Badenoch pledges no inheritance tax on family homes and welfare cuts for defence

Kemi Badenoch used the Conservative Party conference to promise that a future Conservative government would end inheritance tax on family homes, allow couples to pass on an extra £1 million tax-free and cut welfare spending to pay for defence.

In a closing speech in Birmingham, she said the next election would be 'a battle for the soul of this nation'. She framed the choice as between Labour, which she said was high tax, high spend and addicted to welfare, and the Conservatives, who would let people keep more of what they earn. She also attacked Reform UK, saying she would not do a deal to 'unite the right' with a party whose MPs questioned identity. She referred to comments by Reform MP Suella Braverman about Englishness, saying she did not want to explain to her mixed-race son that some people do not think black England players are English.

On tax, Badenoch said she could not abolish inheritance tax at the conference because of other spending commitments, including a 'Britannia shield', 50,000 new prison places and cutting the deficit. But she pledged that the next Conservative government would legislate so nobody pays inheritance tax on their family home. Couples would be able to leave an additional £1 million tax-free. She said every inheritance tax bill would be cut and the number of families paying it would fall by more than half. Her ambition was to abolish inheritance tax altogether when affordable.

She also promised no stamp duty when buying a home and no mansion tax when living in one. She said the Conservatives were the party of home ownership and that passing on a home was one of the most human instincts.

The package was estimated by the Conservatives to cost about £6 billion a year. Inheritance tax is paid on fewer than 5% of estates. Coverage of the speech noted that the changes would cut the number of estates paying the tax from around 52,000 to 22,000 by 2029. The Institute for Fiscal Studies said the biggest beneficiaries would be a very well-off group mainly living in London and the South East. Critics said it would encourage wealthy people to stay in expensive homes rather than downsize.

Badenoch set out other pledges: - Cut the benefits bill to spend more on the armed forces. - Cut employers' national insurance for young people to help them find work. - Build 50,000 more prison places, described as the largest prison building programme in modern history. - End Labour's early release scheme and introduce tougher minimum sentences for the worst crimes. - End the family farms tax. - Protect pensions, veterans from malicious prosecution and women's privacy in single-sex spaces.

She said a Conservative government would follow a 'golden economic rule' so that for every pound saved, 50 pence goes to cutting the deficit. She said the party had identified over £70 billion of savings, which would cut the deficit inherited from Labour by more than £35 billion.

The speech was well received in the hall. Badenoch's personal approval ratings are stronger than her party's. The Conservatives remain third in the polls behind Labour and Reform UK. Some advisers were reported to see the inheritance tax promise as a way to win back wealthier voters in southern England and increase the Tory vote share. Reaction in Nuneaton was mixed. Labour said the plan prioritised the wealthiest at the expense of less well-off people. A Labour minister, Torsten Bell, said promising tax cuts on this scale usually ends by trashing the public finances. Reform UK said inheritance tax was the wrong priority. Polling cited in coverage suggested 52% of people want inheritance tax reduced or abolished, even though few estates pay it.