Work and Families Bill

I am very grateful to the noble Baroness for allowing us the opportunity to debate this very broad and important amendment. It is my eldest son’s 18th birthday today; as the noble Lord, Lord Northbourne, said, one does ponder what the future holds. Thinking back to the early days, I agree strongly with the right reverend Prelate and the noble Earl about the importance of parents giving all support to their children, particularly in the early years. Noble Lords have generally given the Bill a very warm welcome. I hope its elements will be seen as supporting parents in wishing to do their best for their children. Although we will no doubt have a debate about whether the level of statutory maternity pay is right, there is nothing between any of us about the importance of what we are seeking to do. I will come on to the details of the noble Baroness’s amendment in due course. If one looks at the Government’s action on statutory maternity pay, there has been a large increase. She will know, for example, that in 1997 it was £55.70, in 2003 it had risen to £100, and it now stands at £106. I think that that shows the Government’s good intent in this area. The noble Baroness mentioned the report published today. There is no question but that the task that we have set ourselves in relation to child poverty is very challenging. I shall not seek to run away from that or from the fact that we hope to make faster progress. A great deal of progress has been made. The Government have halved the number of children in absolute poverty, and more than 1.8 million fewer children are in absolute low income compared with the numbers in 1996–97. Clearly, we need to go further. As the noble Baroness knows, we see work as one way in which many poor people and the children of those poor people can increase their income, and my department’s whole welfare reform agenda is very much focused on that. I also say to the noble Baroness that, looking ahead at the figures from April 2007, if one takes the flat rate of statutory maternity pay plus other forms of government support for the poorest working families, that will be worth more than £8,000 during a child’s first year. I think that there has been a significant and credible advance there. I have assumed that the amendment seeks to increase the basic rate of both statutory maternity pay and maternity allowance to a rate equivalent to 35 hours paid at the highest level of the national minimum wage. At current rates, that would be £176.75 a week. As currently drafted, the amendment achieves that for women who will get maternity allowance, but women who will get statutory maternity pay would receive that same minimum level, or 90 per cent of their average earnings if that is lower. But I take that to be a drafting quibble rather than a substantive point. Currently SMP is paid at 90 per cent of a woman’s average earnings for the first six weeks, with no upper limit, followed by 20 weeks at the basic rate or the 90 per cent rate, whichever is the lower. Maternity allowance is paid at the basic rate or 90 per cent of her average earnings, whichever is lower. Women can qualify for maternity allowance if they earn, on average, £30 per week. The significance of that is that the amendment would mean that many lower paid, and probably part-time, working women would be far better off while they received maternity allowance—and, if I understand the noble Baroness’s intentions, SMP as well—than they would be when at work. I am not sure that that can really be a fair outcome of the purpose of statutory maternity pay. I was interested in what the noble Baroness said about the number of parents who were dissuaded from taking leave because of what she suggested was the low availability of resources. However, research that my department has seen shows that most women stay off work for the whole of their paid maternity leave. We increased the payment period for SMP and MA from 18 to 26 weeks and we increased the basic rate as I suggested. Of course, the Government’s intention is to deliver greater choice to parents in how they balance their work and family life during the first year of a child’s life. Noble Lords will know that we have already set out our commitment to extend paid maternity leave to one year by the end of this Parliament. That will also be significant in meeting the point raised by the noble Earl. As a step towards that, we intend to extend the payment period for SMP and MA to 39 weeks from April 2007. So, in answer to the noble Baroness, I think that we are making considerable progress here. My officials estimate that, if we were to accept the amendment, the cost for the Government of up to 39 weeks would be about £650 million and, for business, £45 million. If it were extended to 52 weeks, we reckon on £1 billion for government expenditure and £68 million for business expenditure. The noble Baroness’s proposal would require a considerable amount of additional public expenditure and would be a burden on business. I fully understand the noble Baroness’s reasons for wishing to see more generous leave payments being made, but given the size of those sums and considering the competing pressures on public finances, it would be difficult at this stage to go down that route. Overall, the action taken by the Government since 1997 has made a considerable contribution to parents wishing to spend time with their children. One would always like to be more generous, but the current level is a considerable increase over previous levels. As I said, the public expenditure implications of the noble Baroness’s amendment are considerable. On that basis, I hope that she will withdraw her amendment.