Baby bonus maternity pay plan could end up costing the economy more

Government plans to scrap maternity pay and give new mums a one off “baby bonus” of £5,500 could end up costing the government and businesses more.

It has also been described as “unfair” by some new mothers.

This week, minister Oliver Letwin outlined plans to remove statutory maternity pay, citing that a one off pay would increase individual choice and “remove a bureaucratic cost from employers.”

Under the existing arrangements, women can take up to a year’s maternity leave. For the first six weeks, maternity pay is usually calculated at 90 percent of average weekly earnings. Then, for another 33 weeks, the pay either continues to be 90 percent of weekly wages, or £135.45 a week, depending on what works out cheaper.

However, throwing a £5,500 baby bonus to mothers isn’t a quick fix plan. And there are a range of things the government has failed to consider. Firstly, a lump sum could end up luring many into false financial pretences with many spending this on items for the baby – and not budgeting for the full nine months. This could, in the worst circumstances, end up with people struggling to pay their rent, mortgage and bills.

It could also put a strain on businesses, which have maternity practices in place, forcing them to send HR employees on courses and readjust how they budget.

More importantly for the government is the fact that this plan could end up costing it more as a result of many mothers not taking the full 39 week allowance.

Mothers have also criticised the scheme calling it “ridiculous”, while some have said the minister in charge of the proposal has “no morals” or “understanding,” and “obviously no children of his own.”

One mother told ChannelBiz UK: “I would earn far less if the government did it this way, and this is obviously what it wants. It’s ridiculous that we are penalised for having children and needing to have a few months to bond with them before going back to work.

“If we’re all forced to take a pay cut with maternity allowance, you can bet NHS counselling bills soar, with many of us needing treatment for postnatal depression as a result of having to hot foot it back to work earlier than we’re ready,” she said.

Another mum echoed the response: “Clearly this minister has no morals or family of his own or has too much cash in the bank,” she said. “It’s not fair to demand we live off a lump sum. With a bonus like this you’re more likely to go out and spend a huge amount on nursery things  without looking at the bigger picture.”

However, others were slightly more positive. “It would make it easier to buy things in one go instead of saving up monthly maternity pay,” one mum said.

Another said “a choice of a bonus or monthly pay would be better.”

The proposals are part of a new Children and Families Bill, which will be one of the major pieces of legislation for the next year.