Draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

Sarah Champion Excerpts

Wednesday 25th January 2017 General Committees

[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.

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[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.