A step backwards

Reform’s proposals to scrap the current maternity and paternity rules would leave families worse off

Proposals to alter maternity leave arrangements outlined at an event with Shadow Minister for Family Welfare, Maria Miller MP, could leave the average family £1,530 worse off.

The Conservative think tank, Reform, published a report on Monday, Productive parents, which argues:

“Too often policy presents these parents with a narrow range of options and either/or choices, which can damage both family life and their chances in the labour market. Government should instead provide parents with the financial means to organise their lives flexibly and give them room to choose what is best for them.”

The report proposes scrapping the current maternity and paternity rules - introduced by the current Labour government - and replacing them with a new flat rate “parental payment” of £5,000, payable monthly and shared between the mother and the father.

The press release accompanying the report claims that this “equates to £192 per week, compared to the current basic statutory maternity pay of £123 per week.” But it fails to mention that the existing requirement for employers to pay new mothers 90% of their existing salary for the first six weeks of maternity leave would be scrapped.

The average woman working full-time earns £412 per week according to the Office of National Statistics, resulting in maternity pay during the first six weeks of £2,220. Combined with an additional 33 weeks statutory maternity pay and two weeks statutory paternity pay at £123 per week, the average family takes home £6,530 if the full entitlement is claimed. Reform’s plans would therefore result in a cut of 23%.

Poorer families, who are only entitled to the statutory minimum of £123 per week during the first six weeks would be no better off under Reform’s plans since they currently take home £5,045 from 39 weeks maternity and two weeks paternity pay.

Reform Chief Economist, Patrick Nolan, said, “As well as the change in the pounds, it’s also important to consider the benefits of increased flexibility for families and reduced hassle facing employers (which at the moment discourages them from hiring women).” But while their efforts to increase workplace flexibility and reduce discrimination by employers is laudable, failing to match the current entitlements is clearly a step backwards.

Will Straw is editor of Left Foot Forward

Comments

Posted by Patrick Nolan on 16 July 2009, 5:05:37 PM
Will Straw has forgotten about the women who work part time in his analysis. In fact the average woman earns £365 per week and would be £380 better off under Reform’s proposals when they take 6 months off. Many of these women only take 3 months of work because they can’t afford more – they would be £2,100 better off. If Will had applied simple logic to his numbers, the fact that high earners will be slightly worse off and the same amount is leaving the Treasury means that those on average incomes and below will be better off.

Posted by Will Straw on 16 July 2009, 6:17:37 PM
I was clear that my statistics referred to full-time employees. Nonetheless, a woman earning £365 per week and taking 39 weeks paid leave (and with a husband taking 2 weeks) would be entitled to £6,276 under current rules. A key justification for extending paid maternity leave to 39 weeks (and to 52 weeks in total) was because of the developmental benefits of maternal bonding during this period. Although the increased flexibility is an interesting and progressive idea, removing the right to the extended period is not.

Posted by Elizabeth Truss on 17 July 2009, 11:47:26 AM
The other point about our proposals is that exchange for not having to process the existing maternity pay, employers would be asked to provide two weeks extra paid holiday to new parents. This would bump up the amount in Will's example by £730. The key point is take-up. At present 52% of mothers earning that amount take 26 weeks or less leave, which means that Will's example is an unusual case. In contrast 68% of mothers earning over £39,000 take leave of longer than 26 weeks. All we are suggesting is rebalancing the existing money spent towards lower income working parents. This proposal makes it much easier to share pay and leave between mother and father. I want to ask Will if he supports the flat rating principle even if he disagrees with the level?