Conservatives announce £5,000 tax rebate for young home buyers

The Conservatives will set out plans to “reward work” by giving young people a £5,000 tax rebate towards their first home when they get their first full-time job.

In his speech to the party’s conference in Manchester, shadow chancellor Mel Stride is expected to announce proposals for a “first-job bonus” that would divert National Insurance payments into a long-term savings account.

The party says the plans will be funded by cuts to public spending worth £47bn over five years in areas such as welfare, the civil service and the foreign aid budget.

In a speech on Monday, Sir Mel is expected to say that there is “no more pretending we can keep spending money we simply do not have”.

Proposals include stopping welfare claims for people with “low-level mental health problems” and reducing the number of civil servants by around 132,000 to bring it back to 2016 staffing levels – a pledge made under Boris Johnson.

Sir Mel will also say his party would reduce aid spending by £7bn, by reducing the budget to 0.1% of national income, from 0.5% currently.

The conference in Manchester marks almost one year since Kemi Badenoch was elected party leader.

In the last 12 months, the party has struggled to counter the political threat posed by Reform UK and suffered heavy defeats in this year’s local elections.

During their conference, which began on Sunday, the Conservatives are hoping to portray themselves as more competent and more credible – particularly on public spending – than their political rivals.

It comes as the Labour government has unveiled major housing market reform plans which will make sellers and estate agents legally required to provide more information about a property up front, in a bid to reduce the cost of moving.

The Conservatives say their £47bn target would be delivered over the lifetime of a five-year Parliament by saving:

• £23bn from the welfare bill
• £8bn by bringing civil servant numbers from 517,000 down to 2016 levels of 384,000
• £7bn from the overseas aid budget
• £3.5bn by ending the use of hotels to home asylum seekers
• £4bn by ensuring benefits and social housing are reserved for UK nationals
• £1.6bn by scrapping environmental policies, including cutting subsidies for heat pumps and electric vehicles.

Speaking to BBC Radio 4, Sir Mel said welfare savings could be delivered by reducing payments to those with “lower level mental health issues”, citing mild depression, anxiety, and attention deficit hyperactivity disorder (ADHD).

The Tories also want to review exemptions for the household benefit cap, limiting the VAT subsidy for Motability – which allows claimants to lease vehicles – and changing obligations for job-seekers.

He defended the party’s decision not to back a government attempt to cut nearly £5bn from the disability and health-related benefits bill.

Labour ministers, he added, had been “pulling a quick lever to make quick savings” whereas the Tories were interested in “fundamental reform”.

He also insisted the Tories’ policy of restricting foreign nationals’ access to disability and sickness benefits was backed by the public, adding that the Tories wanted British citizenship to “really mean something here”.

Those losing their benefits could try to find a better-paying job or work additional hours, he suggested, and would also “have an option to return to other parts of the world”.

Last year, the Office for Budget Responsibility forecast that total spending on health and disability benefits would rise from £64.7bn in 2023-24 to £100.7bn in 2029-30.

Earlier this year, Prime Minister Sir Keir Starmer said he would cut the UK’s aid budget from 0.5% of gross national income to 0.3% in 2027 in order to pay for an increase in defence spending.

The Conservatives say further reducing spending to 0.1% would save nearly £7bn.

Currently, a portion of the existing aid budget is used to pay for hotels to accommodate asylum seekers.

The Institute for Economic Affairs (IEA) think tank welcomed some of the proposals but warned the Conservatives not to ignore “elephant in the room” of age-related spending such as pensions.

Tom Clougherty, 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 committed to changing the triple lock, which guarantees that the state pension will go up each year in line with either inflation, wage increases or 2.5% – whichever is the highest.

Romilly Greenhill, chief executive of Bond, the network of international development organisations, said the proposed aid budget cuts were “reckless, short-sighted, and morally indefensible”.