The UK is “wired for an old world” of the “80s and 90s” and facing “aggressive competition from economies like China”, Kemi Badenoch has said.

The Conservative leader suggested that the UK is “regulating ourselves at very high standards” not seen in other countries which “puts us at a disadvantage”.

She told the Business Property Relief Summit in London that as well as encouraging people to invest in the UK, there should be thinking about “how to make sure that we keep good people”.

The event at the London Palladium was organised by the group behind a rally of farmers in Westminster in November, which saw thousands of people, including TV presenter Jeremy Clarkson, protest against the changes to inheritance tax for farms and other measures in the Government’s Budget.

When asked by a businessman at the event why he should stay in the UK, former business secretary Ms Badenoch suggested that the UK has “stopped being serious” on issues such as growth and productivity, but pledged to “fix” the situation.

She went on: “Why should you stay when other economies are competing for your business, they’re competing for your talent, they’re competing for your productivity? You should stay because we are going to fix this.

“I tell people a lot of the time that the system is broken, and they don’t understand what it is that I mean by that. It’s that we are wired for an old world, a world of the 80s and 90s, not for the world that we live in now, where information travels so quickly, where you have aggressive competition from economies like China.

“And where we continue regulating ourselves at very high standards – which we should do – but in a way that other countries don’t follow, which puts us at a disadvantage, which means that there’s no level of playing field if you’re a farmer, for example, and many others.

“And we need to start thinking differently.”

She went on to say that the UK should start thinking about “how to make sure that we keep good people” and then when it comes to net migration she worries “about who’s leaving”.

“Because the numbers matter, but who is staying, who is coming in, who is leaving, that matters more and we need to make sure that we keep all of our talent in this country so that we can have something to hand over to the next generation.”

Revised figures released in November indicated that net migration hit a record 906,000 in 2023.

Ms Badenoch also said a flat tax is an “attractive” concept but that the UK cannot afford them “where we are now”.

Asked about the idea of a flat-rate tax by the same businessman, Ms Badenoch said: “This is an idea that I’ve heard many times, it’s very attractive but if we’re going to get to that sort of scenario there’s a lot of work we will need to do first hand.”

She added: “We cannot afford flat taxes where we are now, we need to make sure we rewire our economy so that we can lighten the burden of tax and of regulation on individuals and on those businesses that are just starting out in particular.”

A note from the organisers of the Business Property Relief summit described the event as an opportunity to “send a message to the government about the crippling effect of the October budget”.

The organisers wanted the government to reconsider changes to business and agricultural property reliefs and national insurance rates.

Ms Badenoch told attendees that she would reverse the “damaging tax grab” of the changes to business and agricultural property reliefs.

She added: “We are the party of entrepreneurs.

“We’re the party of every business because we know that it is not government that creates growth, it is business that creates growth.”