The thinktank CenTax has urged chancellor John Healey to scrap the £100,000 "cliff edge" in England's free childcare scheme, warning it discourages higher earners from working more and pushes some mothers out of work entirely to avoid losing entitlement. Under the system, families where both parents earn under £100,000 can claim 30 hours of childcare a week, but earning even £1 over the threshold removes the benefit completely, creating a strong disincentive to cross it. The issue is significant because it distorts work decisions ahead of Healey's first budget, which comes amid tight fiscal headroom.

CenTax found that by 2030 a parent crossing the threshold would need to earn £124,000 to avoid being worse off overall, and estimates that "income bunching" to dodge the cliff edge could rise from around 1,000 families in 2022 to nearly 12,000 by the end of this parliament. It also found 9% of lower-earning partners, usually mothers, were out of work when their partner earned above £100,000, compared with 6% below it. The thinktank proposed alternatives such as tapering the entitlement gradually or reducing rather than removing it above the threshold, with Healey due to deliver his budget on 28 October.