On 13 June 2006, 1 announced the launch of a consultation on proposals to increase the holiday entitlement from four weeks to 5.6 weeks, subject to a maximum entitlement of 28 days, implementing the Government's manifesto commitment to make paid leave for bank and public holidays additional to the existing statutory entitlement. The consultation attracted considerable attention and a healthy number of responses.

Today I am publishing the Government's response to that consultation, along with a further consultation on draft regulations. The initial consultation sought views on the phasing of the introduction of the additional holiday entitlement. Based on the views expressed in the consultation and in order to minimise the administrative costs of introducing the additional holiday, the Government propose that the holiday entitlement will be increased in two equal phases from 1 October 2007 and 1 October 2008.

The consultation also sought views on whether there should be an ability to carry unused holiday entitlement over to the following holiday year, and whether there should be the ability to provide payment in lieu of taking leave. Many businesses already provide the ability to carry leave over and we intend to allow them to continue to offer that flexibility. Enabling payment to be made in lieu of taking holiday, however, is contrary to our overall intention—to enable people to spend more time away from the workplace—and may be open to abuse. We do not therefore intend to allow payment in lieu of taking the additional holiday entitlement except on termination of employment.

To further identify the sectors most likely to be affected by these proposals, we have conducted a detailed research project and the findings are presented in the partial regulatory impact assessment that accompanies the further consultation. Whilst the overall cost burden is only around 0.4 per cent. of the total wage bill, we recognise that the impact on individual businesses may be more significant.

The further consultation will run until 13 April and we aim to lay the draft regulations before the House for approval by affirmative resolution in early summer. Copies of the Government response to the initial consultation, the further consultation document and the partial regulatory impact assessment have been placed in the Library.