Spring Budget Response Briefing – a letter to the Prime Minister
Published: 22 Mar 2024
Dear Prime Minister Rishi Sunak,
Working Families’ mission is to remove the barriers that people with caring responsibilities face in the workplace.
We are concerned that the Government’s Spring Budget was a missed opportunity to make the positive changes urgently needed to improve the lives of the UK’s 12 million working parents and 3 million working carers.
The 2023 Working Families Index highlighted the hurdles confronting many parents and carers, especially those with lower incomes, who often face prohibitive childcare costs, lack of access to flexible and secure work, and low levels of pay for new parent leave. In 2022/23, Working Families’ Legal Advice Service provided personalised legal advice to nearly 1,700 parents and carers by email and phone, and nearly 1 million working parents and carers accessed our legal advice pages. These numbers demonstrate the scale of support needed for working parents and carers as they navigate a host of financial uncertainties and barriers to balancing work and caring.
We have drafted this Spring Budget response briefing with the support of our Academic Advisory Board, who are a group of leading experts from universities across the UK on issues relating to flexible working, job quality and security, social security, and childcare. They keep us up to date with the latest evidence and innovations in practice. And, crucially, they share strategic insights on where we should focus our efforts to create change for working parents.
This briefing highlights the key policy areas where we recommend the Government should make practical changes to remove the barriers that people with caring responsibilities face in the workplace, especially those on lower incomes.
Commenting on the Spring Budget, Working Families CEO Jane van Zyl said,
While it is welcome that the Government has introduced new legislation to help remove the barriers that people with caring responsibilities face in the workplace, this budget was a missed opportunity to provide the finances to ensure that these reforms, such as the new childcare policy and the groundbreaking neonatal leave policies can be implemented in full as soon as possible. We are delighted to work with our Academic Advisory Board members to help highlight why our Spring Budget proposals are still areas where financial support is required as soon as possible.
Academic Advisory Board member Dr Ian Roper, of the University of Essex, said,
Working Families is the pre-eminent UK charity promoting practices to enable parents in families of all types to be able to fully participate in the labour market. Members of the Academic Advisory Board work in partnership with Working Families to support these aims.
Five key policy areas that still need to be addressed following the Spring Budget
- Address the shortfall in childcare funding.
- Prioritise the plight of working parents by protecting those on Universal Credit and legacy benefits.
- Bring forward the implementation of neonatal leave and pay provisions.
- Address the inequities affecting new mothers on Universal Credit who are also receiving Maternity Allowance rather than Statutory Maternity Pay.
- Review the rates of pay for Statutory Maternity, Paternity, Adoption and Shared Parental Pay.
1. Why address the shortfall in childcare funding?
- Over half (51%) of lower-income parents have had to reduce their working hours to manage childcare needs, and a fifth have had to quit their job altogether.
The ambition and scope of the Government’s childcare reforms are commendable. Acknowledging the gaps in childcare and increasing the subsidised support could see huge steps taken to remove the barriers to work for parents and carers in the UK. However, this cannot happen if the policy is underfunded.
Whilst we welcome the commitment that the Chancellor has made to guarantee the rates that will be paid to childcare providers to deliver the government’s childcare expansion package, we will be watching this with great interest to see that this promise is kept, and that parents and carers are not left without sufficient childcare places due to a shortfall in funding. We are pleased to see the promised introduction of an indexing mechanism to ensure rates keep pace with the cost of living, but we would like to see further detail on how this index will be calculated, so we can be sure it truly reflects the rising living costs. And we remain concerned that current places for three- and four-year-olds are still insufficiently funded.
Providing good quality accessible childcare is one of the surest ways to ensure a healthy productive workforce to ensure our economy can grow effectively. Care shortages can directly damage our economy at a time when we need to see growth the most. It is therefore, a real disappointment to see that the government has not allocated sufficient budget into this, which can affect not only our economy now, but also into the future when considering the educational effect of good quality childcare in training our future labour force.
Prof. Heejung Chung, University of Kent / King’s College London
2. Why prioritise the plight of working parents by protecting those on Universal Credit and legacy benefits?
- Around 5 in 6 low-income households on Universal Credit are currently going without essentials, and 66% of the public think the basic rate of Universal Credit is too low.[1]
Working Families was pleased to see the Government take heed of calls, including by Working Families, to protect those on Universal Credit and legacy benefits in the Autumn Statement by uprating benefits in line with inflation. While we are pleased to see the Chancellor uplifting benefits and tax credits by 6.7% from April 2024, it’s important to note that this is linked to September 2023 prices, rather than reflecting the full cost of living in April 2024; so it’s unlikely to be sufficient to see households through the cost of living crisis. We cautiously welcome the move announced in the Spring Budget to increase the high-income threshold to child benefit so that it applies to households and not individuals.
However, the cost of living for the UK’s 12 million working parents and 3 million working carers is still exorbitantly high. For those on lower incomes, times are still incredibly challenging, and the decision announced in the Spring Budget not to introduce any additional support to those on Universal Credit or legacy benefits except to increase the time to pay back budgeting advance from 12 months to 24 months is, in our view, not sufficient. If the Chancellor and the Government want to really support those on Universal Credit, they could have increased Universal Credit payments to meet living costs, so that those in receipt would be less likely to be in debt and or need help with emergency costs in the first place.
The UK is in the middle of a deep cost-of-living crisis that is impacting most heavily on low-income families. Too many are facing a ‘heat or eat’ dilemma, with the burden of managing strained family finances often falling on women. Living in financial hardship or fearing it both have real and lasting impacts on the well-being of parents and their children.
Prof. Tracey Warren, University of Nottingham
3. Why bring forward the implementation of neonatal leave and pay provisions?
- Almost 120,000 parents of babies needing neonatal care in the UK from now until April 2025 will miss out[2]
The passing of the Neonatal Care (Leave and Pay) Act was an important moment for parents who urgently need more support while their babies are receiving neonatal care. The bi-partisan support that this legislation received in parliament is testament to the vital nature of this reform.
However, the Government has moved slowly towards the implementation of this vital change, which will now not take place until April 2025. With so many parents missing out on this support because the reform hasn’t yet been implemented, we call on the Government to bring forward the implementation of this legislation, so that more parents receive this vital support.
There are huge mental health as well as logistical and financial challenges being faced by parents with sick and premature babies in receipt of neonatal care. Lack of flexibility and support from employers can significantly exacerbate trauma and stress at this time. Parents are currently being forced back to work when they are likely not psychologically fit, forced to take sick leave or to leave their jobs. The legislative change provides a solid framework for ensuring consistent employer support on this issue, but it needs to come much sooner than April 2025.
Dr Krystal Wilkinson, Manchester Metropolitan University
4. Why address the inequities affecting new mothers on Universal Credit who are also receiving Maternity Allowance rather than Statutory Maternity Pay?
- Maternity Allowance is treated as unearned income, creating disproportionate impacts compared to Statutory Maternity Pay, which is considered ‘earnings’.[3]
We call on the Government to review a long-standing inequity of treatment for mothers who receive Maternity Allowance and Universal Credit.
Statutory Maternity Pay (SMP) is treated as earnings, so some or all of it may be disregarded when calculating entitlement to Universal Credit (UC) due to the work allowance and taper rate. However, Maternity Allowance (MA) is treated as unearned income. This means the work allowance and taper rate do not apply and UC will always be deducted in full by the amount of MA received. As a result, mothers claiming MA and UC, many of whom are on lower incomes in the first place, may receive significantly less financial support while on maternity leave, simply because of their employment status. In light of a High Court judgment which noted that these differences are justified, in part due to the way the benefits system is administered, we call on the government to review this and work on a solution that addresses this inequity.
It is critical that Universal Credit supports all workers on a low income – in-built inequalities such as this can mean that many of those on the lowest incomes, including the self-employed and others excluded from Statutory Maternity Pay, are unfairly penalised. The design of our social security system must reflect the realities of working life in the UK labour market, and should work to address rather than exacerbate existing inequalities.
Dr Katy Jones, Manchester Metropolitan University
5. Why review the rates of pay for Statutory Maternity, Paternity, Adoption and Shared Parental Pay?
- Only 29% of lower-income working parents have access to enhanced leave and pay. And 7 out of 10 lower-income mothers who didn’t have access to enhanced leave took less leave than they wanted to, due to financial concerns.
The current statutory rate of pay for Statutory Maternity, Paternity, Adoption and Shared Parental Pay is simply not enough to make leave affordable for new parents on the lowest incomes. We recognise that through recent reforms, the Government has tried to make paternity leave more flexible by allowing it to be split over separate weeks – but this doesn’t address the cost barrier that many lower-income households face. It is vital that the Government reviews rates of pay to make leave for new parents affordable for those on the lowest incomes who don’t benefit from employer enhanced parental leave packages.
We know that enhanced leave has an impact on parents’ choices about being able to take leave and return to work after childbirth, and this is in itself is a sign that, for many, statutory provision is too low to enable real choices about work and family.
Prof. Susan Milner, University of Bath
Low rates of statutory pay exacerbate existing income inequalities between men and women and among racially minoritised workers. Children born into lower-income families should not be deprived of the bonding opportunities developed during the first year of life.
Dr Patricia Hamilton, University of York
Following the Spring Budget, it’s clear that still more can be done to remove the barriers working parents and carers face in their working lives. We urge you to make full use of your Government’s ability to make real change for working parents and carers across the UK by addressing these vital issues.
Yours sincerely,
Professor Emma Banister, Work and Equalities Institute, University of Manchester
Dr Rose Cook, Global Institute for Women’s Leadership, King’s College London
Professor Heejung Chung, University of Kent and King’s College London
Dr Sarah Forbes, University of York
Dr Patricia Hamilton, University of York
Dr Katy Jones, Manchester Metropolitan University
Dr Jasmine Kelland, University of Plymouth
Professor Susan Milner, University of Bath
Dr Ernestine Gheyoh Ndzi, York St John University
Dr Helen Norman, University of Leeds
Dr Ian Roper, University of Essex
Dr Bianca Stumbitz, Middlesex University, London
Professor Tracey Warren, University of Nottingham
Dr Krystal Wilkinson, Manchester Metropolitan University
[1] Joseph Rowntree Foundation, 27 February 2024, ‘Guarantee our Essentials: reforming Universal Credit to ensure we can all afford the essentials in hard times’, https://www.jrf.org.uk/social-security/guarantee-our-essentials-reforming-universal-credit-to-ensure-we-can-all-afford-the
[2] Bliss, 24 May 2023, ‘Tens of thousands of parents with sick babies stand to benefit from ground-breaking new entitlement’, https://www.bliss.org.uk/news/2023/tens-of-thousands-of-parents-with-sick-babies-stand-to-benefit-from-ground-breaking-new-entitlement
[3] Statutory Maternity Pay (SMP) is a regular payment made by employers to their employees who have a baby and are on maternity leave. Other types of workers, including agency workers, may also be entitled to SMP. Maternity Allowance (MA) is a benefit for women who are working, or have worked recently, but who do not qualify for Statutory Maternity Pay.