The Conservative Party in the United Kingdom has unveiled plans to give young people a £5,000 tax rebate in their first job, aimed at helping them buy their first home.
Speaking at the party’s annual conference, shadow chancellor Sir Mel Stride also announced that the party would abolish business rates for high street shops.
Under the proposals, retail, hospitality, and leisure businesses in England would be exempt from the tax up to an annual cap of £110,000.
The party says both initiatives would be funded by a £47bn annual savings drive from cuts to welfare, the civil service, and foreign aid.
In his speech, Sir Mel sought to distance the party from Liz Truss’s troubled 2022 mini-budget, aiming to position the Conservatives as the only party capable of managing public finances effectively.
He criticized Labour’s record in office, warning they would leave a “mountain of debt for the next generation,” and argued that Reform UK’s spending plans were “just as bad,” accusing the party of pledging “tens of billions in unfunded commitments” in the last election.
He told party activists that Nigel Farage’s party was “marching to the left” on economic policy with “more spending and more debt.”
“We’re the only party that gets it. The only party that will stand up for fiscal responsibility,” he said. “And that means we have to face some hard truths to which other parties turn a blind eye.”
£5,000 Savings Pot
Under the Tory housing proposals, the first £5,000 of National Insurance that a young person would pay in their first job would be redirected into a nominated savings account.
Branded the First Job Bonus, the scheme would allow couples to save a combined £10,000, at an estimated cost of £2.8bn per year. Beneficiaries, restricted to British nationals, would be able to withdraw the funds after five years.
Sir Mel said the money could go toward a house deposit or “savings for later life,” with no restrictions on how it can be spent after withdrawal.
The plan to abolish business rates would expand an existing relief from 40% to 100% up to the £110,000 cap, costing the Treasury around £4bn annually by 2029.
The Conservatives claim their proposed cuts would reduce government spending by £47bn a year from 2029/30, including:
£23bn through welfare reductions, including payments to those with “lower level mental health issues”
£8bn by cutting the Civil Service by around 132,000 staff to 2016 levels
£6.9bn by reducing overseas aid to 0.1% of national income
£3.5bn by ending the use of hotels for asylum seekers
£4bn by reserving benefits and social housing for UK nationals
£1.6bn by scrapping environmental policies, including subsidies for heat pumps and electric vehicles
Combined, the business rates and house deposit policies, along with other pledges like reversing VAT on private school fees, would use approximately £9bn of the £47bn savings.
On BBC Radio 4, Sir Mel cited depression, anxiety, and ADHD as conditions where the party would reduce working-age benefit payments.
The Tories also plan to review household benefit cap exemptions, VAT subsidies for Motability, and job-seeker obligations.
Last year, the Office for Budget Responsibility forecast spending on health and disability benefits rising from £64.7bn in 2023-24 to £100.7bn in 2029-30.
Earlier this year, Prime Minister Sir Keir Starmer proposed cutting the UK’s aid budget from 0.5% of gross national income to 0.3% in 2027 to increase defence spending.
While the Institute for Economic Affairs welcomed some proposals, it warned against ignoring age-related costs like pensions.
Tom Clougherty, the IEA executive director, said, “Ultimately, no political party is going to be able to balance the books only by cutting things their supporters don’t like. Without that, other cuts are likely to amount to running to stand still.”
The Conservatives have not pledged to change the triple lock, which guarantees state pensions increase annually in line with inflation, wage growth, or 2.5%, whichever is highest.
Romilly Greenhill, chief executive of Bond, described the proposed aid budget cuts as “reckless, short-sighted, and morally indefensible.”
