Conservatives and Reform UK Set Out Rival Economic Policy Visions Ahead of Next Election

The economic battleground is heating up between the Conservatives and Reform UK as the next general election draws nearer. Kemi Badenoch, leader of the Tory party, laid out ambitious plans at the recent party conference, aiming to re-energise her party’s economic platform and take back the initiative from Reform UK, which has gained considerable momentum in the polls. The economy remains a crucial area for both parties as they try to win over a sceptical public looking for clarity on tax and spending.

A headline announcement from Badenoch’s conference speech was a promise to abolish stamp duty on the purchase of main homes. This levy currently raises more than £15bn annually for the Treasury, with the proposed abolition on primary residences set to cost nearly £9bn in lost revenue. Yet, the move might inject dynamism into the housing market, making it easier for families to move for job opportunities and potentially accelerating home ownership rates. Stamp duty has long been criticised as a major financial hurdle, with Badenoch describing it as a barrier to mobility and entrepreneurship.

In support of first-time buyers, Mel Stride, the shadow chancellor, added a “first job bonus” proposal. New workers would receive a £5,000 tax rebate to put towards their first home, appealing directly to young voters and families seeking their step onto the property ladder. This proposal goes further than Reform UK’s position, which offered to cut stamp duty to zero only for properties under £750,000, with incremental rates above that value. The current system starts at 2 percent for homes over £125,000 and climbs to a 12 percent rate for properties exceeding £1.5 million.

Tax policy promises extend beyond stamp duty. The Conservatives have pledged to reverse Labour’s 20 percent VAT on private school fees and bring back the education VAT exemption, a move also supported by Reform UK. Both parties align on the issue of inheritance tax, vowing to restore property reliefs scrapped under Labour for family farms and businesses. There is joint intent to ease the burden of business rates on high street retailers as well as a commitment to cut so-called green levies. The Conservatives put forward £1.6bn in carbon tax cuts, while Reform UK seeks the termination of net zero policies and related subsidies, touting anticipated savings in the tens of billions of pounds.

Divergence between the parties emerges in matters such as water industry ownership, where Nigel Farage has pledged to renationalise half of Britain’s water sector. Reform UK proposes scrapping the two-child benefit cap and forcing the Bank of England to slash interest payments to commercial banks on reserves, a policy the Conservatives have not embraced.

The cost of these pledges is significant. Tory spending and tax cut plans now total £21.1bn, supported by outlined spending reductions of £46.9bn, largely in benefits, the civil service, overseas aid, and asylum. Badenoch has positioned her party as the more fiscally responsible option, instituting a “golden rule” that at least half of any savings made must go towards deficit reduction. Reform UK, for its part, aims to extract £90bn across government departments and changes to central banking policy.

One area left unresolved by both parties is pension reform. With pension spending expected to balloon from £141.9bn to £181.8bn by the decade’s end, largely due to the state pension triple lock, neither side has committed to overhauling the policy – though Farage has floated an increased pension age in line with longevity. Tax cuts and spending promises remain the preferred currency for appealing to voters, even as long-term questions about the sustainability of these commitments loom.