Small firms hit back over Ed’s paternity leave plans

SMALL businesses have attacked Ed Miliband’s plan to double the length of automatic paternity leave, saying they would struggle to cope.

Labour announced yesterday that it would increase paid leave for new fathers from two to four weeks, as well as putting up statutory paternity pay by more than £120, to £260 a week.

But the Federation of Small Businesses said firms would have to shoulder the expense of getting staff in to cover for fathers – a burden many may be unable to afford.

And the British Chambers of Commerce said the plan would amount to a ‘tax on business’.

The criticism follows a week of woe for Mr Miliband, who has been attacked by captains of commerce from the head of Boots to the former boss of Marks and Spencer.

John Allan, of the Federation of Small Businesses, said of the latest pledge: ‘It’s important political parties understand the practical implications of policy changes.

‘Altering paternity leave so soon after introducing shared parental leave has the potential to cause confusion. We’d like to see shared parental leave have a chance to bed in before seeking to give dads extra time off.

‘For small businesses in particular, extending paternity leave from two to four weeks makes it much more likely that they will have to buy in replacement staff . . . a cost some firms will struggle to afford.’

Christian May, of the Institute of Directors, said: ‘The very firms likely to be hit hardest by this new regulation will be the ones who are already best placed to manage parental leave without heavy- handed legislation. Small and medium- sized businesses often come to arrangements that suit both parties.’

He added: ‘Politicians need to realise that each new whim, each new policy announcement, has a major impact on somebody’s business somewhere down the line. New rules would simply mean more bureaucracy.’ Yesterday, Labour’s welfare spokesman Rachel Reeves dismissed the criticism – saying ‘good’ businesses would welcome the move.

She told BBC Radio 4’s Today programme: ‘This is exactly what people used to say about maternity leave, that it was a big burden on businesses. But the reality is, what good businesses know, is that it is really important to keep women in the workplace once they have children and not let them drift off because they can’t manage work and family life. That’s increasingly the case for dads.’

She added: ‘Good employers like Asda, National Grid and Citibank are already giving more than the statutory paternity leave.

‘What good businesses know is that unless they give that flexibility to mums and dads, they are likely to lose their best employees as they will go to a business that does value them, or they will sadly drop out of the workforce all together.’

A new system of shared parental leave, championed by the Liberal Democrats, will come into force in April. Nick Clegg is also proposing the introduction of a month’s paternity leave after a child’s birth on a ‘use it or lose it’ basis.

Labour said its proposal would cost £150million a year, paid for by savings in tax credits. It said these would be created by another party pledge, to extend free childcare for parents of three and four-year-olds so that such families would not rely on benefits to pay for care.

But Mark Littlewood, director general of the Institute of Economic Affairs, said: ‘Whilst wellintentioned, Labour fail to understand that companies, especially smaller businesses, can’t afford to shoulder the ever-growing financial burden which accompanies policies such as extended paternity pay.

‘Whilst those about to become fathers will be the winners of this policy, everyone else loses.’

Elizabeth Duff, of the National Childbirth Trust, welcomed the move, saying: ‘The more that dads are able to engage with their baby in the early days, the better their bond will be, so we want to see all political parties committing to policies like this.’