which stand at £77bn. The Tories are currently unwilling to reform the triple lock, so they would be forced to find all the money through the second bucket, basically shredding it.
There is no credibility here, just another round of desperate promises which worsen the situation we’re already in. It is, in effect, continuity Trussism – the frantic insistence on tax cuts as an engine of growth without a sober appraisal of their affordability. This fundamental lack of seriousness about spending or tax cuts is precisely how Britain became so financially constricted. It is the product of a political class which likes to talk about fiscal rectitude while retaining the electoral benefits of handing everyone sweeties.
Badenoch is not a solution to the problem, she is an example of it. And when she finds out about all the promises she’s been making, she’ll be livid.