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

Debate between Seema Malhotra and Sarah Champion

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.