US Edition Fathers will be able to take time off work and claim state benefits throughout the majority of the first year of their baby’s life if the mother returns to employment.
This will allow the main household earner, if the mother, to return to work after just a fortnight.
The Daily Telegraph can disclose that the introduction of the joint allowance will be delayed until October 2015, following a Cabinet disagreement over the impact of the scheme on hard-pressed businesses.
The system of maternity allowance will be renamed “flexible parental leave” to make it clear that both mothers and fathers are entitled to the state support.
To address fears from women’s charities, mothers will still receive the assistance automatically unless they apply to transfer it to their partners. It is understood that mothers will only be required to take the first fortnight of leave after giving birth, for health reasons, after which fathers can take the paid time off work.
The Prime Minister and his deputy will announce the scheme formally during the last week of the month as part of a series of initiatives intended to demonstrate that the Coalition parties are working well together.
Official figures show that 420,000 families every year could benefit from the proposal, but estimates from the Department for Business, Innovation and Skills, presented to the home affairs sub-committee of the Cabinet last month, predicted only up to 13,500 couples would find it economically beneficial to switch the allowance from mother to father.
The Department for Work and Pensions has conducted a feasibility study on how it will police the payment to ensure parents do not claim simultaneously.
It will have to build a new IT system that is expected to cost £22 million.
A senior government source said: “This is being introduced slowly and with great care to ensure that it does not undermine business during the difficult economic times.
“But it was a Coalition pledge and it is important to both the Prime Minister and the Liberal Democrats that both parents should be supported to spend time with their new children.”
The Prime Minister has said previously that it was “completely unacceptable” that some employers would not hire women of child-bearing age because of maternity rights. He said that a “moral” way of addressing this problem was to make shared parental leave the norm.
Mr Cameron has struggled to appeal to younger women and Downing Street has recently focused on family-friendly policies designed to improve his popularity with mothers. The Coalition agreement commits the Government to becoming the “most family friendly in Europe”.
One Conservative minister described the joint parental allowance as a “crazy” proposal in the current economic environment.
“The last thing businesses, particularly small businesses, should be saddled with at the moment is yet another round of regulation and uncertainty,” the minister said. “They should just be left to get on with building their companies and helping get the economy going.”
The Daily Telegraph understands that the scheme was blocked initially in Cabinet by Iain Duncan Smith, the Work and Pensions Secretary, and Oliver Letwin, the Cabinet Office minister. Theresa May, the Home Secretary and Mr Clegg were keen to push ahead.
Vince Cable, the Business Secretary, was sceptical initially because of concerns that it could be seen as anti-business, but now believes the impact on enterprise will be minimal.
His department presented projections to other ministers which claimed that the burden on business would be marginal, with an £8 million up-front cost and up to £3.6 million of ongoing annual costs. However, these are expected to be challenged by business groups. The final deal was agreed by senior ministers in recent weeks and the details were resolved at a meeting of the Cabinet sub-committee before the Conservative Party conference.
The scheme will be brought forward in “early 2013” in a Children and Families Bill to be presented to Parliament.
Under the current system, mothers are legally entitled to 90 per cent of their earnings for the first six weeks after birth. They can then receive a maternity allowance — equivalent to either 90 per cent of earnings or £135.45 a week, whichever is the lowest — for an additional 33 weeks. Some employers offer more generous terms.
Fathers are entitled to two weeks of paternity leave and mothers can transfer their leave to their partners after the first six months.
The new system will mean that either the mother or father can claim parental leave and the allowance after two weeks.
A government source said: “This has taken a long time to develop as the system has to be robust enough to prevent fraud, with both parents claiming.
“It was decided to keep the current default system of assistance being given to women. There are also other safeguards to prevent vulnerable mothers, or those in families which do not function well, from losing their entitlements. Absent fathers will not benefit.”
In an interview with a women’s magazine over the summer, when asked about whether it was unacceptable for employers to reject job applications from women of child-bearing age, Mr Cameron said: “It’s completely unacceptable and one of the ways to make it not only morally, but economically, unacceptable is to have more shared parental leave.
“We’ve been consulting on this and we’ll be announcing soon that we’ve got a good answer.
“We’ve come up with a good compromise. We’ve been looking at the issue of how much paternity leave there ought to be, but I feel that the most important bit is the sharing out.”
Ministers are braced for a backlash against the plan from businesses already struggling to cope with regulation.
A scheme to force companies to offer pensions to their workers was introduced this month, and the Government has a “one in, one out” rule regarding business red tape and regulation.
At the Conservative conference this week, George Osborne, the Chancellor, announced a scheme that will
allow workers to waive employment rights in exchange for shares in their employers.