Hunt to Extend Free Child Care in UK Budget to Boost Labor Force

UK Chancellor of the Exchequer Jeremy Hunt plans to unveil a multi-billion pound expansion of free child care in his budget on Wednesday as he seeks to get parents back into work, a senior official said.

(Bloomberg) — UK Chancellor of the Exchequer Jeremy Hunt plans to unveil a multi-billion pound expansion of free child care in his budget on Wednesday as he seeks to get parents back into work, a senior official said.

Hunt will announce 30 hours of free child care per week for one- and two-year-olds, extending a policy that already applies to three- and four-year-olds, according to the official, who requested anonymity speaking about a policy that hasn’t been announced.

The measure would be the centerpiece of a budget geared toward getting people back to work, the official said. The Guardian first reported the plan, which it said would cost £4 billion ($4.9 billion). The Treasury declined to comment.

The chancellor is trying to address labor shortages which are holding back economic growth by reducing exorbitant child care costs that currently deter thousands of parents from returning to work. Hunt is also trying to steal a march on the opposition Labour Party, which views child care as a key battleground in the next general election, due in less than two years.

The UK has one of the most unaffordable child care systems in the OECD, pricing a growing number of women out of the workforce. That’s prompted a race between Rishi Sunak’s Conservative Party and Keir Starmer’s opposition Labour Party to announce a workable child care offering ahead of the election, which the prime minister must call by January 2025 at the latest.

Labour says that the average cost of an hour of child care for a two-year-old is now 14% higher than in 2018.

Britain’s battle against double-digit inflation, fueled by a shortage of workers, has prompted the government to examine policies that can entice people back into the workforce, including those who have retired early and parents who have quit or reduced their hours to offset soaring child care costs. There are almost 490,000 more inactive people of working age than before the pandemic.

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