Why parental leave pay matters

The big parties published their manifestos this week with childcare and parental leave being key issues for parents.

Statutory Maternity Pay

 

This was the week of the party manifestos from the main political parties. For the Conservatives, it was, as usual, all about tax cuts, but at a time of crisis in our public services it’s hard to see how the books balance. And yet again, most of the money for tax cuts looks set to come from squeezing the poorest.

For Labour many of the family-friendly policies were trailed beforehand. They include extra nursery places and free breakfast clubs for primary schoolchildren in England. There was also a commitment to action on inequality in the workplace, including to address the gender pay gap. The UK pioneering gender pay gap reporting back in the day, but there has been little innovation since despite repeated calls to make it mandatory for employers to come up with an action plan to address any gaps or to extend reporting to smaller employers. While there has been progress is reducing the gap and in representation of women on boards, small changes at the top of companies and a reliance on female non-executive directors being parachuted in to boost representation mean that the significant transformation needed to make progress sustainable has not taken place in any sectors and companies.

While Labour said it would strengthen rights to equal pay and protections from maternity and menopause discrimination and sexual harassment and has previously said it will review the parental leave system, the Liberal Democrats manifesto had perhaps the most detailed commitments on employment rights for parents.

On childcare, they say they will review the rates paid to providers for free hours to ensure they cover the actual costs of delivering high-quality childcare and early years education and develop a career strategy for nursery staff, including a training programme with the majority of those working with children aged two to four to have a relevant Early Years qualification or be working towards one.

Other pledges include making all parental pay and leave day-one rights, including for adoptive parents and kinship carers, and extending them to self-employed parents; doubling Statutory Maternity and Shared Parental Pay to £350 a week; scrapping the two-child limit on means-tested benefits; increasing pay for paternity leave to 90% of earnings, with a cap for high earners; introducing an extra use-it-or-lose-it month for fathers and partners, paid at 90% of earnings, with a cap for high earners; requiring large employers to publish their parental leave and pay policies; and introducing a ‘Toddler Top-Up’: an enhanced rate of Child Benefit for one-year-olds. In the longer term, when the public finances allow, they want to give six weeks of use-it-or-lose-it leave for each parent, paid at 90% of earnings and grant parents 46 weeks of parental leave to share between themselves as they choose, paid at double the current statutory rate.

Also in the manifesto is a pledge to overhaul the Carer’s Allowance system “so that it provides real financial support to those who need it”, to set up new mental health hubs for young people and a dedicated, qualified mental health professional in every school, to establish free personal care and to offer a higher minimum wage for care workers.

The current low rate of parental leave pay is a huge issue as it means many parents start family life in debt. A report out from Maternity Action this week shows that that the proportion of women relying on credit cards and borrowing money to get through maternity leave has risen to 62% (up from 51% in 2022), with nearly a quarter (23%) now accumulating debts of more than £4,000.

Not only do parents start family life in debt, but they then have to face the childcare costs barrier. By the time their child enters school [if they don’t have another in the meantime], they may be heavily in debt or have had to make huge changes to their home or work life to pay the bills. Our annual survey shows just how turbulent things are for many parents. Getting families off to a good start is vital if we want to encourage the next generation and invest in the future.



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