PolicyLens

Methodology note

Expand paid parental leave: calculation note

Scenario estimate showing gross costs, offsets and behavioural uncertainty; not an official costing.

View main policy page: Expand paid parental leave

Central fiscal result

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

Low case: +GBP 0.8bn. High case: +GBP 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 GBP 194.32 costs about GBP 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: +GBP 0.55bn
  • Non-transferable parental leave payments: +GBP 1.30bn
  • Public-sector cover costs: +GBP 0.80bn
  • Administration: +GBP 0.15bn
  • Tax and benefit offsets: +GBP 0.00bn

Central net impact: +GBP 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: +GBP 0.3bn. Scheme preparation.
  • 2027-28: +GBP 2.8bn. First full claims year.
  • 2028-29: +GBP 3.2bn. Take-up increases.
  • 2029-30: +GBP 3.5bn. Behaviour settles.

Main source groups

  • S1: S1 ONS: 594,677 England and Wales births in 2024.
  • S2: S2 HMRC: statutory family pay is GBP 194.32 weekly.
  • S3: S3 HMRC: employers can recover most statutory family pay.
  • S4: S4 Ruhm: parental leave has mixed labour-market effects.
  • S5: S5 Kleven et al.: childbirth drives gender earnings penalties.