Maternity leave debts revealed

PregnantNearly a third of new mothers go into debt due to taking maternity leave, while one in 10 cuts their time off short to ease financial pressures, a study has suggested.

Some 28% of those surveyed had gone into the red due to their time out of work, typically accruing almost £2,500 in debts, while just a quarter felt financially prepared for motherhood, according to research from
Some 11% of mothers said they had ended their maternity leave early to boost their ailing finances, while 9% said they had been forced to reconsider plans not to return to work.

Those mothers surveyed said their net monthly household income had dropped from £2,866 on average to £1,654 typically while they had been on maternity leave. One in 10 people questioned said they had borrowed cash from relatives, while 14% had used credit cards, loans and overdrafts to help tide them over. More than 1,000 mothers took part in the uSwitch study.

Families' incomes have been squeezed by high inflation and soaring bills, at a time when people are seeing little return on their savings due to three years of record low interest rates.

A recent study from the Institute for Fiscal Studies (IFS) think tank found that families with children stand to lose £511 a year on average under tax and benefit changes which came into force this month. Shadow chancellor Ed Balls previously said the impact calculated by the IFS was proof of a "tax credits bombshell", with up to a million households losing eligibility entirely.

A Government spokesman said: "This is exactly why we have proposed changes to the current outdated maternity leave arrangements, replacing it with a new flexible parental leave model to better meet the needs of modern families and modern workplaces.

"Under the new system families can choose how to divide their leave, with fathers being able to take on more paid leave as a result. In particular this will benefit families where the mother is the main income earner in a household.

"In addition to this, we're taking millions out of tax altogether by raising the personal allowance, which is putting up to £126 cash back in people's pockets this year.

"The Chancellor has confirmed that working age benefits will go up by 5.2% in April and the child element of the child tax credit will increase by inflation from April - which could mean up to £135 extra per child. We also know that families are worried about the cost of living and so we've cut fuel duty and frozen council tax."

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