The Conservatives will commit to a new economic “golden rule” designed to cut government borrowing and taxes, party leader Kemi Badenoch will say in her keynote speech to the party’s conference.
The party says the rule would ensure half of all savings made by a future Conservative government would be put towards reducing the deficit, which is the gap between spending and tax revenues.
The other half of every pound saved would be used for policies aimed at growing the economy, including tax cuts.
Badenoch will say the Conservatives are the only party “with a plan to get our economy back on track”.
“It starts with fiscal responsibility,” Badenoch will say. “We have to get the deficit down and we must also show how every tax cut or spending increase is paid for.”
She will accuse the Labour government of risking the UK’s financial stability with a “borrowing and tax doom loop”.
Badenoch will say Labour’s economic plans are “not sustainable” and equate government borrowing to “stealing from our children and grandchildren”.
At the conference, her party has pledged to save £47bn a year from cuts to welfare, the civil service and foreign aid, if it gets back into government.
It has also made £9bn worth of spending commitments on policies including a £5,000 tax rebate for young people and abolishing business rates for High Street shops.
Badenoch will attempt to rebuild the party’s credibility on the economy and further distance herself from former Tory Prime Minister Liz Truss, whose tax-cutting mini-budget spooked financial markets and led to her resignation in 2022.
The Tory leader will also try to reclaim the mantle of financial prudence from Labour, which has sought to position itself as the party of sound money and economic stability since winning power.
But the government is facing a challenging autumn Budget, not least because a rebellion by Labour MPs derailed a plan to save billions on welfare spending earlier this year.
Economists have said taxes will have to go up if Chancellor Rachel Reeves is to meet her self-imposed rules on borrowing to fund public services.
The Conservatives want to focus on reducing public sector net borrowing (PSNB), which represents the difference between total government spending – including capital investments – and total tax receipts.
In its latest forecast, the Office for Budget Responsibility said PSNB is forecast to fall from £137.3bn (4.8% of GDP) this year to £74bn (2.1% of GDP) in 2029-30.
The Conservatives say they are concerned about the level of overall borrowing and interest payments on the debt.
Party sources say they are sceptical of Labour’s plans to bring down the deficit and doubt the OBR’s forecasts will bear out in reality.
Getting the deficit down was one of the main economic policies of David Cameron’s coalition and Conservative governments from 2010.
Under Badenoch, the Conservatives are shifting back in that direction and the language in her speech mirrors that of the former Conservative Chancellor George Osborne, who oversaw years of spending cuts in a bid to reduce the deficit.
Reform UK has also promised to make savings worth billions to offset big spending on tax cuts, the NHS and defence.
At the conference, Conservatives have branded Reform UK “socialist” over their promises to increase spending and nationalise industries.
Like other parties, the Conservatives have upped their attacks on Reform UK, which is leading UK-wide opinion polls.
Badenoch has faced repeated questions about her leadership at the conference in Manchester.
It is her first conference as Conservative leader after she was elected last year in the wake of the party’s heavy defeat in the 2024 general election.
Her party performed badly at the local elections earlier this year and the Conservatives have sunk far below Reform UK and Labour in the polls since.
But speaking to the ahead of her speech, Badenoch insisted her approach would pay off in the long run.
She said: “I’m not losing. I’m going to be winning.”
