Draft Equality Act 2010 (Specific Duties and public authorities) regulations 2017

Caroline Dinenage Excerpts

Wednesday 22nd February 2017 General Committees

[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 (Specific Duties and Public Authorities) Regulations 2017.

It is a great pleasure to serve under your chairmanship, Mr Nuttall. The 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. They 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 must set equality objectives every four years.

Tackling the gender pay gap is a priority for this Government, which 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, and 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.

It is only right that public bodies, including Government Departments, are subject to the same reporting requirements. That is why we announced that we would extend the manifesto commitment to the public sector in October 2015. My Department’s gender pay gap is much lower than the average, at only 5.9%, but I want the Government to be a trailblazer and to lead by example.

The regulations apply to specified public authorities in England, to non-devolved organisations and to certain cross-border organisations and authorities. Scottish and Welsh public bodies are subject to separate specific duties regulations. The devolved Administrations in Scotland and Wales have been kept informed of the proposed changes. Both sets of regulations will require the same gender pay gap calculations and use the same methodology for calculating the data.

[Neil Gray (Airdrie and Shotts) (SNP)]

Will the Minister advise us on what measure was taken to fall upon the figure of 250 employees? She mentioned Scotland. We in Scotland are further ahead on that, as are other nations in Europe. Why not fewer than 250?

[Caroline Dinenage]

That is a good question. The reason is that we were fundamentally keen that this manifesto commitment was delivered hand in hand with business and that we were with business every step of the way. We are really serious about this and want businesses to be 100% committed to it. Business felt that this number was manageable. I know that the Scottish Government have imposed a lower threshold in Scotland, but it should be noted that the requirements there are less specific and do not include the full range of calculations that will apply to public bodies in England. We want businesses to see this as being in their interests. They want to be able to identify and promote the skills of every single one of their workforce, and we do not want to make this too burdensome. We want to bring them with us every step of the way, hence the number we have settled on.

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 also allow us to establish a database of compliant employers and to monitor compliance closely. 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.

I firmly believe that the two sets of regulations will provide unprecedented transparency on gender pay differences in all sectors and create the environment we need to drive change.

--- Later in debate ---

[Caroline Dinenage]

I thank everyone who has contributed to this debate. I start by emphasising that we fully agree that it is unacceptable that the gender pay gap exists in this day and age. The UK’s overall gender pay gap is just over 18%. While that is the lowest on record and has consistently fallen, it is doing so too slowly, and voluntary reporting has not led to sufficient progress.

This challenge faces us all. I am really proud that the Government will lead by example. The regulations, alongside those aimed at private and voluntary sector employees, will drive action that promotes better, greater gender equality in workplaces across the country. The gender pay gap obligations apply to specified public authorities if they have 250 or more employees. We estimate that around 3.8 million employees in the public sector will be covered by the new gender pay gap reporting requirement. Indeed, the combination of these regulations and those for the private and charitable sectors will cover more than 15 million employees in 9,000 organisations, representing nearly half the total workforce. That is a massive step in the right direction.

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 very keen in the first instance to place the same requirement for gender pay gap reporting on all employers, to ensure consistency and comparability. We have started in the public sector with the threshold of 250 employees, which aligns with section 78 of the Equality Act, but we will keep the threshold under review. The regulations and the ACAS guidance will, in any case, help organisations of any size to analyse their gender pay gap. We are not limiting reporting to those with 250 or more staff. Anybody can do it, but at present, those with 250 need to.

We have consulted massively on this. The right hon. Member for Slough said that the regulations were out of date. The idea may have arisen in 2010, but we have consulted on the regulations numerous times over the past year or so in order to get them exactly right, to make them timely and relevant and to ensure we took on board the views and expectations of all the different aspects of society. The majority of respondents to the public consultation who answered the question about the proposed scope agreed that the gender pay gap obligations should apply to authorities with 250 or more employees. Having said that, I have already spoken to employers with somewhere between 200 and 250 employees who are doing that reporting because they feel it is too close for comfort and do not want to be in a position where they suddenly slip into that larger number and get caught out.

The gender pay gap reporting requirements will be reviewed by the Secretary of State five years after commencement. Although that is the formal point for reviewing the obligations, we will of course closely monitor compliance on a much more regular basis, to ensure that the measures are effective and are working as intended. Ensuring that employers comply with the regulations is, of course, of the utmost importance to the Government. The Government Equalities Office will closely monitor that compliance by reviewing the data uploaded to a Government-sponsored website.

The Equality and Human Rights Commission can take enforcement action if a particular public authority has not complied. In line with the rest of the specific duties regulations, the Commission has powers to issue a compliance notice and can apply to the courts for orders requiring compliance. We have discussed with EHRC how the new system will operate and we will work closely together after reporting begins in March.

[Sarah Champion]

The Government have been great at naming and shaming businesses that are not paying the minimum wage. Does the Minister envisage that she will be doing the same thing with the gender pay gap?

[Caroline Dinenage]

That is an excellent question. That is the whole point behind ensuring that businesses and employers have to publish their data publicly. They cannot be hidden away in the murky depths of their website. They need to be in a really accessible place so that we can compare the data and tackle any worrying sectors or employers.

The regulations do not require mandatory equality objectives connected to gender pay gap data or action plans, but all employers will be strongly encouraged to publish information on how they intend to tackle the gender pay gap in their organisations. That is why we have strongly encouraged a narrative. Many public bodies have indicated that they are keen to publish a 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. We know that sometimes the organisations that are doing some of the best work to bring women through the pipeline have, on paper, some of the worst gender pay gaps, but they are investing in a much more long-term strategy. That is where that narrative is really important.

We know that transparency is not a silver bullet. The hon. Member for Rotherham and the right hon. Member for Slough have spoken about the things that are missing here. We are not pretending for one second that this is a silver bullet, but it will incentivise employers to analyse the drivers behind their gender pay gap, which is what this is all about, and the extent to which their policies and practices might contribute to that gap.

We are also working closely with ACAS to deliver guidance for public bodies to help employers fully understand and implement the regulations and understand why they are good for their organisations and businesses.

The hon. Member for Rotherham asked why the Government had not accepted all the recommendations from the Women and Equalities Committee. Of course, we massively appreciate the important role that that Committee plays on the issue. I was one of the MPs in the previous Government who campaigned hard to get a Women and Equalities Committee. We carefully consider all the recommendations it makes. The report makes a number for Government, several of which we have already actioned. For example, the right to request flexible working already allows those with fewer than full-time hours to request the opportunity to work more.

Many of the recommendations would involve significant cost to business and, because we are so early in the process, they would also require changes to primary legislation, which has been in place for only 12 to 18 months. In particular, shared parental leave and flexible working are very new. We would rather wait until these new policies have had time to become established and sufficient evidence has been gathered on what works before changes are made.

[Jess Phillips (Birmingham, Yardley) (Lab)]

I thank the Minister for what she is saying. I wonder, when she says that the Government are going to wait, whether she could give us an indication of how long.

[Caroline Dinenage]

The hon. Lady knows that I am passionate about this and will not let it drag on forever. I will keep it under constant review. She knows, as well as I do, that I am not in the business of spending taxpayers’ money before knowing that that money is going to be well spent and will make a real and positive difference to working women—and men and employers—up and down the UK.

[Angela Crawley (Lanark and Hamilton East) (SNP)]

The Minister mentioned earlier the work of the Women and Equalities Committee inquiry. A number of witnesses to that inquiry outlined that the European Commission recommends a threshold of 50 employees. Does the Minister accept that a more ambitious target would bring forward the kind of changes that we want a bit earlier?

[Caroline Dinenage]

That is in terms of the number of employees one would have to have. As I said at the outset, we wanted to do this hand in hand with business. One concern articulated by business right at the beginning was that, if businesses did not feel that they had bought into this and could not see the advantages, the more unscrupulous ones might subcontract all their lower paid jobs to microbusinesses or very small companies to get round the gender pay gap reporting. We do not want to be in that position. We want to be in a position where businesses, authorities and public bodies all see that there is a genuine benefit in maximising the potential of every single member of their talented workforce, bringing them through the pipeline and making sure they reach the absolute pinnacle of what their skills allow them to do—and that they look at all the different resources available to them such as flexible working and shared parental leave.

It is important to note that we may not have such a low threshold of staff as other European countries, but the way we want to report is much more onerous. We cover bonus pay gaps as well. We know that the bonus pay gap is significantly larger than the gender pay gap on average. Men get paid significantly more and that is why we are asking for a median and mean average for bonus pay gaps. Our requirements are a little bit more arduous, but we think that they are the way we are going to get to the nub of this problem and really begin to tackle it.

The right hon. Member for Slough spoke about older workers and older women in particular. I am really dedicated to looking at ways to tackle the challenges facing older women in work. We are really committed to unlocking the skills, talents and experience of all women and supporting them to reach their economic potential. We will shortly publish “Fuller Working Lives: a partnership approach”, which sets out how working longer can benefit businesses, individuals and the economy, and the key actions that Government are taking. In the meantime the Women’s Business Council, which this Government established, has set up its own action group on staying on. It specifically looks at what businesses can do to support older workers, such as encouraging greater use of flexible working and providing practical support.

I am really pleased that the Committee broadly welcomes the regulations and that we agree on the underlying policy intention to accelerate action to close the gender pay gap. On that basis, I hope that hon. Members will support the regulations, which I commend to the Committee.

Question put and agreed to.