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Maternity leave is proving a thorny issue for Government

By David Prosser

Harriet Harman faced some tough questions at yesterday's Treasury Select Committee hearing on the City's treatment of women.

Naturally, the Equalities minister wanted to argue the case for more flexible working practices, but MPs confronted her with a warning given by one of the City's most senior women at the last hearing on the same topic. Nichola Pease, deputy chairman of J O Hambro Capital Management, had told MPs that many of the rights already given to women, particularly on maternity leave, were actually damaging their career prospects.

Ms Pease believes that many employers — though they would never admit it explicitly — are put off hiring women by the maternity leave rules. Why hire a woman who is entitled to ask for a year out of the office after having a baby, if you could hire a bloke, for whom paternity leave is capped at a fortnight?

Ms Harman's argument is that maternity leave is important to the family and to society, and that it has wider economic benefits too. She is undoubtedly right, but if a significant number of employers really are discriminating against women because they're worried about the maternity leave question, we need to address that problem, rather than simply sweeping it under the carpet of progressive policy making.

In fact, there is no question that this is a problem. We may not like their answers, but time and again, research conducted with employers, particularly those who run smaller organisations, reveals that maternity leave is something that worries them — and more so since the Government extended maternity rights.

The solution, however, is not to turn back the clock, by insisting that mothers who want to keep their jobs are back at work before their babies have checked out of the maternity ward.

A much better response would be greater equalisation of parental rights. In a world where men were as likely to take extended leave to look after a young baby as their partners, employers would no longer see any benefit in not hiring or promoting women in case they fall pregnant.

In fact, the current government already has ambitions of this sort. From April 2011, fathers will have the right to take up to six months of paternity leave — three months of it paid — during the second six months of their baby's life, assuming that the mother has returned to work. The change will effectively enable new parents to split the year's parental leave that is currently available only to mothers.

Once that legislation is on the statute book, there will have to be a concerted effort to ensure that men feel able to exercise their new rights (research published this week suggests that many men don't even feel comfortable taking their full paternity leave entitlement of two weeks).

But if that is successful, we could remove the fear expressed by Ms Pease. Employers could no longer be confident that by hiring men rather than women the question of parental leave would not arise.

That, by the way, is not to say that the worries of employers should be just dismissed. The majority of businesses that worry do so not because they have some ludicrously old-fashioned view about women staying at home, but because coping with maternity rights genuinely presents them with problems.

If you run a company with, say, five employees, all of whom are crucial to what you do, suddenly discovering that 20% of your workforce is disappearing for up to a year can be quite a shock. You'll be required to continue paying them for some of that time, while also covering the cost of a temporary replacement.

Larger companies have workforces that can be rearranged more easily to provide cover. Smaller organisations are much more exposed.

Still, there are ways to mitigate that difficulty, through tax incentives and concessions on national insurance contributions, for example. Such policies will not come without cost to the taxpayer, but if we want to put a stop to discrimination against women — and fathers, for that matter — there will be a price to pay.

Mervyn King is at it again. Governments on both sides of the Atlantic may have resolved not to break up the banks, but the Governor of the Bank of England continues to insist that any reform has not gone far enough if it leaves intact organisations deemed too big to fail.

Mr King last night outlined several ways in which the problem might be addressed, but it is clear that he favours a much more aggressive intervention than any government has so far proposed.

The Governor's increasingly strident tone on this issue is entirely justified. For all the talk of outrage about the behaviour of the banks — and the focus on bonuses which, in the grand scheme of things, are a side issue — we have been remarkably reluctant to tackle the central problem head on.

For as long as the world has banks whose collapse would pose a systemic risk, the world — that is the taxpayer — must act as their guarantor or last resort. The massive scale of taxpayer support for these institutions over the past two years may have been abhorrent, but if they continue to exist in their current form, the implication will always be that we will provide such support again should it be necessary.

The arguments so far presented for not returning to legislation similar to the Glass-Steagall act repealed in the US 10 years ago do not stack up.

Chiefly, the objection seems to be that finance has grown too complicated and international for legislation enforcing a strict separation of retail and investment banking to be practical.

That, however, is a smokescreen. The real reason for the caution is that even after the crisis we have been through, the nerve and will to take on the banks is still not there.

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