(Image: Jacob King)
Kemi Badenoch has promised to slash inheritance tax and let families pass on an extra £1 million tax-free as she put economic growth at the heart of a future Conservative government.
The Tory leader used her party's annual conference in Birmingham to pitch the Conservatives as the "no-nonsense" alternative to Andy Burnham's Labour, declaring the next election would be a "battle for the soul of the nation".
Under the proposed changes, the Conservatives would abolish inheritance tax on all "family homes" and allow couples to leave behind an additional £1 million without paying the tax.
Mrs Badenoch said the move would mean the number of families paying inheritance tax would be cut by more than half.
The pledge is part of a wider Conservative push to promise tax cuts and changes to welfare, with Mrs Badenoch saying voters should be able to "keep more of what they earn".
Mrs Badenoch said she was determined to rebuild the Conservatives after the party's heavy defeat at the 2024 general election.
"I'm not someone who gets written off," she told activists. "And neither is the Conservative Party."
She added: "We are going to win, not for ourselves, but for our country."
What else are the Conservatives promising?
The inheritance tax pledge is one of several measures announced by the Conservatives at their conference.
The party has also promised to:
- Halve employer National Insurance on earnings for workers aged 21 to 24.
- Block school leavers from moving straight onto out-of-work benefits, as part of what the party describes as a "tough love" approach to youth employment.
- Scrap the so-called mansion tax on properties in England worth more than £2 million, which is due to come into force in 2028.
- Cut red tape and abolish some arms-length bodies, including Natural England, in an effort to speed up development and reduce the cost of new homes.
- Invest £10 billion over 10 years in a "Britannia Shield", designed to protect Britain and overseas bases from drone and missile attacks.
Mrs Badenoch said reviving the economy would be the "central organising principle" of a future Conservative government.
She also said the party would take a "tough love" approach to welfare in an attempt to reduce the benefits bill and get more young people into work.
"We need to put the fair back in welfare," she said.
"It is morally wrong to tell people suffering bouts of mild anxiety that they are disabled and cannot work."
Conservatives reject pact with Reform UK
Mrs Badenoch also ruled out forming an electoral pact with Reform UK, despite the Conservatives trailing Labour and narrowly sitting behind Nigel Farage's party in opinion polling.
She said Reform UK would take the country "backwards" and rejected calls to "unite the right".
"To those who say 'unite the right', we are not uniting with that," she said.
The speech was met with a standing ovation from Conservative politicians and delegates.
However, Labour and other opponents have accused the Conservatives of pursuing "fantasy economics" by understating the cost of their proposals. The Conservatives insist their plans are fully funded.
Warning over inheritance tax cut
The inheritance tax proposal has also attracted criticism from Tax Justice UK.
Faiza Shaheen, Executive Director at Tax Justice UK, said: "Cutting inheritance tax, as trillions of pounds is going to pass between generations, is a reckless move by any politician that claims to be serious about getting Britain thriving.
"This is a policy that would take money from some of the poorest, to give to the wealthiest. And it would deprive public services of vital cash when the pressures on delivery are increasingly acute."
She said the country instead needed funding for the NHS, education and social care, alongside investment in housing and energy.
The Conservatives' plans would also come against a backdrop of uncertainty over the future of the state pension triple lock.
Prime Minister Andy Burnham has pledged to adjust the guarantee to help fund a new national care service.
Mrs Badenoch has said current Conservative policy is to retain the state pension guarantee, but acknowledged it would be "difficult" to commit to reinstating the policy if Labour changed or scrapped it.
The Conservatives' inheritance tax pledge therefore forms part of a much wider economic pitch, with the party attempting to set out how it would approach tax, welfare, pensions, housing and government spending if it returned to power.