Research by NCT, based on IPPR analysis, has found that government plans to limit annual increases to maternity and paternity pay to 1% will mean that by 2015 parents lose out by around £224.
Ahead of the 2014 budget, the parent charity is calling on the government to end this parent penalty and raise maternity and paternity pay in line with the cost of living.
NCT chief executive Belinda Phipps said:
"Parents living on statutory maternity or paternity pay are already receiving around £100 less a week than the minimum wage.
"By limiting the increase to maternity and paternity pay to just 1%, the government is hitting family finances hard and costing them around £224 a year while on maternity leave. This parent penalty can buy a lot of baby essentials – a year’s supply of sleep suits, 1,500 nappies or pay for heating bills for two months.
“The government should start showing they value parents by increasing maternity and paternity pay in line with inflation. This would allow parents to focus on their new family rather than worrying whether they can make ends meet.”
Currently statutory pay for parental leave is £136 per week, compared to £236 for a full-time minimum wage job (rising to £243 in October 2014).
Research commissioned by NCT shows that this change will hit the poorest fifth of families hardest. On average, they will lose the equivalent of 1.9% of their weekly net income, compared to the richest households who will lose 0.6%. The research also shows that families with fewer children will be hit harder.
NCT has previously raised concerns that limiting the annual increase in maternity and paternity pay will reduce the chances of dads taking up much-welcomed shared parental leave.
Our Parent Penalty Infographic demonstrates what £224 could equate to, and what parents could be losing out on. Full report and press release available. We have a range of helpful articles for parents in our section on work and childcare and family finances.
Mum of four children aged six, three and eight month old twins, currently on maternity leave:
“We try to keep the lights off where possible saving valuable pennies on electricity. We are doing the best we can so we know that we can survive with our reduced income but it would be nice to have a light on at night. I am due back to work in June but because of high childcare cost it’s going to cost me more to return to work. It’s looking likely that I will have to give up my job."
Mum who received maternity pay from December 2012 until August 2013:
“The statutory maternity allowance simply doesn’t cover the basic cost of living. We ended up with the house bills costing the same as the new household income (not including food and petrol or loans and credit cards), and our debts spiralled. In the end we had to give up our house. All this contributed to a lot of anxiety and stress, which was difficult to handle with a newborn baby to care for.”
Mum currently on maternity leave after the birth of second child:
“I'm currently on leave but only able to take 14 weeks off as statutory pay is just not enough for me to pay the bills. With me being the main earner in the household, we simply could not afford to lose such a large proportion of income. This has affected everything, particularly not being able to breastfeed as long as I would have liked to.”