To ask Her Majesty's Government why maternity allowance is not treated the same way as statutory maternity pay for the purposes of calculating Universal Credit; what estimate they have made of (1) the cost of doing so, and (2) the number of women claiming maternity allowance who are affected by that disparity, during the COVID-19 pandemic.
15 May 2020
It is a longstanding principle of the welfare system that benefits are not paid to claimants with income available from other sources to support themselves. Where claimants have income available to meet their everyday living costs, such as Maternity Allowance (MA), it is right that their entitlement to Universal Credit (UC) is adjusted accordingly. The general principle is that unearned income, which is provided to meet everyday living costs, is taken into account in the calculation of UC. Where claimants have income available to meet their everyday living costs, their benefit entitlement is adjusted accordingly. This is particularly the case where there would be double provision of social security benefits and the same approach is applied to Jobseeker’s Allowance and Employment and Support Allowance.
The difference in the treatment of Statutory Maternity Pay (SMP) and MA in UC is not unintended and is a consequence of the simplification of the treatment of earned income in UC. One of the simplifications introduced by UC is for information on people’s earned income to be collected automatically through revenue information which we receive from Her Majesty’s Revenue and Customs. This enables a claimant’s UC entitlement to be reassessed quickly in response to any changes in earnings.
As statutory benefits (such as SMP) are paid by employers, and are an earnings equivalent, they are treated as earned income. However, other benefits paid to meet living costs, such as MA will continue to be taken fully into account in the UC assessment, as they have been with other legacy benefits.
This simplification in the process of the treatment of earned income in UC is essential to make it responsive to changes in a claimant’s circumstances, and has been key to the vital role it has played in supporting people through this pandemic to date.
The Department has made no estimate of (1) the cost, and (2) the number of women affected by the disparity, in the treatment of MA and SMP for the purposes of calculating UC, during the COVID 19 pandemic.