Conservatives Pledge to Scrap £100,000 Childcare “Cliff Edge” and Extend Free Hours to High Earners

BIRMINGHAM – The Conservative Party has pledged to remove the £100,000 income limit on government-funded childcare in England. The change would extend free hours to higher-earning families and end what Tory leader Kemi Badenoch calls an absurd “cliff edge” that penalises parents for earning more.

Under the current rules, working parents of children aged nine months to four years can claim 30 hours of funded childcare a week. However, the entire entitlement is withdrawn if either parent earns more than £100,000 a year. The same threshold applies to the government’s tax-free childcare scheme. As a result, a parent whose salary rises just above the limit can end up worse off overall than before the pay rise.

Under the Conservative proposal, any parent working at least 16 hours a week would qualify for 30 hours of free care, regardless of income. The threshold would also be removed from tax-free childcare. The party estimates the cost at around £700 million a year. It says this would be paid for by reducing staff numbers at arm’s-length public bodies, which it claims would save £1.6bn by 2029-30.

Badenoch announced the policy ahead of the Conservative Party conference, which opens in Birmingham on Sunday. She made the announcement during a visit to a nursery in Wythall, Worcestershire, alongside Shadow Education Secretary Laura Trott. Asked whether the plan meant a parent earning £1 million a year could receive free childcare, Badenoch said people should not be punished for working hard, whatever they earn.

The party argues that the threshold discourages parents, often mothers, from taking promotions, increasing their hours or accepting pay rises. Analysis by the tax research group Centax estimates that nearly 12,000 parents are deliberately keeping their income below £100,000 to retain their childcare support. Shadow Chancellor Andrew Griffith described ending the cliff edge as a first step towards lower, simpler and fairer taxes. The theme is expected to feature in his conference speech on Monday.

The pledge effectively reverses a design feature introduced by the last Conservative government. The £100,000 cut-off was set by former Chancellor Jeremy Hunt when he announced the expansion of funded childcare in his March 2023 Budget. At the time, the Institute for Fiscal Studies warned that the threshold would create some of the most severe distortions in the tax and benefit system.

Labour criticised the announcement, saying the Conservatives were unwilling to admit they had created the threshold in the first place. A Labour spokesperson said the government had prioritised the early years more than any before it, pointing to the 30 hours of funded childcare and the expansion of free breakfast clubs in primary schools. The spokesperson added that the government’s ongoing Childcare Review would bring further reforms for working families.

The childcare pledge is one of several policies the Conservatives are setting out ahead of their conference. Badenoch is seeking to present a programme of lower taxes and a smaller state as an alternative to Prime Minister Andy Burnham’s Labour government.