Real term government cuts leave families up to £450 worse off

By agency reporter
4 Apr 2014

Years of real-terms cuts to child benefit, statutory maternity, paternity and adoption pay will leave expectant and new parents up to £450 a year worse off – enough to buy a year’s supply of nappies, baby wipes and babygrows, the Trades Union Congress (TUC) says today (4 April), ahead of the annual increase in benefits on Sunday.

The four key benefits for expectant and new parents – statutory maternity pay (SMP), statutory paternity pay (SPP), statutory adoption pay (SAP) and child benefit – are going up by one per cent this Sunday (6 April), but this is a real-terms cut as the cost of living (as measured by RPI inflation) is rising by 2.7 per cent.

This is the fourth successive real-terms cut in the value of these benefits, which before 2011 used to increase in line with RPI inflation every year, says the TUC.

From tomorrow SMP, SPP and SAP will be worth £138.18 a week – £7.87 a week less than if they had increased in line with RPI inflation since 2011. The same day child benefit increases to £20.50 a week for the first child and £13.55 for each additional child – which are effectively real-terms cuts of £3.24 and £2.14.

A working couple having a child in the next financial year (2014/15) will be £275 worse off if they take their full entitlement to SMP (which includes 33 weeks at the flat rate) and two weeks of SPP. They could also lose up to £168 in child benefit, bringing the total loss for expectant and new parents to nearly £450 – enough for a year’s supply of nappies, wipes and babygrows.

The income loss for better-off parents will be even greater as couples where one parent earns £50-60,000 will also have to pay the child benefit higher income charge. Those earning over £60,000 are no longer entitled to child benefit and could be £1,341 worse off next year (2014/15).

The TUC is concerned that as all these key family-friendly benefits will be subject to the government’s welfare cap, their value will continue to wither away. The TUC wants the government to restore the real-terms value of family-friendly benefits to give new parents the extra financial support they need from the welfare state.

TUC General Secretary Frances O’Grady said: “New babies are wonderful – but they can also be expensive, as any parent can attest. That’s why it’s important we protect the real value of family-friendly benefits to give new parents the help they need to buy baby essentials.

“Statutory paid leave for working mums and dads has the additional benefit of helping them to take time off to spend with their baby – without fear of losing their jobs.

“But family-friendly benefits have come under stealth attack in every Budget since mid-2010. Successive years of real-terms cuts will leave expectant and new parents up to £450 worse off this year – enough to buy a year’s supply of nappies, wipes and babygrows."

She concluded: “The government’s welfare cuts may be popular with people who think that they will never be affected themselves. But every parent expecting a baby next year should remember that they will be victims of the Chancellor’s plan to get rid of the social security safety net.”

[Ekk/4]

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