Expand paid parental leave: calculation note

Central fiscal result

+£2.8bn - Net public-finance impact in 2027-28

Low case: +£0.8bn. High case: +£8.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Create six weeks of paid partner leave and stronger non-transferable paid parental leave.
• Baseline is current law and published official data unless stated.
• Private business costs are excluded unless they affect tax or procurement.
• Target year is 2027-28, with later years shown separately.

Affected population

• Unit is births, parents and employers.
• ONS records 594,677 England and Wales births in 2024.
• Central UK-wide birth base is about 650,000.
• Eligibility and pay rate determine fiscal exposure.

Gross impact

• UK births are scaled to about 650,000 from ONS England and Wales data.
• Six weeks statutory partner pay at £194.32 costs about £0.76bn at full take-up.
• Central adds stronger parental leave and public cover costs.
• Tax offsets are small because statutory pay is low.

Fiscal build-up, central case

• Statutory partner leave payments: +£0.55bn
• Non-transferable parental leave payments: +£1.30bn
• Public-sector cover costs: +£0.80bn
• Administration: +£0.15bn
• Tax and benefit offsets: +£0.00bn

Central net impact: +£2.8bn in 2027-28.

Behaviour and pass-through

• Low case assumes low partner take-up.
• Central assumes moderate take-up and statutory-rate pay.
• High case assumes higher replacement and eligibility.
• Employers face cover and planning costs.
• Long-run labour-supply gains are not netted off.

Phasing

• 2026-27: +£0.3bn. Scheme preparation.
• 2027-28: +£2.8bn. First full claims year.
• 2028-29: +£3.2bn. Take-up increases.
• 2029-30: +£3.5bn. Behaviour settles.

Main source groups

• Office for National Statistics, "Births in England and Wales: 2024" (2025): ONS recorded 594,677 live births in England and Wales in 2024; sizes potential parental-leave claims.
• HMRC, "Rates and thresholds for employers 2026 to 2027" (2026): Used to support the baseline, affected-population sizing or behavioural assumptions in the illustrative scenario.
• Ruhm, "The Economic Consequences of Parental Leave Mandates" (Quarterly Journal of Economics, 1998): Paid leave mandates can support employment, but long leave periods may reduce wages or employer demand; supports a mixed view of paid-leave expansion.
• Kleven, Landais, Posch, Steinhauer and Zweimuller, "Children and Gender Inequality: Evidence from Denmark" (American Economic Journal: Applied Economics, 2019): The arrival of children creates persistent gender earnings penalties through hours, participation and job choices; explains why parental-leave policy can affect gender inequality.
• Department for Business and Trade, "Employment Rights Act 2025 - Economic Analysis" (2026): The ERA economic analysis estimates around £1bn annual direct business cost before social-care bargaining; provides official baseline costs and affected groups.
• Green Party of England and Wales, "Workers' Charter 2026" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.