UK overhauls childcare, pensions and welfare

UK finance minister Jeremy Hunt on Wednesday expanded access to childcare and announced an overhaul of the welfare system under measures aimed at alleviating a tight labour market that has hampered the outlook for growth.

In what he described as “the biggest change to our welfare system in a decade,” Hunt said disabled benefit claimants would be able to seek work without losing financial support.

Those benefit claimants able to work but choosing not to would face more rigorous sanctions, he said, under a swathe of labour market reforms aimed at getting people back into work.

The lifetime threshold on tax-free pension contributions was also abolished and the annual tax-free allowance increased by 50% to 60,000 pounds, in a bid to encourage high earners to keep working and not take early retirement.

“Today, I bring forward reforms to remove the barriers that stop people who want to from working,” Hunt told parliament.

Hunt said working parents with children over nine months old would be entitled to 30 hours of free childcare a week by Sept. 2025, expanding the existing scheme for three- and four-year-olds.

“I don’t want any parent with a child under five to be prevented from working, if they want to, because it is damaging to our economy and unfair, mainly to women,” he said.

The government said that in 2025, the cost of providing extra childcare for parents would be 4.5 billion pounds and reducing the taxes on high earners’ pensions would cost more than 1 billion pounds.