Conservatives pledge to scrap £100,000 childcare cap

The Conservative Party has promised to abolish the £100,000 salary limit for government childcare support, a move that would expand free childcare to high earners.

Announced on the eve of the party's annual conference in Birmingham, the proposal aims to eliminate what the Tories call an "absurd cliff edge" in the current welfare system. Under rules introduced by the previous Conservative government, working parents in England lose all access to 30 hours of free childcare for children aged nine months to four years if either parent earns more than £100,000 a year.

Conservative leader Kemi Badenoch argued that the current cap penalises those who work harder. "What we want to see is that people who work harder don't get punished for doing so," she told the BBC's Sunday with Laura Kuenssberg programme.

Asked if the policy meant someone earning £1 million a year would qualify for state-funded childcare, Badenoch said: "It doesn't matter what you earn — we don't want you to be punished for working hard."

How the childcare cap works

Currently, working parents in England are eligible for 30 hours of free childcare a week. However, the system features a strict cutoff: if one parent's income passes £100,000, the entitlement is withdrawn entirely, regardless of what the other partner earns.

The same £100,000 limit applies to the tax-free childcare scheme, where the government tops up parents' savings by £2 for every £8 paid, up to £2,000 per child each year.

Economists have long criticised this threshold. Because the benefit drops off completely rather than tapering out, it creates a situation where a pay rise can actually leave a family financially worse off. The Conservatives argue this setup discourages people from taking promotions or working longer hours, and may even deter some couples from starting families.

Funding the £700 million plan

Scrapping the threshold is estimated to cost around £700 million a year. The Tories say they would fund the policy by cutting jobs within executive non-departmental public bodies — arm's-length government organisations like Arts Council England and the Environment Agency.

According to the party, shrinking these public bodies would save £1.6 billion by 2029-30, leaving more than enough to cover the childcare policy. Shadow chancellor Andrew Griffith is expected to outline the wider tax strategy during his conference speech on Monday, framing the plan as the "first step" towards lower and simpler taxes.

Political reaction and wider policy agenda

The Labour Party quickly criticised the announcement. A spokesperson said: "It tells you everything you need to know about the Tories that the first of their own tax policies they want to unpick is one helping higher earners." They also pointed out that it was the Conservatives who originally introduced the £100,000 threshold.

The childcare proposal is the latest in a series of eye-catching policies from Badenoch's party as they try to regain ground from Labour and Reform UK. Other proposals include a £9 billion plan to abolish stamp duty on primary residences — which critics also argue would disproportionately benefit wealthier buyers — and a plan to build 50,000 new prison spaces, funded by a 90% cut to the UK's overseas aid budget.