Social Security (Maternity Allowance) (Participating Wife or Civil Partner of Self-employed Earner) Regulations 2014
(Limited Text - Ministerial Extracts only)
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Lord Bates
That the Grand Committee do consider the Social Security (Maternity Allowance) (Participating Wife or Civil Partner of Self-employed Earner) Regulations 2014.
Relevant document: 20th Report from the Joint Committee on Statutory Instruments.
Lord Bates (Con)
My Lords, in order to make the best use of parliamentary time there are two instruments for debate today. I have agreed with my noble friend Lord Faulks also to present an instrument which falls within the remit of his department, the Ministry of Justice. I will speak also to the draft Legal Aid (Information about Financial Resources) (Amendment) Regulations 2014, which bring forward a measure that is consequential on my department’s regulations. Both regulations were laid before both Houses on 21 January 2014 and are intended to come into effect from 1 April 2014.
I am satisfied that the Social Security (Maternity Allowance) (Participating Wife or Civil Partner of Self-employed Earner) Regulations 2014 is compatible with the European Convention on Human Rights. Likewise, my noble friend Lord Faulks and I are satisfied that the Legal Aid (Information about Financial Resources) (Amendment) Regulations 2014 is also compatible with the European Convention on Human Rights.
First, the Social Security (Maternity Allowance) (Participating Wife or Civil Partner of Self-employed Earner) Regulations 2014 provide for a maternity allowance to be made available to women who are neither employed nor self-employed in their own right, although they regularly take part in activities related to the business of their self-employed spouse or civil partner. They must be neither a partner nor an employee of the business concerned.
These regulations are being introduced in order to fully comply with European directive 2010/41, which was adopted on 24 June 2010 following negotiation between member states. The directive assures equal treatment between men and woman who are self-employed. It protects self-employed women during pregnancy and motherhood, together with women who are not self-employed, who habitually participate in the activities of their self-employed spouse or civil partner’s business.
The UK already complies with most of the directive through existing equality legislation, primarily the Equality Act 2010. However, Article 8 of the directive legislates for a maternity allowance to be paid to self-employed women and spouses or civil partners who habitually participate in the activities of a self-employed worker. This is required to enable them to interrupt their activities as a result of pregnancy or motherhood. We already provide a maternity allowance to self-employed women.
Women who contribute to their spouse or civil partner’s business by regularly helping out in an unpaid capacity could bring themselves within coverage of the maternity allowance and other social protection by becoming partners in, or employees of, the business. There are strong business and social incentives for doing this, which include tax benefits for the business and greater social protection for the woman. However, for women who do not wish to take these steps we must bring forward these regulations to ensure that we fully comply with the directive. If we were not to bring these regulations forward, we would not be fully compliant with the directive, which would put the UK at significant risk of being subjected to infraction proceedings by the European Commission. This would attract an initial lump sum fine estimated at around €11 million with a daily accrual until we are fully compliant.
The regulations will provide a maternity allowance to women who are due to give birth on or after 27 July this year and regularly assist in the self-employed business of their spouse or civil partner but are neither employees nor business partners. For the first time, spouses or civil partners of the self-employed worker who help in the business and receive no income will be able to receive a maternity allowance enabling them to take a break in their activities as a result of pregnancy.
In line with the Government’s objective to avoid the gold-plating of EU legislation, we will not go beyond the minimum requirements of European directives. This means that benefit will be payable at the weekly rate of £27 for a maximum of 14 weeks. This reflects the lowest rate of maternity allowance that is currently payable to working mothers on a very low income to be paid for the minimum duration specified by the directive.
This rate is less beneficial than the standard rate of maternity allowance currently awarded for up to 39 weeks to women who are eligible because they are employed or self-employed in their own right—the standard rate from April 2014 being £138.18. The higher rate and longer payment period of maternity allowance is intended to provide a measure of earnings replacement to enable women to take a break in their occupation at the end of their pregnancy or soon after childbirth. It would not be right to make a corresponding award of maternity allowance to women who have no earnings to replace. A number of stakeholders have been notified of this forthcoming change: for example, Netmums, Mumsnet, and Maternity Action. Maternity Action has advised that it supports the change and will help us to raise awareness of it if it is passed by your Lordships’ House.
I trust that your Lordships will agree that the regulations will help women who are pregnant or have recently given birth where, prior to that, they have lent unpaid support to their spouse or civil partner in helping them to build and maintain a self-employed business.
I turn to the draft Legal Aid (Information about Financial Resources) (Amendment) Regulations 2014. Those draft regulations amend the Legal Aid (Information about Financial Resources) Regulations 2013 that came into force on 1 April 2013. They add the maternity allowance being introduced for participating spouses or civil partners of self-employed earners to the list of prescribed benefits in the schedule to the 2013 regulations.
If an individual is in receipt of a prescribed benefit, the director of legal aid casework in the Legal Aid Agency, in assessing an individual’s income for the purpose of the legal aid financial means test, may request information about the benefit from various other government departments, including the amount that the individual is receiving. Having accurate information about the financial resources of an individual who is applying for or in receipt of legal aid is an important part of ensuring that only those eligible for legal aid receive it, and that those who can afford to contribute to the cost of their legal representation are made to do so. I commend the instruments to the Committee.
Baroness Scott of Needham Market (LD)
My Lords, I support the social security regulation which we are debating today—not just because it avoids an €11 million fine. I think it is a good thing in its own right. For once, we have a welcome change to the benefits system in that it is beginning genuinely to reflect the diversity of people’s lives and the lives of women in the workforce. That is a very good thing indeed. It is bringing a new group of women, predominantly from the very small, micro-business sector, within the ambit of maternity benefit. I just wish that the gold-plating had been left in place just on this one occasion so that they could have had a benefit more in line with everyone else.
I want to ask two questions. The first is about disseminating information, because this is a very difficult group to reach. They do not tend to be members of chambers of commerce, and that sort of thing. I do not have a particular answer, but I wanted to put in the plea that all efforts are made to ensure that women who are likely to benefit actually know about it and are able to. We hope that the Government’s new enterprise allowance scheme will be successful, so we could have even more very small businesses starting up in the coming year or so, so we need to get on top of how we can ensure that women know that these benefits are available.
Secondly, I welcome the discussions on shared parental leave—I know that the Deputy Prime Minister has been very keen on this and it has some support within government. It would provide welcome flexibility, but I am curious as to how these arrangements might work if we have shared parental leave. With those questions, I welcome the instrument.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for his explanation and I look forward to hearing the answers to those two excellent questions. I do not propose to ask any questions about the second order, as I accept the Minister’s assurance that it is consequential upon the first. However, I should like to ask a few questions so as to understand better the implications of the first order, relating to maternity allowance.
The first question relates to the point that has just been made about the rate being so low. The standard rate of maternity allowance is £136 a week, or 90% of average weekly earnings, for up to 39 weeks. In this case, the Government decided to settle on £27 a week for 14 weeks. I think I heard the Minister say that the aim of the allowance was to enable women who regularly help in the business of a spouse or civil partner to take a break from their activities towards the end of a pregnancy or the start of motherhood. Have the Government made any assessment of whether the amount of money involved is such that it is likely to make taking that break possible when otherwise it would not have been?
Secondly, the Explanatory Note says that 1,300 women will be affected by the provisions at an estimated cost of £0.5 million. No impact assessment was carried out, so we do not know whether the Government considered other approaches. Clearly, there is quite a wide range between what the Government are doing and an allowance that is fully gold-plated. Did the Government consider bringing this in at an intermediate level and, if so, what kind of cost would have been implied?
Next, I should be interested in understanding what conditions a claimant would have to meet to qualify for maternity allowance under these circumstances. We have had a question about shared parental leave. I should also be interested in knowing what happens to someone who is adopting a child rather than giving birth, as the regulations are specifically about giving birth or having just given birth. Looking at the regulations, I do not think that someone in these circumstances would be entitled to statutory adoption pay, so would they be entitled to maternity allowance? Similarly, what happens if the child is stillborn or dies immediately after birth? Certainly, I think that SMP is payable if a child is stillborn after 24 weeks, but is there a read-across to this provision?
I was pleased to hear the question about communication because I was going to ask something similar. The Minister made the very good point that there may be strong reasons why women in these circumstances may be better off being paid by the business and being able to pay national insurance. I am very conscious that the Pensions Bill is going through the House at the moment. Of course, if a woman in these circumstances does not end up with 35 years of national insurance payments in her own right, she may find that when she comes to retire she is not entitled to the new single-tier pension, and in future she will not be able to claim on her husband’s contributions either. Therefore, when the Minister looks at the communications campaign, I wonder whether anything can be done to make sure that the opportunity is taken to communicate to those women so that they understand the consequences of not paying national insurance and of not coming within the national insurance and tax system.
Finally, I have a practical question. Can the Minister explain the tax and tax credits treatment of these benefits and say whether there is any passporting or link across to any other benefits as a result of receiving this maternity allowance?
Lord Bates
I thank my noble friend Lady Scott of Needham Market for her contribution and I also thank the noble Baroness, Lady Sherlock, for raising these points. Some very good questions have been asked and I shall do my best to answer them.
My noble friend Lady Scott asked whether women getting this maternity allowance will have access to shared parental leave and a pay scheme. The answer is no, and I am sorry to be disappointing. The statutory shared parental leave and pay provisions are designed for employed couples to share the care of their child. It would be available to eligible women who are entitled to maternity leave, statutory maternity pay or maternity allowance because they are employed or self-employed earners—that is the key word. Therefore, women receiving this form of maternity allowance will not have access to that scheme as they will be neither employed nor self-employed in their own right.
My noble friend Lady Scott and the noble Baroness, Lady Sherlock, asked how we will encourage take-up of the allowance, and we talked about some of the publicity which is being received. We have identified stakeholder groups relating to both self-employment and maternity, and they have been informed of the change. They include Maternity Action, Netmums, Mumsnet, Bounty, Sands, Citizens Advice, the Royal College of Midwives, the British Medical Association and HMRC. We will be publicising the qualified conditions and the claim process on direct.gov.uk, as well as providing relevant guidance and claim forms. Needless to say, if there are any specific organisations which the noble Baroness thinks it would be helpful to include in that list, we will be delighted to hear from her.
I turn to the points raised by the noble Baroness, Lady Sherlock. She asked about the sad cases where there is a stillborn child. The mother would still be entitled to maternity allowance, in the way that statutory maternity pay applies at present. These provisions do not extend to adoption.
Baroness Sherlock
Before the Minister leaves that point, I understand the Government’s argument that they do not wish to gold-plate anything that comes from Europe. I was pushing him slightly because he gave two different reasons for doing this. One was not to gold-plate; the other was to give the women an opportunity to take a break from their activities. My question was whether he had done any assessment of whether the level and duration of the payment would be adequate to meet that objective.
Lord Bates
The answer is that no such assessment was undertaken.
The noble Baroness asked whether this maternity allowance will passport through to other benefits. It is up to each provider of those passported benefits to decide whether to extend their passported benefits to this group. Of course, in the same group of regulations we are talking about changes being made to the legal aid provision, so there is some element of a knock-on effect to that. I am grateful to all noble Lords who have spoken.
Baroness Sherlock
I am happy for the Minister to write to me but I asked about the tax treatment of the allowance and the tax credits position. He may feel free to write if that is easier.
Lord Bates
I apologise to the noble Baroness. I will follow that up in writing.
I am grateful to all noble Lords who have spoken. I thank them for their interest in the debate and take the opportunity to say that I hope we agree that the Social Security (Maternity Allowance) (Participating Wife or Civil Partner of Self-employed Earner) Regulations 2014 ensure that those women who participate in the business of their self-employed spouse or civil partner can receive maternity allowance to enable them to interrupt their activities due to pregnancy or motherhood, and that the Legal Aid (Information about Financial Resources) (Amendment) Regulations 2014 contribute to ensuring that those entitled to help with their legal aid costs receive that help, while those who can afford to pay, do so.