Maternity Allowance (Hansard, 17 April 1986)

§ Mr. Newton

The consultation paper set out detailed proposals for a statutory maternity allowance to be paid by employers instead of DHSS, on the lines indicated in chapter 5 of "Reform of Social Security" (Cmnd. 9691). 90 responses were received and we are very grateful for the many helpful comments made.

Separate from the present maternity allowance scheme administered by DHSS, employers are currently responsible for maternity pay under the Employment Protection (Consolidation) Act 1978. A major concern among those commenting was that our proposals would mean that employers would have to operate a second scheme of cash provision for maternity. In the light of this concern we have modified our proposals with the aim of integrating the two schemes as far as possible. This will not only minimise the work for employers, but will represent a more coherent structure of cash support for maternity.

The new provision, to be known as statutory maternity pay (SMP), will therefore replace both the existing maternity pay scheme administered by the Department of Employment and the maternity allowance scheme administered by DHSS. We propose a two-tier provision—an earnings-related payment equivalent to 90 per cent. of earnings for six weeks, followed by a flat-rate payment for a further 12 weeks. To qualify for the earnings-related element a woman must have worked for the same employer for at least two years. This is the 446W current requirement under the maternity pay scheme. To qualify for the flat-rate element a woman must have worked for the same employer for at least six months. A woman who has worked for the same employer for between six months and two years will qualify for only the flat-rate element, but for 18 weeks. Women who have decided not to pay full-rate national insurance contributions ("opted-out married women") will be eligible for SMP, as they are for maternity pay and statutory sick pay.

We envisage that the flat-rate element would be aligned with that rate of statutory sick pay which is at present £31.60 a week. Like statutory sick pay and the present maternity pay, both the earnings-related and the flat-rate elements will count as taxable income. They will also be taken into account in determining national insurance liability under the normal rules.

The consultation paper proposed that, in order to qualify, the woman's average earnings should be at or above the lower earnings limit for national insurance contributions (f38.00 a week in current terms) for 26 weeks. There were strong representations that such a long period would cause difficulties for employers, particularly those with computer payrolls. We therefore propose that the period should be reduced to eight weeks.

We propose that the pont at which the earnings and employment tests are applied should be fixed at the 14th week before the baby is due. This is the earliest point at which a certificate of expected confinement can be issued.

The consultation paper proposed that a woman should be able to choose, to some extent, the period over which she was absent from work. There was a wide welcome for this. We propose that there should be a "core" period of 13 weeks, starting six weeks before the week that the baby is due. A woman will be able to choose whether she takes the other five weeks before or after this core period, or some before and some after. A woman who works during any part of the core period will lose the flat-rate element correspondingly, since the aim is to ensure that, in the interests of her own and her baby's health, she should refrain from work for a reasonable period on either side of the date of the birth.

As already announced, we propose that a pregnant widow should be able to get SMP without loss of her widow's benefit.

We propose that, as with statutory sick pay, employers should recover their payments of SMP by deducting the appropriate amounts from their remittances of national insurance contributions and tax to the Inland Revenue. The need to make a special claim to the Department of Employment, as is currently required for maternity pay, will no longer apply.

The maternity pay fund will be merged with the national insurance fund, and the DHSS will be responsible for SMP. National insurance inspectors will include checks on SMP in their visits to employers.

If a woman does not qualify for SMP, she will qualify for a maternity allowance paid by DHSS if she has worked as an employed or self-employed person, and paid full-rate contributions, for at least 26 weeks out of the 52 weeks ending 14 weeks before the baby is due. The rate of this maternity allowance will be, as at present, the same as that of sickness benefit—£29.15 a week in current terms. It will run for 18 weeks—a core period of 13 weeks, and a choice about the other five, as proposed for SMP.

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Clauses to give effect to these proposals will shortly be tabled with a view to consideration by the Standing Committee on the current Social Security Bill. We propose that, subject to the passage of the Bill, the date for the introduction of SMP should be 6 April 1987.