Draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017
(7 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Women and Equalities (Caroline Dinenage)
I beg to move,
That the Committee has considered the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.
It is an absolute pleasure, as ever, to serve under your chairmanship, Sir David. Section 78 of the Equality Act 2010 delegates powers to Ministers to make regulations requiring employers in Great Britain with at least 250 staff to publish information showing whether there are differences in pay between their male and female employees. These regulations are the first use of the power under section 78, because this Government are committed to tackling the pay inequality that has existed between men and women for far too long. That is why we are taking bold steps to tackle the gender pay gap. That is not just good for women; it is good for the country as a whole. McKinsey estimates that eliminating work-related gender gaps could add £150 billion to our annual GDP.
The gender pay gap is not about men and women being paid differently for the same job—unequal pay has been prohibited since 1975—but is a measurement of the difference between men and women’s average earnings. We will continue to implement a wide range of measures to tackle the wider causes of it. The UK’s overall gender pay gap has fallen over time. Ten years ago it was 25% and, according to the latest Office for National Statistics figures, today it stands at about 18.1%. While that is the lowest on record and it is moving firmly in the right direction, progress is still far too slow and voluntary reporting has not led to sufficient progress. Following two public consultations and extensive stakeholder engagement, the Government are delivering our manifesto commitment to require large employers to publish a range of complementary gender pay gap measures every year, starting this year.
Publishing the difference between the average hourly rate of pay for male and female employees, calculated using both mean and median averages, will give employers a better understanding of their gender pay gap. Bonus payments are a significant element of overall remuneration in some sectors, and ONS figures show that more than £44 billion was paid out in bonuses across the UK economy during the 2015-16 financial year. Publishing the difference between the average bonuses paid to male and female employees will encourage employers to ensure that those practices are fair and transparent. Fewer women than men are employed in senior and higher-paid professions. Requiring employers to report on the proportions of men and women in each quartile of their pay distribution will ensure that they consider whether there are any blockages to women’s progression within an organisation. That could be valuable in making comparisons with competitor employers that are actively nurturing female talent.
The principle of greater transparency on gender pay differences has cross-party support. It will incentivise employers to analyse the drivers behind their own gender pay gap and explore the extent to which their own policies and practices may be contributing to it. The regulations are, of course, only one element of the Government’s strategy to meet the needs of women at every stage of their working lives, and by working together we can make real progress in closing the gender pay gap.
Sarah Champion (Rotherham) (Lab)
It is indeed a pleasure to serve under your chairmanship, Sir David. I think that this is the first time I have done so. This is a historic day. The Minister talked about taking bold steps. I agree, and am delighted that she has taken bold steps down a path that Labour laid before her.
It has been almost 50 years since the women sewing machinists at Ford’s Dagenham plant downed tools and demanded what was rightfully theirs: equal pay for a hard day’s work, equivalent to that of their male colleagues. It was a demand that their work be considered of equal value—in fact, that they be considered of equal value. Successive Parliaments have failed to deliver on that demand. As the Minister said, pay inequality—a woman being paid less for doing work that is of equal value and demands equal, or even higher, skills—is still a factor for women across the UK despite being illegal. Recent cases taken against Birmingham City Council, for example, and the ongoing case against Asda, demonstrate that clearly.
We know that the situation is more complicated, and even harder to tackle, than companies acting in breach of the Equal Pay Act 1970. Average pay for men remains greater than that for women. As the Minister said, the gender pay gap persists at 18.1%, and that simply is not good enough. That disparity is not due in the main to explicit gender discrimination by employers choosing actively to pay women less for the same work. Rather, it is far more ingrained. It is about the undervaluing of roles done by women, the dominance of men in the best-paid positions, unequal caring responsibilities and occupational segregation, for example. Those issues collide and compound to create the perfect storm. It is only through direct action that we have any hope of tackling the underlying causes of the gender pay gap and living up to Barbara Castle’s promise to the Dagenham machinists. That is why the last Labour Government included practical measures to tackle the gender pay gap in the groundbreaking Equality Act 2010, brought to reality by my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman). We all owe her a great debt of thanks.
Section 78 of the 2010 Act introduced mandatory pay audits, under which companies employing more than 250 people will have to publish details of the pay of their male and female staff. Labour knew then, as we know now, that transparency will push companies to focus on the reasons why the pay gap still exists and highlight to the Government where changes are needed. It will highlight where women are being paid less than men despite doing work of equivalent skill and responsibility, where men are getting higher bonuses and where all the highest-paid roles in a company are held by men.
All of those things require changes, to allow equality in the workplace. That is why Labour continued to press the coalition Government to implement section 78 of the 2010 Act despite almost five years of refusals. It is why, in December 2014, as a Back Bencher, I presented a ten-minute rule Bill asking the Government to implement mandatory pay transparency, and it is why—under the stellar leadership of my hon. Friend the Member for Ashfield (Gloria De Piero), the then shadow Minister for Women and Equalities—Labour was able to pass the amendment to the Small Business, Enterprise and Employment Bill in March 2015 that ensured the Government could no longer wriggle out of their duty to tackle the gender pay gap.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
My hon. Friend is making an excellent speech. We all recognise that, now that there is cross-party consensus on this issue, it is excellent that we have reached this point today, although obviously it is still sad that it has come seven years from when the Equality Act was passed.
My hon. Friend may be coming to this, but does she agree that it is one thing to introduce these regulations, but another to make sure that there are consequences for non-compliance so that we get the outcome we want, which is equal pay for men and women?
Sarah Champion
My hon. Friend is absolutely right. It is not about the regulations, which are sound. It is about how we implement, monitor and evaluate them and what we ultimately do when we see the disparities. She is right that I will come on to that.
We must congratulate the Government for bringing the regulations forward. I am grateful to them for doing so. I know that the Minister cares passionately about the issue and that, wherever blatant gender disparities exist, she will be there tackling them.
It is important, and to be welcomed, that the reports that will be produced will go into pay bands. That will help to demonstrate how the pay gap differs across an organisation and across levels of seniority. It is also really good news that the data will incorporate bonuses—both their amount and the proportion of men and women employees who receive them.
However, the regulations are bereft of some basic powers that would assure a benefit for women, so excuse me, Sir David, if I do not wholeheartedly celebrate them today. The Government have chosen to omit any enforcement provisions or sanctions for non-compliance, or for publishing inaccurate or misleading reports. This is especially disappointing as, in the “Closing the Gender Pay Gap” consultation paper, the Government correctly sought sectors’ views on whether a civil enforcement system would help ensure compliance with the regulations. The majority of responses—two thirds, in fact—agreed that such a system would help compliance.
Does the Minister actually believe that the regulations will be effective in getting data from employers without an enforcement regime or being backed up with civil sanctions? I take a guess that she will claim that the Equality and Human Rights Commission—another Labour creation—will be able to use its existing powers of enforcement in section 20 of the Equality Act 2006, as outlined in the explanatory memorandum. But of course, section 20 does not confer suitable powers on the EHRC to fulfil that enforcement duty. In its response to the “Closing the Gender Pay Gap” consultation, the Equality and Human Rights Commission said it would
“require additional powers, and resources, to enable it to enforce compliance with the regulations, because its current powers are not suitable for enforcing, in a proportionate manner, a failure to publish.”
Julie Elliott (Sunderland Central) (Lab)
I welcome the regulations, but does my hon. Friend agree that one of the main issues is not just what transparency will bring up but how that will be addressed? Once we know what the problem is, as we hope to through the information that comes forward, how will we then address the issues raised, particularly around bonuses? In my experience, bonuses are not a gender-neutral area of payment.
Sarah Champion
Again, my hon. Friend hits on the nub of the problem. Unless we can first reliably gather the data and then have some form of enforcement, all we will have is statistics on a piece of paper.
Seema Malhotra
My hon. Friend is being generous in giving way. Does she agree that one reason why enforcement is so important, and why we have strong ongoing Government backing for this change, is the reality of good intentions not materialising into outcomes? Of the 300 organisations that signed up to the “Think, Act, Report” voluntary initiative introduced in 2011, only 11 voluntarily published gender pay information. We cannot rely on good intentions; it has to be backed up in law.
Sarah Champion
I thank both my hon. Friends for their interventions. That is the problem—even if section 20 of the 2006 Act could be interpreted as extending to a breach of the regulations, it appears that the EHRC does not believe it can enforce that.
Vernon Coaker (Gedling) (Lab)
What my hon. Friend rightly says is compounded by the fact that although the Government have included a regulation allowing them to review the operation of the regulations and whether their objectives have been achieved, that review could be up to five years away. We need to encourage the Government to make that review quickly, to see whether the concerns we are raising have come to pass.
Sarah Champion
I thank my hon. Friend, and I look forward to hearing what the Minister has to say on that specific point.
In the November 2015 autumn statement, the Government imposed a 25% cut to the EHRC’s budget. That followed a whopping—I am not sure whether that is a Parliamentary expression—69% funding cut since the beginning of the coalition Government, and has led to the budget being reduced from £70 million to £22 million. How does the Minister expect the EHRC to fulfil its enforcement duty? Do the Government plan to legislate to provide the EHRC with the powers it needs to enforce the regulations? Does she plan to provide the EHRC with extra, vital funding? If not, given what my hon. Friends have said, how will she ensure that the regulations are meaningfully enforced?
The Government have stated that they will run checks to assess non-compliance, but details on the Government website to which employers must upload their information have not yet been released. Can the Minister tell us today when those details will be released? Will the Government compile a public database of compliant employers? They have said that they will publish tables, by sector, of employers reporting gender pay gaps. Will they go further and publish an annual league table, ranking every company and public body by pay gap? Will they ensure that companies tackling or seeking to tackle the issue are rewarded with good publicity, for example?
The question of how the Government plan to use the data is key if we are to be assured that they have a strategy to address the chronic and pervasive factors that have led to the significant gender pay gap. Will they commit to bringing a report to Parliament annually rather than every five years, as has been recommended? That report should include broad data on responses, the EHRC analysis of those responses and—this is of fundamental importance—a Government action plan to narrow the gap in the following 12 months. Will the Government also publish their pay gap figures by Whitehall Department? I have not spoken to my Chief Whip about this, but perhaps the Minister will comment on whether political parties should publish their gender pay gaps.
Finally, will the Minister confirm that she has plans to publish a strategy to tackle the gender pay gap in small and medium-sized employers? How does she plan to assess that problem? The regulations will cover 10.47 million employees in the UK, so what she is doing today is hugely welcome, but those employees represent only 40% of employment.
The Government have been forced to implement the regulations, seven years later than required. They have watered them down to the extent that I have to question their commitment to tackling the gender pay gap, although I do not question the Minister’s commitment to that. Ahead of the spring statement, the Government should outline how they plan to tackle the wider issue of the economic inequality of women, rather than take away the teeth of the enforcement agency. They have refused, year after year, to conduct a cumulative gender impact analysis of their policies. Instead of bringing forward their own documentation, I am sorry to say that they chose to smear the research of the House of Commons Library and the women’s sector.
Almost every major piece of legislation that has improved the lives of working women has been introduced by a Labour Government, and all Opposition Members are proud of that. All the Government had to do on the mandatory reporting of the gender pay gap was bring the legislation into force and create a meaningful mechanism for tackling pay inequality. Unless the Minister can give us assurances today, I am sad to say that they might have failed on that.
Vernon Coaker
It is a pleasure to serve under your chairmanship, Sir David. It is a few years since I have been on one of these Committees, but I was keen to serve on it because it is important for me as a man to say how important the regulations are. Although they are about the gender pay gap, the issue concerns us all.
The situation is simply not good enough. Men should be demanding equal treatment for women and the closure of the pay gap as loudly as many of my colleagues have done, particularly my right hon. and learned Friend the Member for Camberwell and Peckham, who has campaigned on these issues for decades, including when the attitudes she was facing were even more difficult than they are today. We should recognise women who have done that throughout the ages, wherever they have come from. We would not have reached this point were it not for many women like my right hon. and learned Friend. She is here today, and she remains an influence.
It is important for us to lay out the fact that the pay gap, despite numerous attempts and numerous pieces of legislation, remains at 18.1%. For full-time equivalent roles, it is 9.4%. In my region, the east midlands, it is 12%, and that simply is not good enough. More urgency has to be injected into this issue to try to move things forward. Otherwise, there will be a Committee like this one in 10 years’ time berating the fact that whoever is in government at that time is presiding over a gender gap that is 8.9% instead of 9.4%. We have to do better, and the challenge is not just for Government but for all of us to demand better.
My hon. Friend the Member for Rotherham asked an important question, and I reiterate it to the Minister. These pay gap regulations will affect larger private companies, but what exactly do the Government intend to do? What will the timescale be for reporting by Government Departments and larger public bodies? Given the number of people they employ, it would be interesting to hear about that.
Melanie Onn (Great Grimsby) (Lab)
I wonder whether any consideration has been given to different-sized employers. Women who work for a larger employer might have their pay gap monitored, but if they work for a smaller employer doing exactly the same job, they will not be monitored. Those will be people doing exactly the same job and still experiencing significant levels of inequality. Does my hon. Friend see that as an issue?
Vernon Coaker
That is a real issue. The Minister will be able to confirm this, but I think I am right in saying that the regulations will affect 34% of women. That will obviously leave a significant number of women outside the scope of the regulations, who might include some of the women my hon. Friend refers to.
People moving in and out of companies, going from one employing more than 250 to another that does not, is a real issue. I will come back in a couple of minutes—I do not want to speak for too long—to the review mechanism that the Government have built into the regulations. They should consider that point.
I want to draw the Committee’s attention to the fact that some of the issues we are discussing might be cultural problems. It is difficult to argue that we should change the culture by changing the law, but the law can be a signpost to the sort of cultural attitudes we wish to encourage. I am not saying that we should pass a law on this, but CHILDWISE published a report today about discrimination in pocket money. I confess an interest— I will need to check with my family, who are grown up now, to ensure that this did not happen for them. Apparently the gender pay gap begins early in childhood and at home, with boys receiving 20% more pocket money than girls. I hope I did not do that, but I cannot say I definitely did not. It would completely undermine what I am saying now.
The new report from CHILDWISE reveals that between the ages of 11 and 16 the gap grows to 30%, which mirrors what happens in the adult population, where the gender pay gap rises as women get older. Between those ages boys receive an average weekly income of £17.80, and girls of the same age lag behind on £12.50. I do not know how accurate those figures are; I am just quoting them. I do not think I gave my son £17.80—maybe a month, but not a week.
The serious point I am trying to make is that the cultural attitudes in our society are what we need to address, think about and challenge, but the law is a good place to start. I take my hon. Friend the Member for Rotherham’s point that these regulations come seven years after the primary legislation, but the Government did try a voluntary approach. The explanatory memorandum shows the failure—not a catastrophic failure, but a very real one—of the voluntary approach. We are told on page 2 of the explanatory memorandum that according to the ONS:
“Whilst over 300 organisations signed up to this initiative, we are aware of only around 11 of those that have voluntarily published gender pay information.”
That initiative was set up in 2011, so the necessity of the regulations cannot be overestimated.
Julie Elliott
Does my hon. Friend agree that voluntary measures in these areas of employment law never work? That is why transparency is important, but it is essential that action follows from it to make it work and to make the average gender pay gap disappear. Is he as interested as I am to see which Departments the Minister thinks will be the worst when their transparency is revealed? Will they be the high-pay, high-value Departments rather than the smaller, more niche Departments?
Vernon Coaker
I am interested in that, and it takes me to my next point. Legislation is crucial, and to be fair, with our support, the Government have brought it forward. We can argue about whether it should have come sooner, but we support it. The lack of enforcement is a problem, though, and I am disappointed about it. The Government recognise that there may be an issue with enforcement, because a review mechanism is included in regulation 16. They say they will carry out a review of the regulations and publish a report, which must look at whether the objectives have been achieved and so on. However, that report must be produced before the end of a “period of five years.”
The Minister may want to address this point in her closing remarks, but does she really think that we ought to wait five years before we see whether we are achieving our objectives, or does she believe, as I do, that five years is too long? We should say today that, although the regulations specify five years, we will look at the first published results and see whether something needs to be changed. Certainly after the publication of two sets of results it will be clear whether the objectives have been reached. It is important that she addresses that point.
May I say that it is a privilege to speak in a debate such as this? I do not mean this in any way as a flippant remark, but it is really important that men speak in these debates and demand better treatment of women and their rights, not just as something we ought to give them but as something that they should have as of right. That is important, and I know that colleagues on the Committee will have no issue with that.
I say this as a criticism of my own gender: we should be louder in speaking up on these issues. I will not digress from the subject the Committee is considering, but on domestic violence, sexual violence and other such issues, men should be louder in demanding the proper treatment and the proper rights for women in our society.
I thought it was good—other people may disagree—that there were an estimated 20,000 men on the “Women Against Trump” march in London at the weekend. I am sure there were many in other cities, too, and I think it was a good thing.
Hannah Bardell (Livingston) (SNP)
It is a pleasure to serve under your chairmanship, Sir David, and I congratulate the hon. Gentleman on a passionate speech. I was on that march, and I marched alongside many men. I have to draw his attention to one particular placard that struck me, which read, “Men of quality do not fear equality”. Does he agree that that is a statement that all men should operate under?
Vernon Coaker
Men of quality do not fear equality—of course, I absolutely agree. It should not be a rare occurrence that I and other men turn up and speak in debates such as this. We should be make continual demands to support women across the country—and across parties—in trying to achieve more.
Labour has a proud record in trying to tackle inequality and promoting women’s rights; my hon. Friend the Member for Rotherham drew attention to some of our achievements. We recognise that the regulations are an important step forward and we are pleased that the Government have finally come forward with them, but we will continue to highlight the issue and demand better for women in society.
I point out to the Minister something that I found interesting. When the House of Commons Library assessed and analysed the impact of savings to the Treasury over the past few years, it found that 86% of the impact of tax and benefit changes had been on women. Whatever the rights and wrongs of austerity and the economic policies that the Government are pursuing, that cannot be right. I say to the Minister, given her wider ministerial responsibilities, that that is not a political point; it is just a point that women in general—and men such as myself who support what women are campaigning for and trying to achieve—would say needs to be made.
Finally, I say to the Government that we are pleased that the regulations are being introduced. I am pleased about it as a man and as a member of a modern society. However, we must all try to inject a bit more urgency into this process, so that we are not here in a few years’ time debating why the pay gap has only gone down by half a percentage point rather than being eliminated, as it really should be.
Seema Malhotra
It is a pleasure, Sir David, to participate today and to serve under your chairmanship.
I will say a few words following the excellent speech that my hon. Friend the Member for Gedling has just made. If he was looking for a part-time advisory role to the President of the United States of America, I would certainly be willing to support him in that endeavour.
First, I thank the Government again for introducing the regulations. However, building on the points that have already been made, I encourage the Government and the Minister, who laid out her case for the need for the regulations powerfully, to think about the wider issue of economic equality for women, particularly in the run-up to the March spring-statement-stroke-Budget. Keeping the issue going and mainstreaming its implications is an important part of how we can move forward in achieving equality for women across all areas of the economy, which is essentially the backdrop to this debate.
I was struck by some of the analysis of the gender pay gap, and I want to put a couple of suggestions to the Minister. My concerns are around the implementation of the regulations. On one level—the transactional level—that is about how they are implemented within a corporation and how the data are collected and reported on. That can stay within a very small sphere of people: maybe the head of human resources and the chief executive officer. Culture change and the players involved in it are an important part of what a company or organisation owns at the highest level.
I know from my past work on equality in companies, on public boards and in politics and public life that it is important to have wider stakeholder engagement to ensure that people understand the responsibility we can all have in making a shift. That helps to create a context and environment within which there can be actors who will act on the messages that come out from the reports and from transparency more widely. They will have a sense of their own responsibility in making that shift.
I am keen to understand how the regulations will be implemented and whether messages and communications will go to chairmen and women on boards, heads of HR, management networks or other networks. We must look at how to mainstream thinking about jobs and pay much more widely, so that we can pre-empt and reduce the problem and see the results coming through.
Melanie Onn
On implementation, I am interested to see that in the devolved Administrations in Wales and Scotland, the measures will be implemented under the regulations. I wonder how the Government will monitor that implementation at devolved level, to ensure that these measures are being implemented fairly across the whole United Kingdom.
Seema Malhotra
My hon. Friend makes an important point. The public expectation will be that the regulations go beyond administrative boundaries and that the Government take a lead to ensure that they are effectively implemented. It would be helpful if the Minister responded to that point.
It might seem like it is just a small Committee putting the regulations forward today, but I worked in the Government Equalities Office on a different project at the time when the Equality Bill was going through Parliament, and I pay tribute to the civil servants for their work and engagement and to my right hon. and learned Friend the Member for Camberwell and Peckham for leading that work. It was near the close of the Labour Government’s time in office—it was pretty much the last Act that went through Parliament.
To return to the point about the meaning of these measures and those for whom they could make a difference, I was struck by the analysis of the gender pay gap by age published by the House of Commons Library. The gap is much greater for older women, who are hit in other ways as well. They might lose their job and find it harder to get another. We know that they are often the poorest pensioners and the least likely to have pensions in their own right to sustain them in older life. That compounds the problem of the economic wellbeing of older women and poverty that can become entrenched. Awareness of that within organisations would be an important part of tackling economic inequality for older women, particularly when we look at differences by decade of birth.
There is another important issue, which is the relationship, or otherwise, between educational attainment and the pay gap. When we look at the analysis, it is striking that although there is sometimes a link between a better-educated workforce and a reduced pay gap, that is not always the case. There is still a strong gender dimension. We can try to distil the pay gap down to contributing factors such as people leaving school earlier or not having certain educational qualifications, but the data do not suggest that those are the key issues. Rather, the gender dimension remains the key point. That suggests there is a wider cultural inequality issue, which it is important to address. Whether women have GCSEs, A-levels or degree-level education, the analysis shows there is still a gender pay gap for them.
That leads me to my final point, about how we can work much earlier in schools to create role models and a sense of confidence and aspiration. The Fabian Women’s Network, of which I am the founder and president, undertakes deep thinking about that issue. We need to ask what tone we are setting as a nation for the girls, and we need to give them confidence that any future they may want is a future they should be able to achieve; that any profession they want to be in has a door open to them; and that any sky they want to reach is available to them.
The regulations are vital for women who are currently in the workplace, and they can also help us achieve a culture change if we implement them effectively, think about the factors that will support better understanding of the pay gap in organisations and make sure that the issue is cascaded down through management levels in organisations.
I hope the Government will not just encourage organisations to keep data at senior management level but encourage directorates or departments to understand what the gap is in their own departments. That will help to create wider appreciation of these issues lower down the management chain. As those managers then become the senior leaders of tomorrow, they will have begun to appreciate and been engaged with these issues as they become embedded within management life.
I hope that as the regulations are implemented, we will look at the immediate implications and at how we can shift our culture through the opportunity that the regulations will enable. Achieving that shift now will not just help the generations of women in the workforce today but set a completely different tone for our country and benefit the young women coming forward through the schools and in the workplace of tomorrow.
Caroline Dinenage
I have been very taken with the contributions from all members of the Committee—I was so absorbed that I nearly forgot to stand up for a moment. I thank everybody who has taken part in the debate; I always welcome feedback and questions from Members.
We all agree that it is completely unacceptable that a gender pay gap still exists in this day and age. The regulations will create opportunities for both individuals and employers by driving action that promotes greater gender equality in workplaces across the country.
Back in 2010 there was a coalition Government agreement to take a voluntary approach to this issue, because that was a powerful tool in bringing businesses with us. If hon. Members will bear with me, I will explain a little later why bringing businesses with us at every stage was important. That approach encouraged more than 300 employers—big employers with a staff of many thousands between them—to begin to think about the gender pay gap. It laid the groundwork for that important work to move forward, so it is a little unfair to disparage it as meaningless, toothless and pointless. There was a point to it, and it engaged the business community with this important issue.
As I mentioned in my opening comments, we have undertaken extensive consultation with employers and stakeholders to develop these regulations. In addition to two public consultations, the Government Equalities Office held roundtables with employers, women’s civil society, trades unions, academics, legal associations and experts in gender pay analysis. Having worked closely with such a wide range of stakeholders, we can be confident that the requirements are clear and proportionate and will drive real change in workplaces across the country.
The Secretary of State will review the regulations five years after their commencement just because that is the legal requirement, but that is not to say that we will not look at them in the interim. We will keep a close eye on them to make sure that they are being enforced properly. We have worked closely with ACAS to develop clear and user-friendly guidance to help employers understand and implement the regulations. That draft guidance will be published shortly.
The range of metrics that the regulations require will ensure that no large employer can claim that it is unaware of whether it has a gender pay gap. The publication of the information required will increase employees’ confidence in their employers’ remuneration process and could enhance an employer’s corporate reputation.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am sorry to interrupt a speech that my hon. Friend is making with such eloquence and competence, but the explanatory note say that section 78 of the Equality Act
“does not apply to government departments, the armed forces or other public authorities listed in Schedule 19”.
It goes on to say that, in October,
“the then Prime Minister announced that these large public sector organisations would also be required to publish details”.
Can I take it that the regulations do not legally require Government Departments to publish the details, but that they will do so on a voluntary basis? Can she also confirm that all non-departmental organisations and large charities with more than 250 employees will be included?
Caroline Dinenage
We have laid the regulations that will ensure that public sector organisations, and indeed charities, are included in the legislation.
Hannah Bardell
On the point about listed public authorities, is she aware that in Scotland we have reduced the threshold for reporting from those with more than 150 employees to those with more than 20 employees? Does she foresee her Government working with the Scottish Government on the success of that, and perhaps lowering the threshold for the rest of the UK as well?
Caroline Dinenage
I speak as someone who ran a small business for 20 years before I came into Parliament, so I look at it from a different perspective. I do not want to be part of a Government that is crippling, penalising or over-bureaucratising small and medium-size enterprises. Although I am interested in what the Scottish Government have done and will keep it under review, I personally think that the regulations are the best place to start. As I will go on to explain, we want to take business with us at every stage. This is not a punitive measure on business; it is good for business. Making sure that a business encourages the growth, prosperity and development of every single one of its talented workforce is not only the right thing to do but brings massive future economic potential for this country.
The Young Women’s Trust found that 84% of surveyed women aged 16 to 30 would consider an employer’s gender pay gap when applying for a job, and 80% would compare employers’ gender pay gap data when looking for work. Of the employers and business organisations that responded to our first consultation, 82% agreed that the publication of gender pay gap information would encourage them and other employers to take action to close the gap. We can see that bringing business with us on this and convincing them of the merits of it has been one of the key successes of our how we have gone about our policy so far.
Sarah Champion
I support what the Minister is saying, because the 11 companies that voluntarily reported said that it led to a more open workplace where employees stayed longer. However, I challenge her on the point that she made to the hon. Member for Livingston, because what we talking about is actually a simple line of coding in an already existing payroll. It is not a big or onerous requirement, so this is not a question of putting overburdening administration on businesses; I think not taking forward reporting for smaller businesses is Government will.
Caroline Dinenage
I have to disagree, given that the last thing businesses need is unwieldy bureaucracy from a nosey, over-centralised, self-serving, self-satisfied Government. I speak as someone who, for 20 years, ran a business that had just under 20 employees. We were crippled by much of the legislation that came from the Labour Government. The bureaucracy and paperwork that I had to deal with on a daily basis, on all manner of things, became a real burden on my ability to employ people and create wealth and prosperity for this country. I therefore take increasing the burden of legislation on businesses seriously. If it is unnecessary, I am not prepared to do it, but we will keep the matter under review.
The regulations require employers to publish the relevant information on their own website in a manner accessible to employees and the public. Hon. Members have asked how it will be displayed, saying that it should not be squirreled away somewhere. The information will have to be accessible. All employers within the scope of the provisions will be expected to publish the required information annually, and no exemptions are envisaged. A written statement signed by a director or senior employee must also be published online. As well as confirming the accuracy of the required information, that will ensure that business leaders take ownership of tackling any identified gender pay gaps. We will also require the information to be published on a Government website.
Vernon Coaker
Just to be clear, because one or two of us are not sure—that may be our fault—does what the Minister has said today mean that the first time there will be publication relating to transparency on the gender pay gap will be 5 April 2018?
Caroline Dinenage
Yes; companies have to start collecting the data from April this year and publishing the information by April next year. That fully conforms to our manifesto commitment, which was for three years of publications before the next general election.
The Opposition spokeswoman raised the issue of the EHRC not having the necessary legal powers. We are clear that the EHRC does have them, as it has recognised. It may issue an unlawful act notice to any person who has committed an unlawful act, such as non-compliance with the regulations. The notice could include recommendations for an action plan to address the unlawful act and to ensure that it does not continue. As well as investigating whether a person has complied with an unlawful act notice, the EHRC may apply for a court order requiring them to take specified steps to comply with the notice. The EHRC has received, and will continue to receive, sufficient funds to be able to fulfil its statutory duties, of which this is one. It is for the EHRC as an independent body to determine the allocation of its overall funding across specific functions. We believe that the £20.4 million of taxpayers’ money that it receives is sufficient for it to carry out these important duties.
The regulations do not create any additional civil or criminal penalties, and failure to comply would be an unlawful act, as I said. Many consultation respondents felt that disproportionate sanctions would defeat the object of ensuring that a sufficient number of employers take direct responsibility for promoting gender equality in their workforce. We feel that competition in sectors, as well as the risk of brand and reputational damage, will drive compliance. Many employers will see this as an opportunity to put proactive strategies in place to tackle the barriers facing their female employees. Consultation responses highlighted that that approach should have much more of an impact, in terms of making a positive change, than a box-ticking exercise to avoid financial penalties would. Relying on fixed penalties from the outset could encourage some employers simply to pay fines rather than to undertake the necessary pay analysis and do the donkey work involved in making the proposals work.
Crucially, during a roundtable with women’s civil society and trade unions, there was broad agreement that compliance measures should not be so harsh that they risk incentivising employers to subcontract female employees. That is not only about being a friend of business, but because it is so important for women. Rather than just creating a low gender pay gap, we want to create the right type of low gender pay gap. Some industries—indeed, some countries—with low gender pay gaps have very low rates of female employment. That is not because they have a lot of women in high-paid jobs, but because they do not have women in work at all. That shows low workforce participation and high social inequality. The launch of the Government website allowing employers to publish the required gender pay gap information will coincide with the commencement of the regulations, which will allow us to monitor levels of compliance closely. So we will not just be looking at the data once every five years; we will monitor it.
Vernon Coaker
May I suggest to the Minister that the first time it is published on the Government website, she makes a written or oral statement, to signify to everyone how important this is, and to get it out there with a bit of urgency and excitement about it?
Caroline Dinenage
I cannot imagine anyone would need to encourage a politician to seek publicity. Of course, I will shout it from the rooftops if it will make the hon. Gentleman happy. We will keep our position on financial penalties under review, in the light of employers’ willingness to comply with the reporting requirements during the early years of implementation. The public will be able to search the Government’s website to check whether employers in the scope of the regulations have complied with them and to compare them with other employers in the same sector. We will consider the most effective way to present the published information, in discussion with a wide range of stakeholders.
The hon. Gentleman asked about the scope of the regulations. We calculate that they will affect about 8,000 employers, who between them have more than 11 million employees. An estimated 3.8 million employees will also be covered by separate gender pay gap regulations that will apply to public authorities. In total, the new gender pay gap regulations will cover nearly half of the total workforce.
I agree that we need to challenge gender stereotypes, from the division of unpaid work to the types of occupations that men and women pursue. The Government are looking really closely at that. The hon. Gentleman hit the nail on the head when he said that men need to act as agents of change. Men can be the most powerful agents of change. That is why the Government set up the Women’s Business Council, which has recently expanded to include more men. One of its key work strands is about men as agents of change, and it is about to issue awards recognising men who do fantastic work promoting women in the workplace across the UK.
On SME reporting, I have already spoken a lot about how it could impose too much of a burden on small businesses. At the moment, large employers alone are being required to report, but we will encourage small employers to analyse their pay data and take action where issues occur. I also think that, through the supply chains of big businesses, this will filter down to smaller companies anyway.
The regulations covering the public sector, including Government Departments, were laid last week, and public bodies will be required to publish gender pay gaps every year. The gender pay gap of the Department for Education in 2016 was 5.9%, I am pleased to say.
Vernon Coaker
I am sorry to keep asking questions, but is that timetable for public bodies the same as for private bodies?
Caroline Dinenage
Yes, it is exactly the same.
The female employment rate is currently the joint highest on record, at 69.8%. The female participation rate has increased by more since 2010 than during the three previous Parliaments combined. We agree, of course, that there is a wider gap for older women, as the hon. Member for Feltham and Heston described. That can be explained in part by age, but not completely. That is why we have introduced measures such as extended flexible working, shared parental leave and increased hours of paid-for childcare—working couples can expect 30 hours from September.
We are not requiring gender pay gap reporting by age, as workforce demographics vary significantly. Such reporting could also raise confidentiality issues, if a company had only a small number of employees in one age bracket. That was raised with us as a concern, and we do not want to betray anybody’s confidence. We agree that the data need to be owned across organisations, which is why we will require a senior director to sign off the data. We will closely monitor compliance on that.
I was asked about devolved approaches. Section 78 regulations cover England, Scotland and Wales. Scottish and Welsh public bodies are subject to their own specific duties in regulations under section 153 of the Equality Act, but the Equality and Human Rights Commission works across England, Scotland and Wales.
Seema Malhotra
Can the Minister clarify one point? This may be in the details we have been given, but will companies be required to report on the gender pay gap in their annual reports?
Caroline Dinenage
I am not entirely sure whether they will be required to do that, but they will be required to publish the information on a website that is readily accessible. It cannot be hidden away in a tiny little corner of their online presence that nobody can find. We will then republish that information on the Government website, so it will be easily accessible.
We know that transparency may not be a silver bullet, but it will incentivise employers to analyse the drivers behind their gender pay gap and explore the extent to which their own policies and practices might be contributing to it. I am really pleased that the regulations are broadly supported by the House, and that we agree on the underlying policy intent. I understand that we might have slightly different motivations about how we want to support businesses—whether we want to cripple them with massive amounts of bureaucracy or support them to create the jobs that the country needs—but I truly believe that this reporting marks a significant step forward in making that policy intent a reality, and I commend the regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.