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Business reacts to paternity leave extension plans

Labour would double new fathers’ paternity leave entitlements, if the party gains power in the next General Election, leader Ed Miliband has confirmed.

Currently, eligible new fathers are entitled to take up to two weeks of paternity leave, paid at the lower of £138.18 a week or 90% of average earnings. In addition, fathers can take up to 26 weeks of additional leave if the mother returns to work. In April, a new system of shared parental leave will also come into effect.

Under the proposals, a Labour government would extend the paid paternity leave period to four weeks and increase pay to at least £260 a week, arguing that many fathers are reluctant to take leave because of a significant reduction in income.

However, the British Chambers of Commerce (BCC) warned that the plans amount to ‘a tax on business’.

John Longworth, BCC director general, said, ‘Although well-meaning, proposals such as this create very real costs for businesses, which can in turn lead to reduced productivity, reduced growth and fewer jobs.

‘Businesses have already had to absorb over half a dozen changes to parental leave in the last decade - with one, shared parental leave, not even fully in place yet. This constant instability raises costs for business and generates uncertainty when it comes to taking on new staff.’

Meanwhile, the Federation of Small Businesses called on political parties to consider the ‘practical implications’ of such policy changes.