Workplace Pay Gaps

Seema Malhotra Excerpts

Tuesday 7th January 2025 Westminster Hall

[The Minister for Equalities (Seema Malhotra)]

It is a pleasure to serve under your chairship, Sir Roger. I congratulate my hon. Friend the Member for Brent East (Dawn Butler) on securing this important debate. I thank her, as other hon. Members have, for her long-standing advocacy and campaigning on the issues, which she demonstrated deeply in her speech today. I am proud to have worked with her on them. I also acknowledge the contributions made by hon. Members on both sides of the House, which were summarised well by the Opposition spokesperson, the hon. Member for Huntingdon (Ben Obese-Jecty). I am pleased to see the support for our direction of travel, and I see that we need to go further and faster.

I hope to comment on as many of the issues as possible that colleagues have raised. I thank the Opposition spokesperson for his comments, but I will say that if there had been as much passion for and commitment to some of these issues over the past 14 years, and such a focus on the Conservative party’s record, there would have been greater change than there was. I hope that he will continue to be a strong voice on these issues, not just in Parliament but in his party.

Today’s debate is a welcome opportunity to reaffirm and highlight the Government’s commitment to workplace fairness. I am incredibly proud that the work we are taking forward in this Parliament comes on the back of a long history of commitment to equalities legislation, whether that is the Equal Pay Act, the Race Relations Act 1965, the Sex Discrimination Act 1975 or the Equality Act.

One of the key ways that we can measure fairness in the pay that workers receive is by looking at pay gaps. Pay gaps look at the differences in the average pay between groups—for example, the average earnings of women compared with men—while equal pay is a direct comparison of the pay of individuals doing the same or similar work. We have had a number of contributions today on the ranges of and differences in pay gaps.

Pay gaps do not necessarily mean that pay discrimination has taken place, but frankly, they often do. They can point to opportunities not provided and processes that lock people out. Those are issues of fairness and workplace security. Pay gaps can also mean that employers are missing out on the talents and skills of a diverse workforce and all the benefits that come with that. Closing pay gaps of all kinds is in everyone’s interest, which is why we want to go further and faster in this Parliament to reach that ambition. It makes sense for business, society, employers and our economy.

The timing of this debate is welcome, given that—as my hon. Friend the Member for Brent East said—Ethnicity Pay Gap Day falls tomorrow, on 8 January. I acknowledge the work of Dianne Greyson and other campaigners. Since 2018, the campaign has highlighted the need for decisive action to tackle ethnicity pay gaps. Like Disability Pay Gap Day, which was marked on 7 November, and Equal Pay Day on 20 November, the date serves as a reminder of just how far we have to go. We know that ONS data shows that black, African, Caribbean and black British employees have consistently earned less than white employees, when looking at median gross hourly pay. In 2023, the pay gap between disabled and non-disabled employees was 12.7%, and in 2024, the gender pay gap still stood at 13.1%.

A number of issues have been raised—not just by my hon. Friend—in relation to accountability, enforcement, regional variation, the right to know, and so on. I will make a few remarks before addressing those points, although I recognise that there may be a shortage of time to address all the points that have been raised today, so I will also be happy to pick them up with hon. Members afterwards.

I am proud that in the King’s Speech in July, we strengthened our plans to introduce legislation to root out inequalities and strengthen protections against discrimination. As part of the King’s Speech, we announced the equality (race and disability) Bill, through which we will introduce mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees, building on the requirement to publish gender pay gap data. That is a major next step in equalities legislation.

The debate on the publication of an ethnicity pay gap report has had the engagement of a range of key stakeholders, including the Runnymede Trust, the Chartered Institute of Personnel and Development, Business in the Community, ShareAction, Unison and many others. We also know that many ethnic minority workers still face barriers to progression in the workplace. For example, in March 2023, over 26% of the workforce across NHS trusts in England, but only 11% of those at senior manager level, were from an ethnic minority background.

Similarly, although there has been growth in employment rates for disabled people in recent years, there are still significant gaps, as my hon. Friend the Member for Ealing Southall (Deirdre Costigan) laid out. As we know, disabled people have, on average, lower incomes than non-disabled people, and I want to make a couple of comments about the disability pay gap and employment issues. I know that my hon. Friend, who has expertise in this area, has met the Minister with responsibility for disabled people, my right hon. Friend the Member for East Ham (Sir Stephen Timms), to discuss the disability employment charter. We are taking those comments into account in our response to the Public Services Committee that I hope will be coming shortly. We also remain committed to publishing the findings of the disability workforce reporting consultation 2021-22.

[Jim Shannon]

Will the Minister give way?

[Seema Malhotra]

I am conscious of time.

[Sir Roger Gale (in the Chair)]

Order. This is entirely my fault. I imposed a time limit on speeches earlier, but two Members then dropped out, which has left us, perversely, slightly under-running. I should have indicated to the Front Benchers at the start of the Front-Bench contributions that we had a little more time than we might need. It is probably in the interests of the House that we hear what the Minister has to say, so I am going to allow the Minister to run over very slightly; if she wishes to take the intervention, she may do so.

[Seema Malhotra]

Thank you, Sir Roger. I will give way.

[Jim Shannon]

I thank the Minister for her contribution; she will know that my questions to her will never be adversarial. She has referred to disability action. Has she had an opportunity to discuss these matters with the equivalent Minister in the Northern Ireland Assembly? That was the thrust of my contribution, as it is really important that we in Northern Ireland follow the same line of thought as happens here.

[Seema Malhotra]

I understand that we are engaging with our colleagues in the devolved Governments, and across the country in relation to mayors playing a part, and I am very happy to pick that point up with the Minister for Disability. It is a priority for this Government to engage much more with our devolved Governments and work together to ensure that the voice of the whole UK is heard in the legislation that we are bringing forward.

I want to make a couple of comments about parental and shared leave and employment rights. Our plan to make work pay included a commitment to review the parental leave system alongside our wider plans to boost family friendly rights, so that workers and employers can benefit from improvements in productivity and wellbeing. The Employment Rights Bill will make existing entitlements to paternity leave and unpaid parental leave available from day one of employment, and will enable parents to take their parental leave and pay after their shared parental leave and pay.

We are improving access to flexible working, which will be extremely important in how we move forward further in this space.

[Ms Creasy]

I absolutely welcome the commitment to look at these issues, but I want to put on record that many of us believe that shared parental leave has set us back in terms of equality between the genders. It has been a disaster in terms of who has taken it up, because it asks women to give up their maternity leave and men do not pick it up. We need to give men leave that is paid and protected in its own right if we are ever to have equality between the sexes. I put that on the Minister’s table as something we need to look at, because shared parental leave is not the answer here.

[Seema Malhotra]

I thank my hon. Friend for making that point; her views and her voice are very much heard in this place. A number of these issues go across Government Departments, and I encourage her to continue to engage with other Ministers on this.

Hon. Members have raised issues relating to pregnant women and new mothers. Pregnant women and new mothers deserve to know that the law is on their side. We will put in place legislation that makes it unlawful to dismiss pregnant women, mothers on maternity leave and mothers who return to work for a six-month period after they return, except in specific circumstances. Strengthening the legislation in this area is an important part of how we are continuing to take our programmes forward in a way that is good for our economy, society and families.

Returning to ethnicity and disability in relation to employment and pay gaps, introducing mandatory ethnicity and disability pay gap reporting will provide transparency and the vital data to help businesses to identify and address pay gaps within their workforces and identify and remove barriers to progression. It will shine a light on the businesses taking welcome steps to promote the talents of ethnic minority and disabled workers while holding to account those who neglect to do so and make progress. The equality (race and disability) Bill will enshrine in law the full right to equal pay for ethnic minority and disabled people, and we will seek to remove barriers to redress for claimants.

These measures are not just about diversity and inclusion, as hon. Members have commented: they make good economic sense. Evidence shows that the adoption of such policies leads to improved productivity, improved rates of progression and retention, and profitability. Our analysis in opposition indicated that closing the employment gap faced by ethnic minority people could add almost £36 billion to our economy.

Anyone who is familiar with pay gap reporting knows, however, that the changes that we are making are not simple. These are complex matters with numerous challenges, whether it be disclosure rates, for which we will be producing more guidance, or the granularity of reporting. That is why we have listened to stakeholders when it comes to introducing the measures, and we continue to listen about how we will make this work in practice. That will be part of an important set of consultations that we are to undertake this year, including roundtable discussions over the next few months. I look forward to attending my first one, in collaboration with ShareAction, early in March.

As for when we will introduce legislation, we have committed to publishing the draft legislation in this parliamentary Session. As I said to my hon. Friend the Member for Brent East, we will bring forward the consultation shortly. That will be an opportunity for many of the issues to be raised in wider dialogue as we move forward with our plans.

On closing the employment gap and on best or good practice in workplaces, the “Get Britain Working” White Paper was published by the Department for Work and Pensions in November last year. It was a groundbreaking piece of cross-Government work. It sets out the details of reform to employment support to help tackle rising economic inactivity levels and to support people into good work, creating an inclusive labour market, all of which is part of the backdrop for how we make legislation more impactful in workplaces. That includes a new service to support more people to get into work and to help them get on in work.

Local “Get Britain Working” plans across England will be led by mayors and local areas and will include a youth guarantee—for all people aged 18 to 21 in England—for education, training or help to find work. I encourage Members to engage in such activity as we take it forward.

We are also making changes to existing reporting requirements further to ensure that employers are taking the steps we need to narrow their gender pay gaps. It is absolutely right to say that progress on reducing the UK gender pay gap has stagnated, and we need employers to take action to change that.

Organisations have been reporting data since 2017, but with employers encouraged to publish action plans voluntarily. Analysis in 2019, however, found that only half of employers had produced details of the actions that they had developed or implemented to address their gender pay gap. As part of the Employment Rights Bill introduced to Parliament in October last year, action plans will become a requirement. They will ensure that organisations are taking effective steps to improve gender equality in their workplace, and we continue to engage on how we will make them most effective. This will also focus minds on steps, for example, to support employees during the menopause and will introduce much-needed accountability into reporting.

Finally, the Government are acting in a number of ways to act on the drivers of pay gaps and to secure fairness more broadly in our workplaces. The landmark Employment Rights Bill contains robust measures to safeguard working people, including protections from sexual harassment and enhanced rights for pregnant workers, as well as measures that have the potential to change workplace culture for the better, with the elements I mentioned to do with flexible working and expanded day one rights.

We have an ambitious agenda to ensure that workplace rights are fit for a modern economy, and will empower working people and deliver economic growth. That is why we are working at pace across Government to make this agenda a reality. Over 50 years after the Equal Pay Act 1970 and almost 15 years after the Equality Act 2010, I am proud that we are now taking action at pace. In closing, I again thank all hon. Members for their contributions this morning.