Speech

Greater equality for a stronger economy: speech by the Deputy Prime Minister

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Deputy Prime Minister gave a speech on 13 November 2012 in which he announced new family-friendly policies to help working families.

Check against delivery

My purpose in government is to build a stronger economy in a fairer society - so that everyone in Britain is able to get on in life.

That’s why I was so struck a few weeks ago by new research from the Resolution Foundation. It shows that compared to the best performing countries, there are about one million women missing from the UK economy.

Women who want to work, although not necessarily full time, but who find themselves locked out of the labour market - particularly when they choose to start a family. On rates of female employment the UK ranks 15th in the OECD.

This isn’t a new problem: despite rising since the 1960s, female employment has stalled over the last decade.

It is, however, a problem we can no longer afford. Just as working women drove up living standards in the latter half of the 20th Century, after the Second World War, the evidence suggests that living standards in the first half of the 21st Century will need to be driven by working women once again.

So this absence of women from our economy is costing us dearly. If the United Kingdom had, for example, the same proportion of female entrepreneurs as the United States, we would see an extra £42bn on GDP.

Women in this country are now better qualified than men. Girls do better at school; more go to university; they are just as ambitious. And, in the words of the World Bank, gender equality is ‘smart economics’.

It isn’t just the key to a fairer society. It’s the key to prosperity too.

So the challenge I want to address today is this: when women take a break from work to have children, how do we give them a route back?

This isn’t about forcing mothers to work when they don’t want or need to, but it is about giving them a real choice.

The problem comes down to a whole range of clapped out rules and arrangements.

Whether that’s the balance between maternity and paternity leave, or the childcare that’s available, or the way our tax and welfare systems don’t fully reward part-time work.

Arrangements which assume that families are still comprised of one bread winner and one homemaker: Mum in the kitchen, Dad in the office.

Even though the reality is that, in many families, both parents work, often juggling busy lives, often working part-time, often without relatives or friends close by who can help out.

So we are shaking up those various rules and arrangements - and I’ll come onto how.

But before I do, let’s just be clear on the dilemma so many mothers - and fathers - face.

We, as a society, we have got so much better at telling young women: the sky’s the limit. Get a job, be independent, be the boss. Run as far and as fast as your talents can take you. Then, suddenly, when women hit their late 20s, their early thirties, despite all their earlier momentum, despite all the endless possibility, they are suddenly stopped in their tracks.

It’s like a rubber band snaps these women back. Because, the moment they start planning a family, their options begin to narrow.

Imagine a young couple expecting a baby, sat around the kitchen table, planning how they’ll divvy up their new responsibilities. That is a hugely exciting time. But that conversation can be extremely stressful too:

What’s going to happen to their income, and will they manage?

How much will their bills be?

How many hours does that mean they need to work?

How does childcare fit in?

They are about to embark on a monumental, life changing experience, yet it’s boiled down to some very basic sums, and so many couples feel like they are facing an impossible mathematical equation.

And it’s an equation where the answer is almost always rigged because, whichever way you look at it, the solution ends up being the mother doing more of the caring, and the father doing more of the earning.

She gets the year long maternity leave; after that, the expectation is she’ll continue to be the primary carer - so she’s the one who goes part-time.

That, very often, means she ends up on lower pay, with fewer chances for promotion, and it’s at exactly this point that the pay gap begins to widen. Just last week two separate reports reminded us what a problem that still is.

Then, as time passes, as more children arrive, women get caught in a kind of cycle: have a baby, work less, so earn less.

Earn less and - because childcare costs so much, because your partner is now earning more than you - work less.

Even when the children are grown up, working full time isn’t possible for many women. With the population living longer, we’ve seen the emergence of the so-called sandwich generation: women who spend their thirties raising young children and their fifties caring for elderly parents.

And for single mothers it can be even harder. They have a greater need to go to work, but much less help at home.

I don’t pretend there’s an easy answer. And if more traditional arrangements suit a couple, they should absolutely have the right to pursue them. But we cannot continue to shrug our shoulders at the inevitability of it all.

Many families want and need to tread a different path. We have made so much progress on greater equality between the sexes - especially in terms of enshrining equal rights in our laws, and the previous Government certainly deserves credit for that.

But we still have work to do - for the sake of men and women.

It’s heartbreaking to see fathers missing out on being with their children.

It’s heartbreaking to watch women lower their ambitions for themselves.

Equality’s promise must not end at 30.

So we have to give these parents more options; more choice; the support they need to make the right decisions for their families.

That isn’t easy when there’s no money around.

We’ve had to make some difficult cuts to public spending in order to restore stability to the economy, and families up and down the country have felt those.
But we can - and we are - spending the money that is available in ways that empower these families, and we are modernising the rules and practices that affect their ability to balance work and home.

That’s what governing from the centre is all about. It’s not up to us to tell you how to live. It’s up to us to make more of your choices possible.

And so, because of a range of Coalition reforms, when that young couple sits down to plan their family, they are going to have that conversation on different terms.

Question one: who’ll stay home when a child is born?

That can feel like a no-brainer when a woman gets a year off - 9 months of it at statutory pay - and a man gets two weeks.

So in the Coalition Agreement, we committed to creating a new system, where mothers and fathers can share leave more evenly.

As an intermediary step, we implemented the previous government’s proposal to allow fathers to take over care at five months, allowing mothers to go back to work earlier. But we wanted to go further and I announced a consultation at the start of last year.

Since then, we’ve been processing the responses, working with business and family groups, taking our time to make sure we get this right. And we have now come to a decision.

I can announce today that, from 2015, the UK will shift to an entirely new system of flexible parental leave.

Under the new rules, a mother will be able to trigger flexible leave at any point, if and when she feels ready.

That means that whatever time is left to run on her original year can be taken by her partner instead. Or they can chop up the remaining time between them - taking it in turns. Or they can take time off together - whatever suits them.

The only rule is that no more than 12 months can be taken in total, with no more than 9 months at guaranteed pay. And, of course, couples will need to be open with their employers, giving them proper notice.

I had originally been very attracted to a period of time reserved, specifically, for fathers.

The international evidence shows, overwhelmingly, that these so-called ‘use-it-or-lose-it-blocks’ of paternity leave drive take-up. So we looked at extending paternity leave - that’s the two weeks fathers get, guaranteed, after the birth.

Any extension would, of course, have to be in addition to the total time parents already get, otherwise you’d end up taking time away from mothers - which wouldn’t be right..

But, both within Government and among business, there has been real concern over the cost of doing that now. So I’ve accepted that extending paternity leave should be revisited when the economy is in a stronger state.

These are major reforms and, at a time of continuing economic difficulty, it’s sensible to do them in a number of steps rather than one giant leap.

More and more men are taking on childcare duties - or want to - and flexible leave builds on that.

The next stage will be assessing if couples are using this new freedom. So flexible leave will be reviewed in its first few years, by 2018, and extending paternity leave will be looked at as part of that.

I can however confirm that we are going to create a new legal right for men to take unpaid leave in order to attend two antenatal appointments, so that they can be more involved from the earliest stages of pregnancy.

Lots of fathers will tell you that these moments are when it can start to feel real for them.

Whether that’s at the 12 week scan - the first time they see their child on a screen - or a bit further down the track, when they can find out if they’re having a girl or a boy.

This new right means no father will ever need to miss out.

I can also announce today that parents who adopt their children will be eligible for the new flexible parental leave.

They will have equal rights to biological parents. That will end a couple of big discrepancies which currently exist.

Right now, if a couple are adopting a baby, they can only take their equivalent of maternity and paternity leave if they’ve been in a job for 6 months. If a couple are having a baby, they can take their leave no matter how long they’ve been in post. In the future, leave will be a day-one right for all parents.

And, at the moment, if a woman gives birth to a baby she gets the first six weeks at 90% of her pay. On average, if she’s working full time, that’s around £400 a week.

However, if a woman, or man, adopts a baby that’s capped at £135 a week. It’s ridiculous that adopters should be financially worse off, so we’ll make sure the primary adopter is guaranteed 90% of their salary too.

We expect around 4000 families to benefit from these changes each year.

So, back to our young couple.

Now they’ve split their leave more evenly, what will they do after the first year? So often that’s the next question. The mother wants to go back to work, but does it make financial sense?
 
How much mothers want and need to work will depend on their situations but, by raising the personal allowance threshold - the point at which you start paying income tax - we are making sure that women on low and middle incomes can keep more of the money they earn.

It’s part of a bigger drive to rebalance our tax system, shifting the burden away from work and towards wealth.

We want to get to the point where basic rate tax payers don’t pay a penny on the first £10,000 they earn. That’s going to save over 20m people around £700 every year and it’s a tax change that benefits women most.

By April we will have taken 2 million people out of paying income tax altogether - around 60% of whom are women.

Whatever your job, whether it’s low paid, whether it’s just a few shifts a week, we want that work to pay. And, as we reform welfare, we’re doing it in a way that rewards work too.

Under our Universal Credit, people will be better off in work than they are living on benefits.

And we’re taking away the penalties for people who work part-time.

Under the system we inherited, a low income mother knew she’d start losing her benefits almost the moment she went back to work.

Under the previous government, there wasn’t an expectation on lone parents to work until their children were 16 - and, by the end, even the previous government had started to bring that down.

So we are creating a system that encourages these parents to go back to work earlier, and that makes sure that working even just a few hours a week is worth it.

That is far better than not working at all, and it is very often just a start - a way of coming back to employment, with parents building up their hours  over time.

Question three: but what about childcare?

I have made it very clear that childcare is one of my personal priorities in government.

When the Coalition came together we had to make some very difficult, immediate decisions, to get on top of our towering deficit.

One of those was taking the level of childcare families can claim for under the Working Tax Credit from 80% back down to 70% - the level it was in 2006. I want to be upfront about that.

The scale of savings necessary meant that decision was unavoidable, and, as the Resolution Foundation noted in their report, longer term pressures in the economy mean tax credits are not the best way to drive up living standards.

But that reform was one piece of a much bigger jigsaw, and, despite the unprecedented pressure on the public purse, despite the huge constraints within which we are operating, we have been determined to boost childcare wherever and whenever we can.

The Coalition has delivered 15 free hours a week in a nursery or with a childminder for all three and four year olds.

We said we’d provide those hours to 2 year olds from the most-hard pressed homes too, so the 20% at the bottom of the income ladder.

And we’re going to go further - extending it to cover around 40%.

Through the Universal Credit, we’re making sure that low income mothers get childcare support if they work less than 16 hours a week.

I felt, personally, very strongly that we needed to find the extra investment for that - around £300m - and we did. That’s going to provide support for an extra 80,000 families.

Tomorrow, the Government’s new Women and Equality Minister, Maria Miller, will be talking about new start-up grants for childcare providers - to improve availability.

So we are straining every sinew to help get parents the childcare they need and wherever more money can be found, this is where I want it to go.

And it’s very important that we continue to focus on the early years - because that’s where you make the biggest difference.

Two thirds of women with young children say they’d work, or work more hours, if they had access to more childcare.

And these years are critical to a child’s development too. All the evidence shows that good early years education can have a massive impact on a child’s chances in life, especially for children from the most difficult backgrounds.

So I want parents and providers to know I’ll always defend the quality of early years education too.

And the other side of this - the bit that goes with proper, quality childcare - is more freedom for parents to manage their time.

I can also confirm today that the Government will legislate to extend the Right to Request Flexible Working to all employees.

Currently any parent with a child under 17, or under 18 if the child is disabled, can ask for more flexible working patterns. Compressed hours, flexi-time, working from home - that kind of thing. So can anyone caring for a close relative or someone within the home. But people don’t always take advantage of it, and there can still be stigma attached - especially for fathers.

So, in the Coalition Agreement, we committed to extending this right to all employees. We’ve consulted on the best way to do that and we’ll be changing the law as soon as parliamentary time allows, giving everyone this new right will help drive a culture shift in the workplace.

And it will be possible for other relatives, grandparents and even close family friends to change the way they work in order to help with childcare.

Employers will have a duty to consider all requests in a reasonable way - we’ll publish guidance on that and we’re working closely with business to get the detail right.

Ultimately this change is good for business: firms will be able to retain their best staff and it’s good for our economy. A modern workforce is a flexible workforce too.

These are real, concrete reforms:

Flexible working, boosting childcare, income tax cuts, a totally new system of flexible parental leave.

Together, they have the potential to transform that conversation, for that young couple.

Transform the opportunities available to women.

You won’t get to 30 and suddenly have to choose: motherhood or work, because we’re making the changes that will give you a route back.

That means women up and down the country realising their potential, keeping their independence, fulfilling their dreams.

It means children up and down the country benefitting from having their fathers in their lives.

It means an economy running on all cylinders.

And it means a nation reaping the rewards.

Greater equality, a fairer society, a stronger economy too.