Is support for working parents hitting the right spot?

Successive governments have made significant public policy changes over the past few years to improve equality for working parents, but how effective are some of these changes proving to be, and what future developments are in the pipeline? A new report released by the CIPD: Labour Market Outlook: working parents, examines the views and experiences of over 1,000 employers in relation to working parents.

Changes needed to Shared Parental Leave

Shared Parental Leave (SPL) was a real milestone for agile working and equality when it was introduced two years ago. In theory, it gives new parents much more choice and flexibility about leave arrangements, particularly new fathers who want to play a bigger role in their child’s early life. However, on average, just 5% of new fathers and 8% of new mothers have opted for SPL since its introduction, according to the survey. The complexity of the rules and the significant financial gap between maternity pay and shared parental pay in the early weeks are clearly a barrier to uptake for many employees.

A key factor in working parents’ decision will be whether or not their employer enhances statutory shared parental pay (ShPP) to a similar level to that of maternity pay. Statutory maternity pay (SMP) is paid to eligible female employees for up to 39 weeks and comprises 90% of the employee’s average weekly earnings (before tax) for the first 6 weeks, followed by £139.58 per week or 90% of the employee’s average weekly earnings (whichever is lower) for the next 33 weeks. However, ShPP is paid for 37 weeks at the lower of the statutory prescribed rate (currently set at £139.58 for statutory maternity and paternity pay) or 90% of the relevant parent’s normal weekly earnings (subject to the lower earnings limit). The remaining 13 weeks of SPL are unpaid.

This means that ShPP is paid at the lower level throughout the leave period and, unlike SMP, there is no provision for the first six weeks to be paid at 90% of the parent’s actual weekly earnings. This is the case even if the mother returns from maternity leave after only two weeks, during the period where the higher level of maternity pay would have been available to her. Of course, some employers may opt to enhance the level of ShPP they pay to their employees, but there is no statutory requirement for them to pay it at the same rate as any enhanced maternity pay.

A second problem preventing wider take up of SPL is the complexity of the application process, which is proving challenging for employers and HR professionals. In a short, supplementary survey of around 100 CIPD members, 72% agreed that the process and legal requirements of SPL were either ‘complicated’ or ‘very complicated’, and some admitted that their organisation wasn’t actively promoting SPL to employees as a result.

Employers – and employees – who may have been deterred from taking advantage of SPL because of the complex rules associated with its implementation will have welcomed the intention to consult on their simplification in the consultation. The CIPD looks forward to this consultation as an opportunity to improve the implementation of the current SPL and pay provision in the hope that a greater number of working parents will feel able to take advantage of the potential flexibility it could afford them. So far, the low take-up of SPL by new dads will do nothing to shift the cultural perception of childcare being seen as a ‘women’s issue’.

Changes afoot for childcare support

The survey also considered the Government’s existing childcare provision. Currently, all three and four-year-olds are entitled to 570 hours of free childcare a year (typically taken as 15 hours a week for 38 term-time weeks), but there is no childcare funding for the majority of 0-2 year olds. The Government plans to extend the entitlement to 30 hours of free childcare for working parents of three- and four-year-olds from 2017, but the continued absence of funding for young children from birth to two (aside from disadvantaged two-year-olds) does not encourage women to return to work immediately after maternity leave.

The survey found that over two-thirds of employers (68%) agree that the participation rate of women with young children at work would improve to a large (30%) or some extent (38%) if the same level of free childcare support was available for 0-2 year olds. As a result, the CIPD is also calling for a review of the Government’s childcare provision, to ensure that parents with young children have better opportunities to return to work, and that valuable talent is not lost from the labour market.

Any investment to support working parents with childcare costs and their ability to work should be a positive step. However, there could be unintended consequences of the Government’s policies in this area. For example, an inquiry into the free entitlement to early years education by the House of Commons Public Accounts Committee highlights a range of risks identified by the National Audit Office to the successful implementation of the new 30-hour entitlement. These include concerns by childcare providers about the levels of funding that will be available and the possibility that providers could choose to offer additional hours to three- and four-year-olds by reducing the number of places offered to disadvantaged two-year-olds. The inquiry notes that this ‘would jeopardise the Department’s aims to improve educational and other outcomes for the very children who could benefit most from free childcare’.

A survey by the Pre-school Learning Alliance supports this perspective, with half of childcare providers fearing forced closure as a result of the 30-hour free entitlement offer for three and four-year-olds. It also found that half of providers would offer fewer places to children of other ages if they did deliver the extended entitlement.

From early 2017, the Government also plans to launch Tax-Free Childcare (TFC), its new initiative to help working parents with the cost of childcare. Described as a ‘top up’ scheme and operated by the individual through an online account, for every £8 a parent pays in, the Government will pay in an additional £2 (up to £2,000 top-up per year per child). According to our survey findings, the overwhelming majority (69%) of respondents were unaware of the new TFC scheme coming on stream very soon, with the remaining 31% saying they were aware of it. As there is only a short amount of time before the scheme is introduced, employers and working parents need to start planning now for its introduction. Clearly, the Government has some work to do in raising awareness and understanding of the new arrangements. Further, a national childcare strategy would help to ensure that its various initiatives and support for working parents would achieve maximum impact across the workforce.