UK chancellor urged to remove £100k childcare ‘cliff edge’ prompting parents to cut work hours
Summary
A childcare policy in the UK gives families with both parents earning under £100,000 access to 30 hours a week of free childcare. However, if one parent earns just over £100,000, they lose this benefit completely, causing some families to reduce work hours to keep the subsidy. Experts warn this "cliff edge" discourages work for some parents and suggest gradual reductions in benefits instead of a sudden cutoff.Key Facts
- Families where both parents earn less than £100,000 a year can get 30 hours of free childcare weekly.
- If one parent earns just over £100,000, they lose the free childcare entirely.
- By 2030, parents may have to earn up to £124,000 to avoid financial loss from losing the childcare benefit.
- Around 1,000 families may currently reduce their earnings to stay under the threshold; this could rise to 12,000 by 2030.
- More mothers are out of work when their partner’s income reaches over £100,000, likely due to losing childcare help.
- Some families claim the benefit based on expected income but end up earning more than £100,000.
- Suggested solutions include cutting childcare hours instead of removing it completely or gradually reducing benefits as income rises.
- UK Chancellor John Healey is expected to address this in his upcoming budget scheduled for 28 October.
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