Cost of Living: Parental Leave and Pay Debate

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Department: Department for Work and Pensions

Cost of Living: Parental Leave and Pay

Justin Madders Excerpts
Monday 19th June 2023

(10 months ago)

Westminster Hall
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Justin Madders Portrait Justin Madders (Ellesmere Port and Neston) (Lab)
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It is a pleasure to see you in the Chair this afternoon, Mr McCabe, and I thank everyone who has spoken in today’s debate. Despite the attendance, this is a matter of great importance to millions of people up and down the country. I am sorry to Nicola, the organiser of the petition, that more Members were not here to speak. I am sure we are all aware that other business is catching people’s attention today, but I hope that those who have heard the debate will see that there is a lot of interest and well-informed opinion about the challenges that new parents face.

I am grateful to my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) for her introduction to the debate, which gave a comprehensive overview of the challenges that new parents face. She mentioned—I will discuss this in a little while—the huge costs that new parents face, which have increased in recent times. There is a chasm between those costs and the rates of statutory maternity pay, which have also been discussed. She gave us a whole range of facts and figures to demonstrate that, and the personal testimonies from mothers she has spoken to illustrate the real difficulties that many people are facing. She mentioned the Government line that maternity pay is in line with other out-of-work benefits, which shows how completely out of touch they are and demonstrates the lack of understanding about the huge workload that any new parent will face.

My hon. Friend rightly identified loopholes in relation to self-employment for adopted parents. Obviously that needs to be addressed, because we know that formally adopting a child is a huge financial commitment, and those financial barriers need to be removed. Her wide-ranging speech touched on childcare costs, the impact that maternity leave can have on a woman’s pay for the rest of her life—something that still exists, 50-odd years after the Equal Pay Act 1970 was introduced—and maternal mental health, which is grossly overlooked at times. Her conclusion that having a child is a calculation made on a spreadsheet really hit home. All parents look at that when planning a family, but when we look at the costs households face—huge increases in housing cost, student loan payments, an increased tax burden, pension contributions and childcare costs—we can see how, for many, the sums do not add up, and that brings home what a challenge this is.

It was a pleasure, as always, to hear from the hon. Member for Strangford (Jim Shannon). It would not be a Westminster Hall debate without a contribution from him. Like him, I have three boys. I wonder how similar they are—it would be interesting to compare notes at some point. He made some valuable points about the cost of raising a family, with the cost of the first year being £6,000. It probably feels like more for many because babies grow out of their clothes so quickly and there are all the set-up costs.

We are fortunate in my part of the world that the charity KidsBank, which is based in Chester but operates in Ellesmere Port and Neston, provides new parents with a lot of those essentials. They are all recycled and donated goods, but it is a critical thing for those families who are on the breadline and who need that support. It shows how difficult it is to raise a family.

David Linden Portrait David Linden
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The hon. Member makes the powerful point that more often than not it falls to the third sector to step in and support people. Does he agree that it is not a sign of the big society that these groups, however great the work they are doing is, fulfil that need, but a sign of a broken welfare state that is fundamentally beyond repair?

--- Later in debate ---
Justin Madders Portrait Justin Madders
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I hope our welfare state is not beyond repair. I sincerely hope that we are able to build back the blocks of society that have been dismantled over the past 13 years, but wherever we turn in society now, we see the third sector stepping in because the state has not been able to meet the demand, and that is a signal that something has gone fundamentally wrong in this country.

Let me return to the contribution of the hon. Member for Strangford, who mentioned mortgage costs. As other Members have mentioned, that will become a huge issue over the next 12 months. As the hon. Member for Glasgow East (David Linden) said, it is a live issue, and the Government are still grappling with the implications. The hon. Member for Strangford raised the example of Scandinavian countries. Of course, they are always held up as the most progressive examples of welfare support and progressive societies, and I am sure there is something to learn from them.

It is important that we do not see the debate as something that has only happened recently because of the cost of living crisis. Many of the extra pressures are ones that new parents have faced since time began, but they are particularly acute at the moment. In that context, it is important to look at the issue raised in the petition, which is the level of statutory maternity pay. As we know, inflation has skyrocketed in the past two years. Although this year’s increase in statutory maternity pay more accurately reflects the economic situation, last year there was an increase in statutory maternity pay of only 3.1% when inflation was running at about 9%. The figures do not capture the full picture, as my hon. Friend the Member for Newcastle upon Tyne North mentioned. Inflationary increases in the essentials for parents have been particularly acute. She traded some figures about the costs, and I have a few of my own. We can pick whichever ones we want, but they go far beyond the headline rate of inflation for new parents.

The Mirror showed an increase in costs of 38% in a year. The Guardian found that the cheapest baby formula had gone up by 22% in a year. First Steps Nutrition Trust showed that the cheapest brands had gone up by 45% in the past two years and other brands had gone up between 17% and 31%. There is a range of percentages that shows how the issue goes way beyond the headline rate of inflation, which statutory maternity pay is based on.

As the recent Sky News report highlighted, theft of formula milk is becoming more prevalent. Is there anything that symbolises more the current crisis in our country than images of formula baby milk stacked on supermarket shelves with security tags around them? That sends a very clear message about what kind of country we are and the crisis we face. As my hon. Friend mentioned, we know how important it is for children to have a healthy start in life and how their formative years can shape the ones that follow. I worry that the fallout from the issues we are talking about now will be with us for many years to come.

On a more positive note, I pay tribute to all the charities and volunteers who do their bit to ensure that everyone has access to food and support when they need it. As the hon. Member for Glasgow East said, that is not something we should accept as the norm. That should not be substituted as a safety net for the state, but, sadly, that is where we are. In my constituency we have great groups that help out, such as West Cheshire food bank, the Whitby Community Cupboard and the People’s Pantry at Stanney Grange, which I recall visiting recently and being told how much demand there was for formula milk and help and how important it was to get donations, which shows how out of reach all that is for many people.

Of course, the issue is not just about formula milk; it is about the general increase in essentials. Food inflation is just under 20% at the moment. Gas and electricity inflation has reached 129% and 67% at various points in the year, and, as we have already discussed, mortgage rates are shooting up for many people, resulting in instant requests for hundreds of pounds extra a month that people simply do not have.

Looking at inflation in a year in isolation does not tell us the full story. If we go back to 2012, the basic rate of statutory maternity pay equated to 62.5% of a 35-hour week on the national minimum wage, but today it equates to 47.3% of a 35-hour week on the same rate of pay. We are towards the bottom of the league table of decent maternity pay in Europe. Women receive only around 25% of average earnings. As the hon. Member for Strangford suggested, countries such as those in Scandinavia do far better on those metrics.

Research conducted by Maternity Action shows that most women have concerns about money, with the number who are worried increasing at an alarming rate as the cost of living crisis bites in very real terms. In 2022, 64% of women who responded to the survey reported being worried about money when pregnant or on maternity leave. That increased to 71% this year. Widespread concerns about money are all-encompassing. Only 2% of those surveyed claimed that they did not worry about money at all. Some 73% of women told Maternity Action that they struggled to buy the things they needed while pregnant or on maternity leave, of whom 18% reported struggling “a lot”. That has practical consequences.

Some 76% of women surveyed reported that they reduced the number of hours their heating was on; 70% turned down their thermostat; and 55% stopped heating whole rooms altogether. As we know, those choices are made reluctantly and have significant consequences, particularly for newborns, who can pick up infections as a result of the cold, damp and mould. Equally, some parents have reported that they have reduced the amount that they spent on food. Half did that by buying less healthy food, more than one third reduced portions or skipped meals, and one quarter prioritised giving food to their children over themselves.

Just listening to the testimony collected shows the stark reality and human cost of this situation. One respondent talked about the impact of cutting back on heating and said:

“We did use the heating less at first but my…baby ended up with pneumonia and a lower left lung infection…so now we have reduced the thermostat instead.”

Another stated:

“I have had days when the only thing I have eaten is the kids’ leftovers. Some days my only meal is toast.”

We know how hard it is to be a parent at the best of times, but being forced to make those kinds of decision can only add to the burden.

Financial insecurity is one huge aspect of motherhood, but job insecurity is another. Research has consistently found massive discrimination at work due to pregnancy. The Equality and Human Rights Commission estimated in 2015 that

“around 54,000 new mothers may be forced out of their jobs”

in some way due to their pregnancies. Pregnant Then Screwed made similar findings in 2020, which were actually based on a larger sample. In between those surveys, the Taylor review also reported that at least one in 10 employers—perhaps as many as one in five—were not willing to support pregnant women and new mothers, and that one third believed that women should have to disclose family plans at an interview and be at the company for at least a year before being able to have children. Such views really belong in the dark ages.

What has the Government’s response been to those shocking revelations? Despite their being a manifesto commitment and being in the 2019 Queen’s Speech, we have seen no expanded protections for pregnant workers and new mothers until this parliamentary Session. Three times in the previous three Sessions, private Members’ Bills were left to flounder, with none receiving a Second Reading. However, thanks to the tireless campaigning and work by my hon. and gallant Friend the Member for Barnsley Central (Dan Jarvis), such legislation has finally received Royal Assent.

It is clear that the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 has the potential to better protect pregnant workers and new mothers, although the Act only gives enabling powers to the Secretary of State to pass new regulations; it does not, of itself, introduce new protections. Although the Act received Royal Assent only recently, we see no sign of those regulations. I know that that is not within the Minister’s brief, but could she update us on when those regulations can be expected? If she also told us by how long the protected period will be increased, or at least who will be consulted before such judgments are made, that would be warmly received. Given that the Act gave no indication of the length of the protected period or the requirements there would be for consultations before regulations were issued, there is a concern that we might end up, at the end of the day, with a bit of a damp squib.

Of course, extending a period of protection is only as good as the protection in the first place, and, as we have heard, tens of thousands of women face discrimination under the existing law. A single enforcement body might help to address that. Again, that was being promised in that same Queen’s Speech, but since the employment Bill has not surfaced, it seems that we have little hope of seeing that body in place before the next general election.

I turn briefly to the issue of shared parental leave, which a couple of Members have mentioned. It is clear that it is not working and it needs to be urgently reviewed. The Women’s Budget Group, an independent organisation that monitors the effect of Government policies on men and women, has called the scheme “complicated” and said that, because leave was shared, the onus on taking parental leave still often fell on the women—men tended to earn more, so they would be less likely to want to sacrifice that salary as part of the arrangement. Ros Bragg, the director of Maternity Action, said:

“Shared parental leave was brought in seven years ago now and it’s clear that it’s not working—take up is woeful. Our advice lines are full of parents who want to share parental leave, but confusion around the rules means that they are completely baffled. Add that to the low level of pay on offer, and the system seems almost designed to put parents off sharing leave, rather than encourage it.”

The common view is that the shared parental leave system is too complicated. It is poorly understood by employers and parents; there are low rates of pay; and the fact that not all workers qualify, including agency workers, those on zero-hours contracts and the self-employed, means that it needs urgent review. A Government consultation on high-level options for reforming family-related leave and pay, including a right to neonatal leave and pay for parents with premature or sick babies, and proposals to encourage transparency on flexible working and parental leave policies, was launched in July 2019, but the Government have still not published their full response to the consultation. They have addressed some of the proposals, but not all; we are still waiting for the rest.

It seems, as always, that a Labour Government will be needed to come in and address these issues. We will eliminate the restrictive time limits attached to statutory maternity pay, making it a day one right. That will allow women to take control of their family planning. No longer will they be forced to plan one of the most important life decisions around the needs of their employer. We will also extend statutory maternity and paternity leave, as well as urgently review the failed parental leave system. Buttressing those reforms—as well as many others in the new deal for workers, which I encourage hon. Members to review—will be a single enforcement body, which will possess extensive powers enabling it to stand up for workers.

We understand that reforms to employment rights and protections require a multifaceted approach—one that really cannot work through the piecemeal approach we have seen from the Government. After more than a decade in government, the Conservatives are holding back women at work, meaning that a Labour Government, as the last Labour Government did, will stand up for women and bring true equality into the workplace and beyond.