Funding plan would reimpose two-child benefit cap, end Motability VAT break
Conservative Party leader Kemi Badenoch set out plans at a London press conference to raise UK defence spending to 3% of GDP by 2030, accusing Prime Minister Andy Burnham of “kicking defence spending into the long grass.” Badenoch told reporters: “Conflict is coming, we must act now.”
The £10bn-a-year plan would be funded by three measures: reimposing the two-child benefit cap, reforming housing benefit to save at least £4bn, and removing the VAT exemption for Motability vehicles to save £1bn. Badenoch said the final part of her party’s plans to reach 3% had now been completed.
Badenoch pointed to Russia and Iran as threats, saying: “Our enemies are not going to sit around and wait for Labour to find the money to fight them.”
The Conservative target contrasts with the Burnham government’s position. The government has committed only to setting out a path to NATO’s 3.5%-of-GDP target by 2035 in the spring, not to a specific spending level. Burnham has pointed to his appointment of John Healey as Chancellor as proof of his commitment to defence investment; Healey resigned as defence secretary in June over the previous government’s failure to commit to a 3% increase.
Badenoch turned her criticism on Healey directly, suggesting his stance had shifted since joining the cabinet. “He resigned because Britain was not on track to reach 3% by 2030 and I praised him at the time for that decision,” she said. “Now that he is chancellor he does not seem to believe that any more and I am concerned he has been bought off with a promotion.”
On welfare, Badenoch defended the proposed reimposition of the two-child benefit cap, which Labour scrapped in April and which limited universal credit or tax credits to a family’s first two children. Challenged over whether the move would increase child poverty, Badenoch told the BBC: “It is not going to increase child poverty. What increases child poverty is children’s parents not having work or being paid low wages. We want to grow our economy.”
She added: “Right now there are some people making choices not to have children because they can’t afford it and paying for other people to have more children. That is not fair.”
The proposed housing benefit reforms, which Badenoch said would deliver £4bn in savings, target a benefit that made up about 12% of the government’s welfare bill this year, with £37.3bn forecast to be spent. The Motability change would end a VAT exemption that has historically given disabled people in receipt of eligible welfare benefits a 20% discount on cars.
Badenoch said additional savings would come from what she called the “disastrous Chagos deal” and from repurposing money from the British Business Bank into defence.
The push for faster defence spending drew friendly fire from within his own party. It came after Badenoch had pressed Burnham on the issue at Prime Minister’s Questions on Wednesday, urging him to cut welfare spending and invest the money in defence. Labour MP Tan Dhesi used the same PMQs session to call on the prime minister to commit urgently to a path to 3% of GDP on defence by 2030. “Defence is definitely one area where vibes alone just isn’t going to be enough,” Dhesi said.
Burnham has insisted his government is committed to fully funding its defence plans and will set out the pathway to 3.5% of GDP by 2035 in the spring. Badenoch said the prime minister should call a general election if he was not willing to find the money now.