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

Seema Malhotra 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.”

[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.

--- Later in debate ---

[Seema Malhotra]

It is a pleasure, Sir David, to participate today and to serve under your chairmanship.

I will say a few words following the excellent speech that my hon. Friend the Member for Gedling has just made. If he was looking for a part-time advisory role to the President of the United States of America, I would certainly be willing to support him in that endeavour.

First, I thank the Government again for introducing the regulations. However, building on the points that have already been made, I encourage the Government and the Minister, who laid out her case for the need for the regulations powerfully, to think about the wider issue of economic equality for women, particularly in the run-up to the March spring-statement-stroke-Budget. Keeping the issue going and mainstreaming its implications is an important part of how we can move forward in achieving equality for women across all areas of the economy, which is essentially the backdrop to this debate.

I was struck by some of the analysis of the gender pay gap, and I want to put a couple of suggestions to the Minister. My concerns are around the implementation of the regulations. On one level—the transactional level—that is about how they are implemented within a corporation and how the data are collected and reported on. That can stay within a very small sphere of people: maybe the head of human resources and the chief executive officer. Culture change and the players involved in it are an important part of what a company or organisation owns at the highest level.

I know from my past work on equality in companies, on public boards and in politics and public life that it is important to have wider stakeholder engagement to ensure that people understand the responsibility we can all have in making a shift. That helps to create a context and environment within which there can be actors who will act on the messages that come out from the reports and from transparency more widely. They will have a sense of their own responsibility in making that shift.

I am keen to understand how the regulations will be implemented and whether messages and communications will go to chairmen and women on boards, heads of HR, management networks or other networks. We must look at how to mainstream thinking about jobs and pay much more widely, so that we can pre-empt and reduce the problem and see the results coming through.

[Melanie Onn]

On implementation, I am interested to see that in the devolved Administrations in Wales and Scotland, the measures will be implemented under the regulations. I wonder how the Government will monitor that implementation at devolved level, to ensure that these measures are being implemented fairly across the whole United Kingdom.

[Seema Malhotra]

My hon. Friend makes an important point. The public expectation will be that the regulations go beyond administrative boundaries and that the Government take a lead to ensure that they are effectively implemented. It would be helpful if the Minister responded to that point.

It might seem like it is just a small Committee putting the regulations forward today, but I worked in the Government Equalities Office on a different project at the time when the Equality Bill was going through Parliament, and I pay tribute to the civil servants for their work and engagement and to my right hon. and learned Friend the Member for Camberwell and Peckham for leading that work. It was near the close of the Labour Government’s time in office—it was pretty much the last Act that went through Parliament.

To return to the point about the meaning of these measures and those for whom they could make a difference, I was struck by the analysis of the gender pay gap by age published by the House of Commons Library. The gap is much greater for older women, who are hit in other ways as well. They might lose their job and find it harder to get another. We know that they are often the poorest pensioners and the least likely to have pensions in their own right to sustain them in older life. That compounds the problem of the economic wellbeing of older women and poverty that can become entrenched. Awareness of that within organisations would be an important part of tackling economic inequality for older women, particularly when we look at differences by decade of birth.

There is another important issue, which is the relationship, or otherwise, between educational attainment and the pay gap. When we look at the analysis, it is striking that although there is sometimes a link between a better-educated workforce and a reduced pay gap, that is not always the case. There is still a strong gender dimension. We can try to distil the pay gap down to contributing factors such as people leaving school earlier or not having certain educational qualifications, but the data do not suggest that those are the key issues. Rather, the gender dimension remains the key point. That suggests there is a wider cultural inequality issue, which it is important to address. Whether women have GCSEs, A-levels or degree-level education, the analysis shows there is still a gender pay gap for them.

That leads me to my final point, about how we can work much earlier in schools to create role models and a sense of confidence and aspiration. The Fabian Women’s Network, of which I am the founder and president, undertakes deep thinking about that issue. We need to ask what tone we are setting as a nation for the girls, and we need to give them confidence that any future they may want is a future they should be able to achieve; that any profession they want to be in has a door open to them; and that any sky they want to reach is available to them.

The regulations are vital for women who are currently in the workplace, and they can also help us achieve a culture change if we implement them effectively, think about the factors that will support better understanding of the pay gap in organisations and make sure that the issue is cascaded down through management levels in organisations.

I hope the Government will not just encourage organisations to keep data at senior management level but encourage directorates or departments to understand what the gap is in their own departments. That will help to create wider appreciation of these issues lower down the management chain. As those managers then become the senior leaders of tomorrow, they will have begun to appreciate and been engaged with these issues as they become embedded within management life.

I hope that as the regulations are implemented, we will look at the immediate implications and at how we can shift our culture through the opportunity that the regulations will enable. Achieving that shift now will not just help the generations of women in the workforce today but set a completely different tone for our country and benefit the young women coming forward through the schools and in the workplace of tomorrow.

--- Later in debate ---

[Caroline Dinenage]

Yes, it is exactly the same.

The female employment rate is currently the joint highest on record, at 69.8%. The female participation rate has increased by more since 2010 than during the three previous Parliaments combined. We agree, of course, that there is a wider gap for older women, as the hon. Member for Feltham and Heston described. That can be explained in part by age, but not completely. That is why we have introduced measures such as extended flexible working, shared parental leave and increased hours of paid-for childcare—working couples can expect 30 hours from September.

We are not requiring gender pay gap reporting by age, as workforce demographics vary significantly. Such reporting could also raise confidentiality issues, if a company had only a small number of employees in one age bracket. That was raised with us as a concern, and we do not want to betray anybody’s confidence. We agree that the data need to be owned across organisations, which is why we will require a senior director to sign off the data. We will closely monitor compliance on that.

I was asked about devolved approaches. Section 78 regulations cover England, Scotland and Wales. Scottish and Welsh public bodies are subject to their own specific duties in regulations under section 153 of the Equality Act, but the Equality and Human Rights Commission works across England, Scotland and Wales.

[Seema Malhotra]

Can the Minister clarify one point? This may be in the details we have been given, but will companies be required to report on the gender pay gap in their annual reports?

[Caroline Dinenage]

I am not entirely sure whether they will be required to do that, but they will be required to publish the information on a website that is readily accessible. It cannot be hidden away in a tiny little corner of their online presence that nobody can find. We will then republish that information on the Government website, so it will be easily accessible.

We know that transparency may not be a silver bullet, 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 might be contributing to it. I am really pleased that the regulations are broadly supported by the House, and that we agree on the underlying policy intent. I understand that we might have slightly different motivations about how we want to support businesses—whether we want to cripple them with massive amounts of bureaucracy or support them to create the jobs that the country needs—but I truly believe that this reporting marks a significant step forward in making that policy intent a reality, and I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.