Employment Gap: Black, Asian and Minority Ethnic, and White, Workforce

Lord Johnson of Lainston Excerpts

Thursday 29th June 2023 Lords Chamber

[Baroness Thornton]

To ask His Majesty’s Government what assessment they have made of the contribution to the economy which could result from closing the employment gap between (1) the Black, Asian and minority ethnic, and (2) white, workforce.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

The employment rate gap is closing. Data for the first quarter of 2023 shows an ethnic minority employment rate of 69.4%, which is a record high and an increase of 1.1 percentage points on the same quarter a year ago. In April, we set out to Parliament the excellent progress we have made in delivering our ambitious Inclusive Britain strategy to tackle unjust racial disparities in education, health, criminal justice and the workplace.

[Baroness Thornton (Lab)]

My Lords, I thank the Minister for that Answer. The reward for getting this right and closing the gap between BAME and white employees is huge. Research has shown over many years that this could add billions to the economy. Why is this not a priority for the Treasury, the business community and the Government? It would not only deal with the unfairness for the individuals affected but add hugely to the size of our economy. That is really the point. Please can the Government think big about this and take on board the research from McKinsey and all sorts of places that says that this will grow our economy if we get it right?

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness, Lady Thornton, very much for those comments. It is absolutely right that the expected deficit of underutilisation of all groups in this economy is between £20 billion and £30 billion. I draw attention to the fact that 32 of the 74 measures in Inclusive Britain that we put into place have been achieved or are in motion. A huge amount of work is being done to encourage right entry into workplaces following graduation, entrepreneurship, changes in bank lending policies, fundamental mentoring policies and money being put into scholarship programmes. I completely agree with the noble Baroness’s points. This is very much a focus for the Government, and my Secretary of State, Kemi Badenoch, sees it as one of her core priorities.

[Lord Shinkwin (Con)]

My Lords, the introduction of mandatory ethnicity pay gap reporting is the number one recommendation from the Institute of Directors’ commission, which I chair, in The Future of Business: Harnessing Diverse Talent For Success. The director-general and I wrote to the Prime Minister last November, and we are still waiting for a response. I ask my noble friend to encourage No. 10 to reply to our recommendations and avoid giving the impression that this is not an important issue.

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[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his point. I will certainly encourage a response, and I appreciate the comment.

[Baroness Burt of Solihull (LD)]

My Lords, while government guidance is very welcome, does the Minister accept that the only way to close the ethnicity pay gap is to make reporting mandatory for businesses and companies with over 250 employees, and that we can address this disparity only when we really know the true scale of the problem?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Baroness for her comment. As this House will be aware, a deep consultation was undertaken to see what would be the most effective way to ensure that those gaps were narrowed. Since 2012, the gap has narrowed from 5.1% to 2.3% in median hourly pay, but it has very much been felt that, because of the complexities of measuring ethnicity pay gap differentials, particularly in smaller companies of 500 employees or fewer, it would produce data that would not be valid and helpful. Instead, we have introduced a series of voluntary measures and a great deal of training and guidance, which we believe will have the intended outcomes.

[Lord Singh of Wimbledon (CB)]

My Lords, prejudice in society should be tackled not simply for economic reasons but because it is wrong. We all like to believe that it is those people out there who have prejudices and it is not in us. The reality is that prejudice—wariness of difference—is ingrained in us all, in our very genes. But we have to tackle irrational prejudice based on the assumption that people of different colour or who look different are inherently different and inferior to us. What steps are the Government taking to make sure that that irrational prejudice is tackled in schools and universities, particularly in religious education, to emphasise what Sikhs constantly repeat about the oneness of the human family?

[Lord Johnson of Lainston (Con)]

I greatly appreciate the noble Lord’s comments. Clearly, this is a government priority. Continuing on the theme of the original Question, we have developed a number of different action plans, including a work panel process to assess how we can, for example, give more support to employers on ensuring inclusivity. I am pleased to say that we committed to launching that inclusion at work panel and the first meeting is today.

[Lord Sewell of Sanderstead (Con)]

My Lords, I am sure that my noble friend will be aware of the findings of my recent report. One of the things that has come out of it is the disparity in apprenticeships. We found that take-up of higher apprenticeships by white young people was twice as likely as by black youngsters. Does my noble friend agree that we need to target parents to explain that apprenticeships are an effective route to great jobs?

[Lord Johnson of Lainston (Con)]

I am afraid that I was not able to hear the entirety of that question, but I will certainly follow up in more detail. On encouraging inclusion in entrepreneurship, in accessing banking services and in high-quality postgraduate education, the Government have paid specific attention in our Inclusive Britain report to ensuring that there is mentoring and specific funding—I believe that £70 million has been allocated specifically for a scholarship programme that will enable people to move into the right jobs that they want to seek—and that the barriers around class and culture are reduced to enable all students in this country to achieve their potential.

[Baroness Lawrence of Clarendon (Lab)]

My Lords—

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[Baroness Lawrence of Clarendon (Lab)]

My Lords, I will mention the disparity report that came out a couple of years ago. It put immigration, race relations, unemployment and education so much further back, so it is completely wrong to use it as something that is well known. Will the Minister focus on what the noble Baroness, Lady Thornton, was talking about, which is the contribution around education and employment that needs to be looked at, making sure that the disparity is forthcoming, and that employers understand that it is all about the earnings, not the report?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Baroness for her comments. I hope that she understands the importance that the Government place on this. It is also worth looking at how companies—the FTSE 100 businesses and so on—are managing their own boards and make-up to provide the signal and leadership. By the time of the March 2023 report, 96% of the FTSE 100 had met the target to the end of 2022, which is an increase of 7% from 2021. In the FTSE 250, 59% of the companies had achieved their target ahead of their 2024 goal. This is following on from the Parker review. I think that this is extremely encouraging.

This is a priority for the Government. I have said very clearly that the estimated economic loss to the economy was between £20 billion and £30 billion. If I look at the different ethnic groups that make up some of the most successful businesses in this companies, for instance, the Indian ethnicity group is powering ahead. If any noble Lords have had a chance to read the Grant Thornton report that came out three weeks ago, they will see the enormous value of releasing the potential of different specific groups on the economy.

[Lord Green of Deddington (CB)]

My Lords, in the last couple of years or so, the Government have reduced the salary requirements for immigrant workers and the qualifications required, from degree level to A-levels, and they have abolished the requirement to first advertise jobs in local markets. How can those actions help achieve the objectives referred to in this Question?

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[Lord Johnson of Lainston (Con)]

I am not entirely sure that I agree with the noble Lord on all those comments, or, necessarily, on the relevance. However, he commented on education. There is an issue around ethnic groups accessing the highest levels of quality in education, rather than going to low-quality tertiary education outlets. There has been a particular amount of work done on that, as I said, to ensure that we live in an inclusive, one-nation country where everyone can achieve their potential.