Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017
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Baroness Williams of Trafford
That the Grand Committee do consider the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, these regulations which are being introduced under powers in Section 153 of the Equality Act 2010 replace and amend the Equality Act 2010 (Specific Duties) Regulations 2011. Under this power, Ministers can impose specific duties on public authorities to secure the better performance of the public sector equality duty. These regulations replicate the measures from the previous specific duties regulations, namely that public bodies must publish information every year to demonstrate their compliance with the equality duty and set equality objectives every four years.
Tackling the gender pay gap is an absolute priority for this Government. That is why we have used these powers to include new duties for the relevant public authorities, if they have 250 or more employees, to report on their gender pay differences. We have already delivered on our manifesto commitment to introduce mandatory gender pay gap reporting for large employers in the private and voluntary sectors. The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 were approved by both Houses last month and signed by the Secretary of State on 6 February.
Of course, it is only right that public bodies, including government departments, are subject to the same reporting requirements. That is why we announced in October 2015 that we would be extending the manifesto commitment to the public sector. We want government to be a trail-blazer and lead by example. These regulations apply to specified public authorities in England, non-devolved organisations and certain cross-border authorities. Scottish and Welsh public bodies are subject to separate specific duties regulations. The devolved Administrations in Scotland and Wales have been consulted on the proposed changes. Both sets of regulations will require the same gender pay gap calculations and use the same methodology for calculating the data.
Public authorities that are subject to these regulations will need to publish the mean and median differences between the average hourly rate of pay for male and female employees. They will need to publish the mean and median differences between the average bonuses paid to male and female employees. They will also need to report on the proportions of men and women who receive bonuses, and the proportions in each quartile of their pay distribution.
All specified public bodies will need to publish their gender pay gap data on a website that is accessible to members of the public. Organisations will also need to upload data to a government-sponsored website, which will allow us to establish a database of compliant employers and closely monitor compliance. We have aligned the reporting timetables and obligations as closely as possible for employers in different sectors to achieve consistency and comparable sets of data. The two sets of regulations will provide unprecedented transparency on gender pay differences in all sectors and create the environment needed to drive change. I beg to move.
Baroness Gale (Lab)
My Lords, first, I thank the Minister for bringing these regulations before us tonight. We waited seven years for the Government to come forward, but I am very pleased that they have finally introduced mandatory pay audits for large companies in the private and voluntary sectors. It is a shame that it has taken this Government so long to bring into force the measures created by the last Labour Government, but at least now we are taking some steps forward, which is very good. I commend the Government for extending the mandatory pay gap reporting duties to public sector employers, as they promised to do in October 2015. This again is another step forward towards progress.
The regulations discussed today, under Section 153 of the Equality Act, mirror almost exactly the regulations under Section 78, although I have concerns that some of the new duties could have gone further. As with the duties on private and voluntary sector organisations, they apply only to public authorities with 250 employees or more. The maintenance of such a high employee threshold for application of these duties in the public sector was raised as a concern by a significant number of organisations and individuals responding to the Government’s consultation, but the Government have chosen not to set a lower threshold for public bodies.
It is understandable that the Government would want to create comparable data between the public sector and private and voluntary sectors but, clearly, limiting the application to public sector bodies with more than 250 employees will severely limit the number of public authorities caught under this regulation. The Government claim that of course a public authority of any size could choose to adopt mandatory reporting, but to what extent will a voluntary expectation create practice in reality? What communication does the Minister intend to have with all public bodies, regardless of their number of employees, to encourage them to publish their gender pay gap information? Have any indicated to her that they will take this voluntary action? In the consultation response, the Government promised to keep under review setting a lower employee threshold, but failed to give an assurance on a timescale. When will this be reviewed? What evidence will she require to persuade her that the figure of 250 employees is too high a threshold?
Baroness Williams of Trafford
I thank both noble Lords for their thoughtful contributions. I think there is broad support for what we are bringing forward but I shall answer some of the specific questions the noble Lords asked.
The first question from the noble Baroness, Lady Gale, was about why the number of employees was not lower than 250. We estimate that the obligations for authorities with 250 or more employees will affect more than 3.8 million employees in the public sector, and that means they will be covered by the new gender pay gap reporting requirements. Indeed, the combined coverage of these regulations and the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 will be over 15 million employees in 9,000 organisations, representing nearly half the total workforce. In addition, public bodies with more than 150 employees are already required to report on the diversity of their workforce and are encouraged to publish gender pay gap information.
We are keen in the first instance to place the same requirements of gender pay reporting across all employers to ensure consistency and comparability, so we have started in the public sector with that 250 threshold, which matches the threshold in Section 78 of the Equality Act. However, we will keep the threshold under review, and I think that review period will be reviewed by the Minister for Women and Equalities five years after commencement. Although this is the formal point for reviewing the new obligations, we will be closely monitoring compliance on a more regular basis to ensure that the measures are effective and working properly. With regard to what the response was to the public consultation about the proposed scope, the majority agreed that gender pay gap obligations should apply to authorities with 250 or more employees.
The noble Baroness asked whether the reporting requirements were too narrow. The regulations do not require mandatory equality objectives connected to gender pay gap data or, indeed, action plans. However, all employers will be strongly encouraged to publish information on how they intend to tackle the gender pay gap in their organisations. Many public bodies have actually indicated that they are keen to publish that narrative alongside their gender pay gap calculations, so that they can provide more context for any gender pay differences and highlight work to reduce any gaps.
Transparency may not be a silver bullet, as the noble Lord said, 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 may be contributing to it. The regulations that will apply to the public sector will not include an explicit requirement for a senior official to sign a statement or authenticate an organisation’s gender pay gap, but this is in line with the existing obligations under the specific duties regulations.
The noble Baroness asked what assessment has been made of the effect of tribunal fees for people with protected characteristics. The review of the employment tribunal fees, published on 31 January this year, confirms that the objectives have been broadly met and that the current scheme is generally working effectively and operating lawfully. However, that does not mean there is no room for improvement. In particular, the fall in claims and the evidence that some people have found fees off-putting have persuaded us that some action is necessary, so we launched a consultation on 31 January regarding the proposal to widen the support available to people under the help with fees scheme. This would help people with low incomes and is expected to particularly benefit women, disabled people and people from black and minority ethnic backgrounds, who figure disproportionately among those in low-income groups.
The noble Baroness also asked: will the Government be publishing league tables to name and shame employers? The public will be able to search the government website to check whether employers in scope have complied with the regulations and 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 but, as I am sure the noble Baroness and the noble Lord know, the press soon get hold of such figures, so we can probably rely on them to highlight the success and failure stories.
Lord Lester of Herne Hill
I hope that we can also rely on the Equality and Human Rights Commission, which is funded for this purpose. I forgot to mention the issue of access to tribunals. It is my view as a lawyer that it is unlawful and an obstruction of justice to do what has been done to the employment tribunal fees, because they deter people with discrimination cases. I bet that if it goes to the European Court of Human Rights it will declare it to be incompatible, so I am glad that the Government are moving on that.
Baroness Williams of Trafford
I thank the noble Lord for that and will come to the EHRC shortly to give a bit more detail.
The noble Baroness also asked why the Government have rejected the recommendation from the Women and Equalities Select Committee to reduce the gender pay gap. We appreciate and recognise the important work that the committee does on this issue, and we carefully considered its recommendations. The report makes a number of recommendations for the Government, several of which have already been actioned. For example, the right to request flexible working already allows those working fewer than full-time hours to request the opportunity to work more. Many of the recommendations made by the Select Committee would involve significant cost to businesses and we are keen not to place too heavy a burden on employers at this time.
We crossed into the equal pay realm. I thought I might make the point at this juncture that pay discrimination and the size of an employer’s gender pay gap are two quite different things, but I am sure that the noble Lord knows that, given his background.
The noble Baroness talked about pregnancy and maternity discrimination. That is unlawful as well as unacceptable and has no place in today’s society. The Government are working with a range of partners, including the EHRC and ACAS to promote opportunities for women, including pregnant women and new mothers. That will ensure that female talent is recognised and rewarded, and make more employers aware of their legal obligations.
I turn to the EHRC’s failure to ensure compliance. The EHRC takes a proportionate approach to enforcement, resolving many matters via pre-enforcement work and using its formal enforcement powers when absolutely necessary. It also takes a strategic approach to enforcement, focusing on those issues where it can have an impact on systemic, persistent and/or pervasive inequalities. Many less strategic cases are resolved through pre-enforcement work, involving discussions with organisations to encourage them to meet their obligations.
The noble Lord, Lord Lester, may draw some comfort from the fact that when the Women and Equalities Select Committee examined the EHRC’s chair and CEO in January, it asked searching questions about why its enforcement and compliance work, potentially involving legal interventions, seemed so limited. The EHRC’s chair, David Isaac, who the noble Lord mentioned, agreed that putting more resource into enforcement and compliance is a priority for him. Let us see what progress it makes in the coming year.
Finally, the noble Lord mentioned the Ruby McGregor-Smith review. It is an industry-led review, so we are going into a slightly different realm, but I shall not split hairs about that. The Government believe that non-legislative solutions are the right approach for now, but we will monitor progress and stand ready to act if sufficient progress is not delivered.
I am sure that noble Lords will remember this time last year, when the number of women on boards was a push for the Government and we tried to do it in a non-legislative way. That yielded very good results, so we always try the non-legislative way first before taking action, but we will always take action if we need to.
I hope that noble Lords are satisfied with those responses and thank them for taking part in this debate.