Gender Balance on Corporate Boards

David Mowat Excerpts

Monday 7th January 2013 Commons Chamber

[Ann McKechin (Glasgow North) (Lab)]

I welcome the opportunity to speak in the debate. As the Minister will know, I am a member of the Business, Innovation and Skills Committee. The Committee is currently undertaking an inquiry into women in the workplace, which will include a review of the recommendations of the Davies report. I do not want to pre-empt our final report and recommendations to the Government, but I will say that we wanted to institute a cross-party inquiry for the very reasons that the Minister gave earlier.

Diversity on boards is good for companies, and therefore good for the British economy. Given the present state of the economy, we should explore every avenue that may lead to increased innovation, diversity and productivity. In response to what was said by the hon. Member for Esher and Walton (Mr Raab), let me point out that diversity means introducing different experiences to a board, rather than a single set of pre-judged experiences. The hon. Gentleman advanced the classic Catch-22 argument that those who do not have enough experience cannot join a board, but those who are not members of the board do not have enough experience in the first place. However, we all have to start somewhere.

Evidence given to our Committee has made it clear that there are strong views on both sides about the imposition of quotas, but it has also shown that some companies have taken strategic steps to increase diversity through, for instance, regular reporting on how they are achieving a gender balance. I was interested in what was said by the hon. Member for Reading West (Alok Sharma) about the use of reporting to drive progress. Pay transparency is another key component, as are solid targets and consistent ways of ensuring that progress is made. As with politics, progress can go back as well as forward. Unfortunately, when it comes to membership of the Cabinet, it is going back. It is important to have a clear and consistent policy in this regard.

We should take account of companies that are keeping their heads well down and not joining in the argument because they think that if they do not participate in it they can ignore it. I do not rule out the use of quotas if we find that a persistent sector of the economy does not consider diversity to be integral to the progress of the economy overall, and I think that the Government have a role to play in that respect. I agree that quotas are not the only way of achieving diversity, but I think it important for the Government to think about procurement and about how they spend money on training and higher education.

One other aspect we should be considering is regulation of the London stock exchange. Requiring companies that are members of the stock exchange to look at how they achieve diversity on their boards and throughout senior management is a way of avoiding primary legislation while driving progress. In response to the hon. Member for Esher and Walton, I should add that one of the companies that gave evidence to us, Clydesdale bank, has set a target of increasing the number of women in the three top senior management roles over the next few years. That is one way women can gain experience in executive director roles, as well as non-executive director roles, which have been referred to.

This is a work in progress, but the Government need to be at the heart of it.

[David Mowat (Warrington South) (Con)]

The hon. Lady said that companies that are more diverse grow more quickly and that there is evidence of that. Is this not, then, a self-correcting problem, because all companies need to grow, and those that are struggling to grow and are not diverse enough should surely be doing what is required to correct that? Surely this is self-correcting, so the measures she is describing are unnecessary.

[Ann McKechin]

A persistent group of people will always resist change if they can. Despite the good track record, there are contrary voices, as we heard during the Business, Innovation and Skills Committee inquiry, stating that men are inherently better at doing these things anyway and that things will be fine. That view should not be accepted in the 21st century. The public, this Parliament and the Government should take an active role in engaging with this. Issues of pay transparency, part-time work, child care and business culture should interest us all, whether we are in business or not.

I concur with my hon. Friend the shadow Business Secretary about it being important that we respond positively to the EU over how this country and this Government can make a difference to the economy, which will, I hope, improve if we ensure that diversity is key to our corporate structures.