Small firms fear new maternity policy

Employers' representatives voiced alarm today over Labour proposals for new rights for parents which could see paid maternity leave extended from six to 12 months.

Employers' representatives voiced alarm today over Labour proposals for new rights for parents which could see paid maternity leave extended from six to 12 months.

The Trade and Industry Secretary Patricia Hewitt floated the idea in a policy document which will be discussed at next week's Labour conference and may form part of the party's manifesto for the forthcoming general election.

Under her proposals, new fathers could see their statutory paternity pay in the two weeks after the birth of their child increased from around £100 a week to 90 per cent of their salary.

And mothers could enjoy maternity pay for the full first year of their child's life. At present, they are entitled to six months' paid leave - at 90 per cent of salary for the first few weeks, then £100 a week for the remainder - and six months unpaid.

Ms Hewitt's proposal would extend the £100 weekly payment for the rest of the year. And it would also be payable to fathers, so that they could spend time with their children while the mother goes back to work.

Ms Hewitt told the Financial Times: "I have no doubt at all that a centrepiece of the manifesto will be a package of support for hard-working families, and we will be campaigning on that as a big part of the election."

In a pamphlet for the Institute for Public Policy Research setting out her ideas, Ms Hewitt accepted that Labour's second term had "lacked the same strength" as its first four years in power, and called for a "radical, policy-rich manifesto".

Prime Minister Tony Blair made clear in his speech to the TUC last week that the work-life balance would be a key policy area for the third term he hopes Labour can win.

An aide to Ms Hewitt stressed that her proposals were not yet party policy. Any changes to parents' rights at work would come after 2006 and following extensive consultation with unions, employers and other affected parties, he said.

Susan Anderson, director of human resources policy at the Confederation of British Industry, told the BBC: "It's all very well to say we want more and more family-friendly rights but if we don't consider the impact on the employer then there aren't going to be jobs for them to go back to."

"I'm sure firms, particularly smaller firms, are going to wonder who's going to pay for it and how they are going to cope with further absences from work.

"We need to think about the impact on firms.

"There will be costs - not just because of the costs of the pay itself but the costs of employing temporary workers and the uncertainty that arises when you don't know whether somebody's going to come back after six months or a year."

Nick Goulding, chief executive of the Forum of Private Business, said: "Smaller employers will be worried about bearing a disproportionate burden from these proposals and will view them with a sense of dread.

"In addition, small firms face high indirect costs caused by the disruption created by this sort of proposal - such as increased leave and having to hold jobs open for staff who may never return.

"Although the Government is saying it will meet the costs, business will be highly sceptical of how these proposals will be funded in the long term. It should be remembered these proposals come on top of a whole raft of additional obligations imposed by the Government over the last five years. Employers should be allowed to take stock of these changes without having more pressure piled on them from politicians, most of whom have never created a real job in their life."

But TUC general secretary Brendan Barber said: "Patricia Hewitt has put the policies agreed at Labour's Policy Forum at Warwick into a compelling case for a new and radical focus on the workplace in a third Labour term. Employers may complain, but this is a compendium of vote-winners."

Fathers Direct, the national information centre on fatherhood, today welcomed Patricia Hewitt proposals, but expressed disappointment that she had stopped short of advocating the so-called "Daddy month" - four weeks paid paternity leave taken flexibly in the early years of a child's life.

Director Duncan Fisher said: "We warmly welcome Patricia Hewitt's support for increasing the level of statutory paid paternity leave. Currently it is too low, so many families cannot afford to take it.

"However, we had hoped that she would also support introduction of the Daddy month, which has been so clearly successful in increasing the long-term role that fathers play in their children's lives.

"We hope that Ms Hewitt will revise her proposals given the weight of research showing that the children of involved fathers do better at examinations, are less likely to get into trouble with the police and enjoy long-term mental health benefits."