Maternity Allowance and Universal Credit | CPAG

Maternity Allowance and Universal Credit

Date: 
18 October 2019

Moore and Others v Secretary of State for Work and Pensions CO/4081/2019.
On 18 October 2019, CPAG issued judicial review proceedings challenging the treatment of maternity allowance (MA) as unearned income in the calculation of universal credit (UC) awards.

CPAG is acting on behalf of a single mother and her daughter, who changed jobs shortly after finding out that she was pregnant, with the intention of having more predictable hours and better career prospects. She stopped working a month before her daughter was born, but did not meet the qualifying conditions for statutory maternity pay (SMP), as she had not been with her employer for the required length of time. She therefore made a claim for MA. After her daughter was born, she was unable to get by on MA alone and so made a claim for UC. Her MA was treated as unearned income and so was deducted from her maximum UC award pound for pound, leaving her no better off than if she had no entitlement to MA. Conversely, if she had been entitled to SMP, this would have been treated as earned income, so she would have benefited from the work allowance and the 63% taper when it was deducted from her UC award This would have left her better off by £419.19 per month.

A number of women will be affected by this issue and the factors that prevent a woman from being eligible for SMP and therefore having to claim MA can be completely arbitrary. For example, a woman who is made redundant before the 15th week prior to her due date will have to claim MA, regardless of the length of time that she has been with her employer. Women who are sick during their pregnancies and whose incomes fall below the lower earnings limit as a result will have to claim MA instead of SMP, as will women on zero hours contracts, or seasonal workers, who have not earned enough during the relevant period. Self-employed women have no option but to claim MA during their maternity leave, as they are not entitled to SMP. All of these women, if they claim UC in addition to MA, will be significantly worse off than if they were entitled to SMP.

SMP and MA are paid for the same purpose, which is to provide a woman with financial support to enable her to exercise her right to maternity leave. The first ground of the challenge is therefore that the difference in treatement between women claiming SMP and those claiming MA is discriminatory. Women claiming SMP are not only better off financially, but also in terms of quality of family life, as a woman under financial pressure may be less inclined to take her full maternity leave and to return to work to ease the difficulties. CPAG argues that the difference in treatment of these two groups of women, and its discriminatory effect, is not justified and breaches Article 14, read with Article 8 and Article 1, Protocol 1.

The second ground of the challenge is common law unreasonableness. The detrimental effect of this policy on women claiming MA and their children is not necessary in order to acheive the aims of the SSWP and actually harms their aim of ensuring that work pays and is seen to pay, as a woman claiming MA is no better off by being an employee or meeting the work requirements for MA.

The third ground of the challenge is a failure to exercise the public sector equality duty, as required by s149 of the Equality Act when dealing with protected characteristics, which includes pregnancy and maternity. In the Equality Impact Assessment carried out in November 2011, the stated intention is for UC to "draw together the approach taken by existing benefits and tax credits", in respect of maternity payments. However, the treatment of MA under UC is significantly different to its treatment under tax credits, where a woman receiving MA was treated as being in remunerative work in order to qualify for working tax credits, but the MA was disregarded in full in the calculation of awards, leaving women claiming MA in a similar position to those claiming SMP. The failure to consider the difference between the tax credit system and the current UC system in their treatment of MA implies that the PSED was not exercised with sufficient rigour.