Childcare: I’ll cut costs to boost workforce, says Chancellor Jeremy Hunt

Posted: 14th March 2023

The chancellor has vowed to help reduce the cost of childcare at Wednesday’s Budget as part of a wider drive to help people into work.

Jeremy Hunt told the BBC that costs were stopping some parents taking a job, and the government could make a “big difference” to reduce them.

He said further support would be part of a package of measures to break down “barriers” to entering the workforce.

But he said public finances meant the room for tax cuts was limited.

Ministers have a lot of heavy lifting to do to make a big impression at the Budget, against the backdrop of an economy that is still wobbly.

Conservative backbench MPs are calling for tax cuts they are not going to get, whilst Labour is slamming the government’s long-term record.

Shadow chancellor Rachel Reeves says her party’s plan to secure more investment in green industries could arrest a “low growth spiral” in the UK.

Under Budget plans that have already been announced, the government is expected to pay childcare support to parents on universal credit up front instead in arrears, as now.

The current UK-wide £646-a-month per child cap on support for universal credit claimants is also expected to be increased by several hundred pounds. An exact figure has not yet been given.

It is expected to be part of a package of measures designed to reverse a rise in economic inactivity since Covid, including changes to fitness-to-work tests for those with medical conditions.

The Budget is also expected to extend the current level of support for energy bills, limiting costs for a typical family to £2,500 a year, for a further three months until June.

Other measures reportedly under consideration, but not yet confirmed, include continuing the 5p cut to fuel duty, changes to tax-free pensions allowances, and bringing forward a rise in the pension age.

Mr Hunt has also resisted Tory calls for the planned rise in corporation tax from 19% to 25% to be cancelled or deferred.

Tax pressures

Downplaying the prospects of a major tax-cutting Budget, Mr Hunt said it was important to be “responsible with [the] public finances”.

Adding that any cuts would have to be “within the bounds of what is responsible,” he said “Conservatives cut taxes when they can”.

He also signalled that he was unlikely to announce further childcare support for families that don’t qualify for Universal Credit, describing this as “expensive”.

Although ministers “would like to help everyone,” he added that “you can’t always do everything at once”.

Cutting childcare costs has emerged as a key political battleground, with prices in the UK among the highest in the world.

Critics say the current level of government support means it is simply not worth large numbers of parents, even those on middle incomes, taking on new or extra work.

Early Years Alliance, an education charity, has welcomed the changes for families on benefits, but urged a “wider package of measures” to bring down costs for parents.

Labour has promised to completely overhaul the system in England if it takes office, saying the current model of free childcare hours is “broken”.

Ms Reeves, the shadow chancellor, hit out at the Conservatives’ record in government, which she said had left the UK in a “low growth, low productivity, low investment spiral”.

She said Labour would take inspiration from US President Joe Biden’s package of green subsidies to attract investment to new industries.

The party has said that if it wins power at the next election, its promised £8bn “national wealth fund” would be tasked with boosting investment into struggling regions.

Ms Reeves said the government had failed to “seize the opportunities” of investment in green jobs, allowing other countries to “steal march on us here in Britain”.

“I feels like we are in the changing room, while other countries are in the global race,” she added.

Source: Childcare: I’ll cut costs to boost workforce, says Chancellor Jeremy Hunt – BBC News

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