Women pregnant with first child or planning to have another baby are being hit with a new 'mummy tax' says Labour
George Osborne revealed plans to limit increase in benefits to just 1pcBut Chancellor failed to mention it will hit statutory maternity pay



00:25 GMT, 7 December 2012

Women who are pregnant with their first child or mothers planning to have another baby are among the biggest losers in the mini-Budget.

Labour yesterday accused the Chancellor of slapping a 180 ‘Mummy Tax’ on women.

In his Autumn Statement, George Osborne revealed plans to limit the annual increase in most benefits to just one per cent per year for the next three years.

Losing out: Nicola Marshall, pictured with daughter Lily-May, 8

Losing out: Nicola Marshall, pictured with daughter Lily-May, 8

Nicola Marshall, 35, will lose out when child benefits and child tax credits are increased by a maximum of just 1 per cent.

The single mother, pictured with
daughter Lily-May, eight, claims 83 a month in child benefit and 131
in working and child tax credits.

She earns 589 working 16 hours a
week as an office manager in Ightham, Kent, but cannot work more hours
or else she would lose her housing benefit of 586.

She can hardly afford her utility
bills of 100 a month, her rent is 825 a month and she still has to
find 100 for council tax and 240 for food. Miss Marshall said: ‘It’s
becoming impossible to survive. I have no spare money. I am 12
overdrawn in my account. For the past month I have not been able to do a
proper food shop.

‘If they’re not moving things in line with inflation it’s going to be impossible.’

While giving the impression the move
would largely affect the jobless, he failed to mention it will also hit
statutory maternity pay.

At present, a mother is paid 90 per
cent of her salary for the first six weeks of her maternity leave
followed by 135.45 per week for the following 33 weeks.

Typically, the weekly amount is increased every April by the previous September’s consumer prices index measure of inflation.

This would have led to a 2.2 per cent rise, equal to around 3 a week. But under the new system, it will rise by only 1.35.

Yvette Cooper, Labour’s spokesman on
women, said: ‘New mums are paying a heavy price for George Osborne’s
economic failure. This real terms cut in maternity pay is effectively a
180 Mummy Tax on working women – and it’s bad for the whole family.’

A lower rate of maternity pay is likely to push some women back to work when they would prefer to be bonding with their infant.

Labour predict maternity pay will be 180 lower for the 33-week period in 2015 than it would have been.

Fathers will also be hit because the
smaller annual rise will affect statutory paternity pay, which is paid
for two consecutive weeks at the same rate as the mother receives.

Parents will also see a rise of just one per cent in their child benefit when the three-year freeze ends in 2014.

Since April 2011, child benefit has
been stuck at a rate of 20.30 per week for the first child and 13.40
per week for each subsequent child.

VIDEO: Chancellor introduces controversial 'mummy tax' in Autumn Statement

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For parents with one child, this is the equivalent of an extra 20p a week – the average price of a nappy.

Alison Garnham, chief executive of
Child Poverty Action Group, said: ‘Despite all the talk, working
families are once again at the front of the queue for spending cuts.’

Overall, Labour says women are
picking up the bill for 867million of the 1billion of new direct tax,
tax credit and benefit changes in the Autumn Statement.

Other cuts to hit families since the
Coalition came to power in 2010 include the loss of the 250 child trust
fund voucher, which used to be paid to all babies, and a 190 health in
pregnancy grant designed to help women keep fit and eat well.

Mr Osborne used his Autumn Statement
yesterday to announce he was scrapping the link between working age
benefits and inflation, after welfare handouts rose by twice the rate of
average wages.

In the
Commons he emphasised the need to target the jobless, saying he had to
be 'fair to the person who leaves home every morning to go out to work
and sees their neighbour still asleep, living a life on benefits'.

But the one per cent rise will also hit several benefits received by people in work, including income support and housing benefit.

Both maternity and paternity pay will be subject to a below inflation rise for three years from next April.

Some of the 232,000 women who claim maternity pay every year will be hit, along with 59,000 who claim Maternity Allowance instead.

Tough cuts: Child benefit, maternity and paternity pay will rise below inflation for the next three years, Chancellor George Osborne announced

Tough cuts: Child benefit, maternity and paternity pay will rise below inflation for the next three years, Chancellor George Osborne announced

Details of the effective cut were sneaked out in the small print of the Autumn Statement.

Statutory Maternity Pay is paid by employers when women take time off to have a baby.

It is paid for 39 weeks, with the
first six weeks at 90 per cent of usual salary and then 33 weeks at
135.45 a week. From April, the amount will increase by just 1.35 a
week rather than the index-linked rate of around 3.

The same rate is paid under Maternity
Allowance, which is awarded to those who do not qualify for statutory
maternity pay – often nannies and those who are pregnant when they take a
new job.

Expectant mothers can claim the allowance as soon as they have been pregnant for 26 weeks.

Labour Treasury spokesman Catherine
McKinnell said: ‘In the Budget the small print was the granny tax and in
the Autumn Statement the hidden detail was George Osborne’s mummy tax.

‘They are hitting millions of working families and mums taking a break from their job to look after their newborn baby. And all on the same day that millionaires get an average tax cut of over 100,000.’

Yesterday the Chancellor said the long freeze will end in two years’ time, but he will reward families with a rise of only 1 per cent for the following two years.

Autumn Statement: Mr Osborne admitted higher government borrowing and lower-than-expected economic growth meant spending cuts and tax rises designed to balance the books would have to be extended by an extra year, to 2018

Autumn Statement: Mr Osborne admitted higher government borrowing and lower-than-expected economic growth meant spending cuts and tax rises designed to balance the books would have to be extended by an extra year, to 2018

For the second child, the rise is equal to just 13p a week.

George Osborne’s decision was criticised by experts who said the paltry increase will hurt families at a time when millions are struggling to make ends meet.

Child benefit, typically paid to the mother, is relied upon by families to balance their stretched budget, from helping to pay for their weekly food shop to buying a child’s new shoes.

Until the Coalition came to power in May 2010, it used to increased generously each year, with the rise linked to the retail prices index measure of inflation.

But the three-year freeze followed by two years of tiny rises has wiped out the spending power of child benefit, leaving a black hole in the family budget.

Some elements of the complicated child tax credit payments will also rise by only 1 per cent for three years from April 2013.

A spokesman for the StepChange Debt Charity said: ‘Family budgets have been put under extreme strain in recent years. Stagnant wages and rising living costs are pushing more families towards financial breaking point.

‘The changes to child benefit will hit many families at a point when they are already struggling to make ends meet.’

Child benefit, which used to be paid to every family with young children in Britain, has already become embroiled in controversy.

From January 7, families with at least one parent earning more than 50,000 will lose some of the benefit. It is being axed completely for those with at least one earner on more than 60,000.

Around 1.2million families will be affected by the move, but yesterday’s announcement by the Chancellor means those families who still get child benefit are now under attack as well.

Brendan Barber, general secretary of the Trades Union Congress, said: ‘This Chancellor has presided over one of the biggest ever squeezes on the budgets of working families.

‘Small gains on fuel and the personal allowance are dwarfed by the swingeing cuts to child benefit and tax credits that many millions of families rely on to get by. For all the Westminster talk of fiscal rules and structural deficits, it is money at home that matters to families, and that’s where they’ve been hit harder than anyone else.’

Robin Williamson, technical director of the Low Incomes Tax Reform Group, described the rise as ‘not generous’.