Tory think-tank’s maternity pay plans will leave £1500 hole in family finances

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, told Left Foot Forward:

“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.