What would 'Father's Month' leave mean for businesses?

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What would 'Father's Month' leave mean for businesses?

Paid paternity leave would be extended from two weeks to four under a Labour government, according to party leader Ed Miliband - but what would that mean for businesses and the wider economy?

In theory, the so-called "Father's Month" policy is to be applauded. Few would disagree that fathers deserve more time off after the birth of a child; it could also be argued that new dads are unlikely to be at their most productive if forced to go back to work in the third week after the birth of their baby.

However, when it comes to the likely effect of such a policy on the business world, opinion seems to differ markedly - particularly given that the plans would also see paternity pay rise by £120 per week to £260 a week.

On the one hand, the Institute for Public Policy Research (IPPR) thinktank suggests any costs from the move could be absorbed relatively easily. Based on the estimate that take-up would increase from 55 to 70 per cent, the organisation predicted an overall economic impact of £150 million a year - money that Mr Miliband said could be covered by making savings to tax credits.

Announcing the proposals, the Labour leader said millions of families had benefited from the last Labour government's decision to introduce two weeks of paid paternity leave. 

But he pointed out that not all new families are taking advantage of the existing measures. "The money isn't great and too many dads don't take up their rights because they feel they have to go back to provide for their family."

However, while Labour says the costs could be met without too much hassle, the British Chambers of Commerce seems less convinced. 

Director general John Longworth accepted that the plans are well meaning, but stressed that they effectively amount to a "tax on business".

He added: "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."