Increase statutory maternity pay in line with cost of living crisis

Review statutory maternity pay in line with inflation and cost of living

Statutory Maternity Pay (SMP) is currently: 90% of your average weekly earnings (before tax) for the first 6 weeks £156.66 or 90% of average weekly earnings (whichever is lower) for next 33 weeks. This averages £7.5k p/a

The cost of living has been increasing across the UK since early 2021 and in April 2022, inflation reached its highest recorded level, and the ONS estimates that it is now higher than at any time since around 1982, affecting the affordability of goods and services for households.

Consumer prices, as measured by the Consumer Prices Index (CPI), were 9.0% higher in April 2022 than a year before

Statutory Maternity Pay (SMP) is paid for up to a maximum of 39 weeks. The first six weeks are paid at a weekly rate equal to 90% of the woman's average weekly earnings, with no upper limit. This is followed by up to 33 weeks at the lower of either the standard rate or 90% of the woman's average weekly earnings.

The standard rate of SMP is considerably higher than the level of other out of work benefits and reflects the special position of pregnant working women and new mothers.

The standard rate of SMP is reviewed annually, alongside state benefits, and is generally increased in line with the Consumer Prices Index (CPI). From April 2022 the standard rate of SMP increased to £156.66, in line with the September 2021 CPI rate of 3.1%.

When considering calls to increase the level of SMP, this must be balanced against limited resources as well as being mindful of the burden on employers, who (with the exception of small employers i.e. those with gross National Insurance liability of £45,000 or less in a tax year) are required to cover 8% of the SMP costs. If changes to the rate of SMP outside of the annual review of uprating were to be made, payroll providers and employers would need sufficient time to amend, test and distribute any system changes needed to reflect the new rate.

Government already spends approximately £3 billion a year on maternity payments. Any changes to the rate of SMP would have to take account of economic circumstances and affordability for taxpayers and could not be made without consultation with businesses and other stakeholders.

The Government has no plans to increase the rate of SMP outside of the annual review of uprating.

More broadly, the Government recognises millions of households across the UK are struggling to make their incomes stretch to cover the rising cost of living. That is why we recently announced more than £15 billion in further support, targeted particularly on those with the greatest need. This package is in addition to the over £22 billion announced previously, meaning support for the cost of living now totalling over £37 billion this year. Almost all of the eight million lowest-income households will get at least £1,200 of one-off support in total this year to help with the cost of living, with all domestic electricity customers receiving at least £400. On top of the various cost of living payments, the Household Support Fund has been extended through next winter and offers £1.5 billion to the households most in need.

Department for Work and Pensions