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Reforming European Welfare StatesGermany and the United Kingdom Compared$

Jochen Clasen

Print publication date: 2005

Print ISBN-13: 9780199270712

Published to Oxford Scholarship Online: February 2006

DOI: 10.1093/0199270716.001.0001

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(p.211) Appendix F: Major reforms in family policy, 1980–2003 (UK)

(p.211) Appendix F: Major reforms in family policy, 1980–2003 (UK)

Reforming European Welfare States
Oxford University Press

(p.211) Appendix F:

Major reforms in family policy, 1980–2003 (UK)




  1. Child benefit: cut in real value.

  2. Child dependency additions to national insurance benefits, changes in up‐rating method results in decline in real value in this and subsequent years.

  3. Family wage subsidies: increase in Family Income Supplement (FIS) above inflation.


  1. Child benefit: Cut in real value.


  1. Maternity Grant: instead of contributory condition, eligibility for one‐off (£25)

  2. Maternity Grant becomes based on residency only (26 weeks in the year preceding the claim). Any payment of 18‐week Maternity Allowance unaffected by this.

  3. Child benefit increases in real value.


  1. Child benefit increases in real level.


  1. Child benefit suffers gradual decrease of its level (until 1991) due to insufficient up‐rating.

  2. Contributory Maternity Allowance fixed at £27.25 (paid for 18 weeks), with a reduced rate for those with partial contribution records


  1. Maternity Grant: increases in value (from £25 to £75) but becomes means‐tested.


  1. Maternity Pay: Previous Maternity Allowance and Maternity Pay amalgamated in Statutory Maternity Pay (SMP), administered by employers and reimbursed by the state. SMP payable in two rates: a higher rate of 90% of earnings for 6 weeks, followed by a flat‐rate lower benefit, the latter cut back due to making it subject to taxation and removing additions for family dependants.

  2. FIS to be replaced with Family Credit (FC). Switch from gross to net income as the basis for assessment, higher capital savings; minimum qualifying hours dropped to 24 per week; alignment of child additions and threshold above which benefit starts to be withdrawn under FC with those applicable in Income Support. Child care costs to be deducted (from part‐time earnings) in the calculation of benefit.


  1. Child benefit frozen.


  1. £1 per week increase in child benefit and benefit to be indexed in line with inflation.


  1. FC: definition of full‐time work reduced from 24 to 16 hours/week.


  1. Maternity pay/leave: Following an EU Directive, introduction of 14 weeks minimum maternity leave to all pregnant employees, regardless of length of service or hours of work.


  1. SMP entitlement for higher rate after 6 months continuous employment (2 years previously). Value of lower rate (12 weeks flat‐rate) increased by £3.70 (to correspond to sickness pay).

  2. Maternity Allowance (paid to women who do not qualify for SMP, but earn more than Lower Earnings Limit) increased to same level as lower rate of SMP (increase of £7.95).

  3. Maximum period for which women must have been employed to be eligible for Maternity Pay increased from 52 weeks to 66 weeks.

  4. FC: introduction of child care disregard (for child care costs of up to £40 per week)—known as child care allowance.


  1. FC: child care disregard increased to £60 per week. Claimants of FC working 30 hours per week or more receive £10 bonus.

1997 Labour

  1. FC: child care disregard increased to £100 per week (for 2 or more children).


  1. FC (for a child under 11) increased by £2.50 per week.


  1. Child Benefit: increase of 26% (20% above inflation). FC replaced by Working Families Tax Credit (WFTC), earnings threshold increased (from £79 to 90), the ‘taper’ (withdrawal rate) lowered (from 70% to 55%), increased credits for children and child care credit (covering 70% of weekly child care costs up to £100 (later £135) for one child; £150 (£200) for two or more children.

  2. Maternity/parental leave: unpaid parental leave introduced (13 weeks per parent and child up to age of 5); 2 weeks unpaid parental leave for fathers.


  1. Maternity leave increases to minimum of 18 weeks ordinary maternity leave.

  2. Maternity Allowance widens coverage to women earning below Lower Earnings Limit but conditional on employment or self‐employment for at least 26 weeks (in last 66 weeks) and an earnings test (average earnings of at least £30 a week).

  3. Sure Start Maternity Grants replace Maternity Grant. Grant of £200, rising to £300 in Autumn 2000 (conditional on consultation with a health visitor/professional).


  1. Children's Tax Credits (CTC) replace married couple's allowance and additional pension allowance, taking away a tax break for couples without children and doubling tax break for parents with at least 1 child under 16. CTC includes a tax withdrawal rate of 6.7% for higher rate (40%) tax payers.

  2. Basic rates of credit in WFTC increased by £5 per week.

  3. Child care limits in tax credits increased to £135 and £200 per week.

  4. Children's personal allowances in IS and JSA increased by £1.50 from October 2001.

  5. Sure Start Maternity Grant (means‐tested) to increase to £500 from April 2002


  1. Child personal allowances in IS and JSA (income related) increased by £3.50.

  2. SMP (lower rate) and Maternity Allowance increase from £60.20 to £75.


  1. Working Tax Credit to replace WFTC—children no longer basis of eligibility.

  2. Introduction of Child Tax Credit amalgamating previous children's tax credit and child credits in WFTC, plus child additions to means‐tested and non‐means‐tested benefits, into a combined single payment.

  3. Creation of child trust funds (‘baby bonds’).

  4. SMP (lower rate) and Maternity Allowance increases from £75 to £100.

  5. Statutory Maternity Pay and Maternity Allowance period extended from 18 to 26 weeks.

  6. Introduction of Statutory Paternity Pay (SPP)—same work conditions as SMP (26 weeks employment; earning above Lower Earnings Limit), payable to fathers at lower rate of SMP for 2 weeks.

(p.212) (p.213) (p.214)