Britain's Conservatives make pre-budget pitch to cut spending and borrowing

LONDON, Oct 20 (Reuters) - Britain's opposition Conservative Party called on the Labour government to cut spending and borrowing at next week's budget, as leader Kemi Badenoch set out her party's approach to the economy in an effort to win back voters' confidence.

British finance minister John Healey delivers his first budget on October 28. He has pledged to stick to fiscal rules which limit borrowing, but has also indicated he will include measures to ease living costs and try to stimulate growth.   

Facing limited room for manoeuvre, Healey has left the door open for tax rises on the banking sector, but some decisions, such as a broad plan to fund increases in defence spending, are not due to be taken until next year.

Seeking to rehabilitate her party's battered reputation for economic management, Badenoch criticised the current government, saying it was putting off big decisions, calling for immediate welfare cuts to fund defence, and warning that higher bank taxes would harm growth.

"Many of these problems disappear when the economy is growing, and I do not hear any plans for growth from this prime minister or his chancellor," Badenoch told reporters after a speech in London.

"Let's cut spending. Let's live within our means, and let's bring in policies that will actually grow our economy."

Labour has also said it wants to cut welfare spending, but its plans are longer-term, designed to reduce the take-up of benefits primarily by getting people back into work.

The Conservatives lost the 2024 election after 14 years in government marked by slow economic growth and a big increase in government borrowing as they churned through several prime ministers in the wake of Brexit, COVID and economic crises.

Badenoch acknowledged mistakes of the previous government, in which she served as a minister, but said the Conservatives were now under "new management". 

The Conservatives have regained some of the ground they had lost to Reform UK in the polls ahead of a national election due by mid-2029. Labour are currently top in opinion polls ahead of Reform.

(Reporting by Alistair Smout; editing by William James and Alexandra Hudson)