Budget puts families first

The Chancellor of the Exchequer's budget statement on 7th March made it clear that the Government intends to do more to help mothers and fathers balance work and family responsibilities. In particular it intends to make it easier for mothers to make the choice to stay at home after their child is born and for much longer than previously.

In addition to a number of tax measures the budget included a GBP 1/2 billion a year package of measures on maternity and paternity pay.

The flat (lower) rate of Statutory Maternity Pay (SMP) and Maternity Allowance will be increased substantially. From April 2002 this will rise to GBP 75 a week. From April 2003 this will rise to GBP 100 a week. At present the rate is GBP 60.20 a week and it has been confirmed that this will increase to GBP 62.20 from April 2001.

There will be an extension to the period of paid maternity leave from 18 weeks to 26 weeks from April 2003.

Parents who adopt will, for the first time, receive similar benefits.

The Budget confirms that paid paternity leave is to be introduced- but from April 2003. Payment will be at the same flat rate as SMP (which will then be GBP 100). More details of this and other measures are expected to be announced by the Secretary of State for Trade and Industry.

In order to assist employers the threshold for Small Employers Relief is to be increased to GBP 40,000 from April 2002 so that about 60 per cent of all employers paying SMP each year can reclaim their costs in full.

If you have specific queries about the impact the budget has on the employment policies, practices and procedures of your business, please contact Simon Jeffreys or Anthony Fincham by e-mail at [email protected] or [email protected] or alternatively by telephone on +44 (0)20 7367 3000.