Select Committee on Liaison First Report

Committee Recommendations: Progress

Ninth Report: Social Security Implications of Parent Leave (HC 543) Published: 2 November 1999

Committee Recommendations: Progress
Sessions 1998-1999
Ninth Report: Social Security Implications of Parent Leave (HC 543) Published: 2 November 1999

Government Reply: (HC 181) Published: 19 January 2000
RecommendationGovernment Response Committee Response/Follow upFurther Government Action Notes
We welcome the Government's decision to allow low-income parents to claim benefits during periods of leave. The Government is determined to deliver on its Manifesto pledge of helping parents balance the demands of work and home as we enter the 21st century. We are introducing parental leave because its availability will give support to working parents and be an added incentive for people to move into employment and remain there.   The Government has established a wide-ranging review of maternity pay and parental leave called "Work and Parents: Competitiveness and Choice". Stephen Byers the Secretary of State for Trade and Industry is leading a team of Ministers tasked to:   
The Government's decision to allow low-paid parents to claim Income Support may result in a higher level of take-up among low-paid parents. But we remain concerned that large numbers of low-paid workers will be unable to claim their entitlement to parental leave because they will lose out financially if they do so. The family friendly provisions introduced by the Employment Relations Act 1999 are a big step forward - the first time that parents will have a right to parental leave and all working people a right to emergency time off. In addition the legislation allows for workplace or collective agreements to replace the statutory scheme subject to core standards. This will bring employers and employees together in partnership to look at the needs of the business and agree parental leave schemes which suit the individual workplace.
Our immediate task is to ensure that the
  *examine how the economy is changing in relation to working patterns, and what the needs of the modern economy will be
*identify how competitiveness and productivity in this context can be enhanced through giving families reasonable choices to help them balance the needs of children and work.
The Review Team will take into account:

*the impact of maternity pay and parental leave on business, particularly SMEs
It is clear to us that if parental leave is unpaid take-up among fathers will be particularly low. provisions are successfully implemented and that family friendly working arrangements are available to as many people as possible.   and families including whether it is possible to simplify the implementation of existing legislation.   
We recommend that employers should not be obliged to reimburse employees during periods of parental leave. We welcome, however, the IoD's statement that family friendly policies should be encouraged as good practice and we hope that a number of employers will adopt family friendly policies. We want to make sure that vulnerable parents are able to take their leave entitlement and we will be providing access to income support for lone parents and disabled parents while they are on statutory parental leave. In addition we are changing the Income Support rules so that couples in receipt of Working Families Tax Credit/Disabled Persons Tax Credit/Housing Benefit/Council Tax Benefit, who exercise their right to statutory unpaid parental leave to care for   *best practice in business and its impact including the extent to which employers currently offer additional entitlements or flexible arrangements
*factors affecting women's decisions to return to work after childbirth and factors affecting the take up of parental and paternity leave
*impact of returning to work part-time from home or on flexible hours
There is a danger that small businesses will lose out if there is no state payment of parental leave because they will not be able to afford to compete with larger businesses in offering paid or partially paid parental leave. a child who lives with them, will also be able to qualify. This can include two earner couples who take leave at the same time provided they meet the other qualifying conditions for Income Support. This underscores support that is already available. We estimate that about 10,000 parents a year could claim Income Support while they are on statutory parental leave.   *reducing child poverty

and is consulting the widest variety of organisations and individuals as possible in the private, public and voluntary sectors to achieve this. A Green Paper will be published at the end of this year."
We recommend that the Government should establish an independent body to monitor the take-up and impact of parental leave. Over the coming months, the Government will continue to look at ways of raising the profile of family friendly employment policies, including the business advantages of policies which allow staff to balance the demands of home and work.        
We welcome the introduction of parental leave but are concerned that take-up will be very low unless there is an element of payment. We recommend that the Government should introduce a flat-rate method of payment for those taking parental leave. Such a method of payment would be relatively inexpensive and could form the basis for more generous provision in the future. We recommend that a flat-rate payment should be introduced for a specific length of time after which careful monitoring of the take-up and impact of parental leave should form the basis for informed decisions about payment. As employers come to recognise the benefits of being family friendly - an increasingly stable, loyal and productive workforce - we hope they will build on the minimum standards in the legislation. The approach we are taking is to encourage employers to go beyond the reasonable minimum standards which we have laid down in the regulations on parental leave. We are encouraged by the committee's suggestion that it is probable that many employers will provide some degree of wage replacement.

We note the Committee's concerns about small businesses. Many small businesses already offer informal and flexible family friendly practices and will be able to attract employees with children through increased flexibility. Parental leave is intended to help support competitiveness and we will want to establish the effect on small as well as large enterprises in our monitoring plans.

You recommend that the Government should establish an independent body to monitor the take-up and impact of parental leave. The Secretary of State for Trade and Industry announced on 15 December that he is to establish a Parental Leave Monitoring Group. It will have a broad remit to monitor and evaluate the take-up, impact and effectiveness of the parental leave provisions, reporting its conclusions to the Secretary of State. Members of the Group will be drawn from large and small business and employees' representatives, academia and the voluntary sector. The Group will play an important part in helping to inform our future thinking on parental leave arrangements, taking into account their impact on different groups and on different sectors of the economy. It will look at monitoring the numbers taking parental leave and the impact on small businesses who have limited resources. The Group has also been invited to examine how parental leave is promoted during the initial period after the regulations come into force. The first meeting is expected to take place early in the New Year.

Your evidence provides much food for thought on further possible ways for Government funded financial support for parental leave. You examined a number of different approaches and recommended a flat-rate payment as a first step. As was apparent from the evidence put before the Committee there is no consensus on taking this issue forward and we believe that there needs to be further debate and consideration. For our policies to be successful we must allow a reasonable time for the new rights to bed in alongside other changes in employment legislation. The findings of the new Parental Leave Monitoring Group will also help to inform future policy making in this area.

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