Jeremy Hunt said yesterday that he was planning a “back to work” Budget aimed at increasing the numbers of people in employment.

The Chancellor told the BBC that high childcare costs were stopping some parents taking a job and the Government could make a “big difference” to reduce them. He said further support would be part of a package of measures to break down “barriers” to entering the workforce.

Experts said that his proposals were “carrot and stick” policies aimed at the disabled and people with long-term health conditions, the over-50s, and low-earners and parents on universal credit.

The plans come amid a huge rise in the number of working-age adults leaving the jobs market because of long-term sickness, early retirement or responsibilities as carers.

Mr Hunt’s move to scrap the Work Capability Assessment, touted as “the biggest reform to the welfare system in a decade”, is intended to allow disabled people to work without losing their benefits.

“The goal of avoiding labelling some people as unable to work is valuable, but no one should pretend this reform is easy – it will take years to implement,” said Torsten Bell, the chief executive of the Resolution Foundation, a think-tank.

But Mr Bell said that while some disabled people would benefit, others, such as those who are too ill to work but do not have a longer-lasting disability, would lose out.

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Other major reforms are planned on childcare costs for low-earners. Data released last week by the Coram group of children’s charities found that the average annual cost of a full-time nursery place for a child under two was now almost £15,000.

Meanwhile, a survey by Save the Children found that more than half of mothers in the UK had been forced to cut their working hours because of the costs of childcare.

Mr Hunt’s new policies would allow universal credit claimants to have their childcare costs paid up front rather than in arrears and increase the cap by several hundred pounds.

But campaigners pointed out that this help would not extend to families who are not claiming universal credit but are still struggling to afford skyrocketing childcare costs. They also raised concerns about the Government’s plan to relax rules on staffing ratios at nurseries.

“Yet again, the Government has failed to understand what is required to fix the childcare crisis and to support parents to return to work,” said a spokesman for the campaign group Pregnant Then Screwed. “There is no evidence that relaxing ratios will reduce costs. There is evidence that it will reduce quality.”

Other policies expected to be unveiled on Wednesday include a requirement for universal credit claimants to meet work coaches, and for reskilling training to be offered to returning workers.

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