The UK is still “wired for an old world” of the 1980s and 1990s and is struggling to compete with aggressive economies like China, Conservative leader Kemi Badenoch has warned. Speaking at the Business Property Relief Summit in London, Ms Badenoch said that high regulatory standards in the UK, unmatched by other countries, are putting the nation at a disadvantage in the global economy.
She told attendees at the London Palladium that while it is important to encourage investment in the UK, policymakers must also focus on retaining top talent to remain competitive.
A broken system
In response to a question from a businessman on why he should remain in the UK, Ms Badenoch acknowledged the challenges but pledged to address them.
“We’ve stopped being serious about growth and productivity,” she said. “The system is broken, and I tell people that a lot, but they don’t understand what I mean. It’s that we are wired for an old world, a world of the 80s and 90s—not for the fast-paced, competitive environment we’re in today.
“We regulate ourselves to very high standards, which is admirable, but other countries don’t follow suit. This creates an unlevel playing field, particularly for farmers and small businesses.”
She added that the UK must rethink its approach to retain top talent, particularly in light of concerns over migration patterns.
Talent retention and migration
Ms Badenoch stressed the importance of addressing net migration in a nuanced way. Revised figures released in November showed that net migration reached a record 906,000 in 2023, sparking widespread debate.
“It’s not just about the numbers,” she explained. “It’s about who’s staying, who’s coming in, and who’s leaving. We need to keep our best talent here in the UK to ensure we have something meaningful to pass on to the next generation.”
She also expressed concern about the “brain drain” of skilled professionals leaving the UK, warning that this could undermine long-term economic growth.
Flat tax and economic reforms
During the event, Ms Badenoch was asked about the feasibility of introducing a flat tax. While she described the concept as “attractive,” she emphasised that it is currently unaffordable given the state of the UK economy.
“This is an idea I’ve heard many times,” she said. “It’s a simple and appealing concept, but there’s significant groundwork we need to do first. Right now, we cannot afford flat taxes. We need to rewire our economy to lighten the tax and regulatory burden, particularly on new businesses and individuals.”
Her remarks drew criticism from Labour, with a spokesperson accusing her of resurrecting “Truss-style tax cuts for millionaires.” Labour described the flat tax proposal as “a Christmas ghost of bad economic policies past.”
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Reversing the budget’s ‘damaging tax grab’
The summit, organised by groups opposing changes to business and agricultural property reliefs, served as a platform for industry representatives to voice their concerns about the Government’s October Budget.
A note from the event’s organisers highlighted the “crippling effect” of the Budget’s measures, including changes to inheritance tax for farms and increased national insurance rates.
Ms Badenoch reassured attendees that she would reverse these changes, describing them as a “damaging tax grab.” She framed the Conservatives as the party of entrepreneurs and small businesses.
“We are the party of every business,” she said. “It’s not the government that creates growth—it’s businesses that drive growth. We need to empower them, not burden them further.”
Challenges in a new global landscape
Ms Badenoch’s speech comes at a critical juncture for the UK economy, which faces mounting pressures from international competition, high taxation, and regulatory challenges. Her remarks suggest a push for bold reforms, aimed at making the UK more agile and competitive in the global marketplace.
As the UK navigates a rapidly changing economic landscape, Ms Badenoch’s comments underline the need for structural change to address modern challenges while retaining the country’s commitment to high standards. Whether her proposed solutions will resonate with businesses and voters remains to be seen, but her focus on growth and innovation may set the tone for the Conservatives’ future economic policies.
