The government and the Bank of England fear the tight jobs market is in turn fuelling inflation and holding back growth. "Today, I bring forward reforms to remove the barriers that stop people who want to from working," Hunt told parliament in a budget statement. In an attempt to keep older workers - primarily doctors - from retiring early to avoid pensions taxes, Hunt announced a surprise decision to scrap a 1.1 million pound ($1.32 million) cap on the tax-free pension pot an individual can accumulate.
He also raised to 60,000 pounds the amount people can save tax-free each year in their pension pots.
Acknowledging that childcare costs - high by international
standards - were holding the economy back, 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
current scheme which only applies to three- and four-year-olds.
In what he described as "the biggest change to our welfare
system in a decade", Hunt also said disabled benefit claimants
would be able to seek work without losing financial support.
But benefit claimants able to work but choosing not to would
face more rigorous sanctions, he said.
Taken together, the cost of the pensions, welfare and
childcare reforms would rise from 1 billion pounds in 2023/24 to
7.1 billion pounds by 2027/28, according to the independent
Office for Budget Responsibility, with childcare making up the
large majority of that total.
The pensions reform has led to accusations that the
Conservative government is primarily helping higher earners, who
make up the party's traditional support base.
The opposition Labour Party leader Keir Starmer said the
pension tax change would be a permanent tax cut for the richest
1% and queried whether parents would be able to access the free
childcare hours.
"The truth is our labour market is the cast-iron example of
an economy with weak foundations," he said. "Our crisis in
participation simply hasn't happened elsewhere – not to this
extent ... We need a wider reform agenda."
The government said that to help tackle labour shortages it
would expand Britain's business visa offer and add five
construction occupations to a shortage list, making it easier
for businesses to sponsor an overseas worker.
($1 = 0.8319 pounds)
(Reporting by David Milliken, Muvija M, Andrew MacAskill and
Alistair Smout; Editing by William James, Kylie MacLellan and
Catherine Evans)
