Client Update - 9th October 2026

The Conservative Party's annual conference highlighted a growing sense of purpose as it seeks to rebuild following its significant defeat at the 2024 General Election. Under the leadership of Kemi Badenoch, the party appears increasingly focused on establishing a distinct identity and positioning itself as the principal alternative to both the Labour government and the growing challenge posed by Reform UK.

The headline announcement was a commitment to remove inheritance tax on the family home and allow couples to pass on an additional £1 million tax-free to their children. Kemi Badenoch argued this would significantly reduce the number of families affected by inheritance tax and reinforce the principle of rewarding aspiration and long-term saving. It reinforces the Conservative Party's traditional focus on wealth preservation and intergenerational planning.

The party also proposed halving Employer National Insurance contributions for workers aged 21-24 to encourage youth employment. After the last two years, business owners will welcome proposals aimed at reducing employment costs and regulatory burdens, although questions remain around affordability and whether future tax reductions can be delivered without significant spending cuts.

Regarding cuts in spending, the party then outlined plans to reduce welfare spending and encourage greater workforce participation, including proposals to prevent school leavers moving directly onto long-term out-of-work benefits. Ms Badenoch finished by announcing plans for a "Britannia Shield" missile and drone defence system and continued previous emphasis on increased defence spending.

A central challenge for the Conservatives remains the fragmentation of the centre-right vote. Reform UK has demonstrated its ability to attract support from voters dissatisfied with both major parties, while Labour continues to benefit from divisions among its political opponents. Recent polling and local election results suggest that Reform remains a significant force within UK politics, particularly among voters concerned about immigration, public services, economic growth, and political trust.

The Conservatives are increasingly pursuing a strategy that seeks to differentiate the party from Reform UK rather than cooperate with it. Kemi Badenoch explicitly ruled out any alliance or electoral pact with Nigel Farage's Reform UK and challenged some of the party's rhetoric on identity and national values. The party leadership appears to believe that long-term electoral success depends on reasserting Conservative values while demonstrating that it can offer credible solutions to voter concerns. The success or failure of this strategy could have a significant bearing on the shape of the next General Election.

This approach involves drawing a distinction between Reform supporters and Reform's leadership. Conservative messaging has increasingly focused on issues such as:

• Controlled and sustainable immigration.

• Stronger law and order policies.

• Economic growth and competitiveness.

• Fiscal discipline and public sector efficiency.

• Support for home ownership, savings, and business investment.

The objective is to win back voters who may have moved towards Reform without compromising the party's broader appeal among moderate and centre-right voters.

For Labour, the challenge will be demonstrating that its economic programme can deliver sustainable growth while maintaining public services and managing government finances. As economic performance increasingly shapes public opinion, both major parties will seek to convince voters that they offer the most credible path to higher living standards.

While economic policy remains important, electoral success is likely to depend on broader questions of identity, values, and trust. The Conservative Party continues to face the legacy of its period in government, with many voters remaining sceptical about its ability to deliver meaningful change. Rebuilding trust among former supporters, particularly in southern England and suburban constituencies, will be crucial if the party is to recover.

At the same time, the leadership is seeking to prevent further losses to Reform UK by demonstrating that it understands voters' concerns while maintaining a mainstream governing image. This balancing act presents a significant strategic challenge. Moving too close to Reform risks alienating moderate voters, while moving too far towards the centre could encourage further defections on the right.

At present, the Conservatives appear to have developed a clearer strategy than immediately following their election defeat. However, significant challenges remain. The party must rebuild voter trust, regain leadership of the centre-right electorate, and demonstrate that it can once again present itself as a credible party of government.

Having seen Labour move in the opposite direction, it is perhaps no surprise to hear the Conservative party focus on inheritance tax, wealth transfer, and lower-tax economic policies. Whether these proposals ever become government policy remains uncertain, but they provide an early indication of the policy debates likely to dominate UK politics between now and the next General Election. Do have a good weekend.