Workplace Pay Gaps

Stella Creasy Excerpts

Tuesday 7th January 2025 Westminster Hall

[Ms Stella Creasy (Walthamstow) (Lab/Co-op)]

It is, as ever, a privilege to serve under your chairmanship, Sir Roger and I wish you a happy new year. I congratulate my hon. Friend the Member for Brent East (Dawn Butler), who has been a consistent champion of equalities for the entire time that we have been in Parliament.

We could forgive ourselves for feeling that we have been here before, not only because it is wonderful to see the hon. Member for Strangford (Jim Shannon) in his place at every Adjournment debate, but because we have been asking for equal pay and for pay gaps to be addressed in this country for the entire time that I have been in this House—15 years. We are latecomers to this debate: women have been asking for equal pay since 1833. The first recorded instance was in Robert Owen’s labour exchange and, as a Co-op MP, I am sorry to say that it was not received favourably. I hope that we can address that today. Nor should we ever forget Barbara Castle’s contribution as a champion for equal pay. She paid for it with her career because, frankly, people in the Labour movement did not appreciate the argument that she made. Yet her argument was the argument that we always have to make, which is, first and foremost, about our economy.

Pay gaps, whether to do with gender, ethnicity, or disability, represent productivity loss and loss of talent. We have to ask ourselves why this country is languishing in the bottom half of the OECD rankings when it comes to productivity and why we have stagnating living standards. One of the answers is that we do not make the best use of our people. Let us kill the myth that when we talk about equal pay, or the gender pay gap, somehow this is women asking nicely for something as a treat. This is cold, hard economics we are talking about today, which is why it also matters when we do things that may inadvertently increase the gender pay gap. Today, I want to raise some concerns with the Government about that. When we kill the myths, we need to be clear: it is really not us, it is society.

Data from the Fawcett Society shows that even when men and women work in the same occupations, in the same industries, doing the same working hours, and are the same age and ethnicity, two thirds of the difference in their income cannot be accounted for. That is discrimination. Let us be honest about what it is. Women ask just as often for a pay rise; men are four times more likely to receive one. There is segregation within industries and it is increasingly evident that the biggest part of the pay gap is to do with motherhood, which I want to come on to.

I take a very different view to the hon. Member for Montgomeryshire and Glyndŵr (Steve Witherden) on the Employment Rights Bill, which is why I think we need to address this issue. Five years ago, in October 2020, I put forward the Equal Pay (Implementation and Claims) Bill, because of the challenges that we are facing. My hon. Friend the Member for Ealing Southall (Deirdre Costigan) is absolutely right that we have had pay gap reporting for many years now, but it is one thing to know there is a gap and another to have the tools to do something about it. The lack of fines and the previous Government’s cavalier attitude towards the gender pay gap and ethnicity reporting—which they promised us, but never delivered—in tackling productivity and highlighting that lack of talent is a real challenge for us.

We need to give people the tools, because there are no fines. One reason why I proposed the Equal Pay (Implementation and Claims) Bill was to give women the right to know the incomes of their male comparators, so they could bring an employment tribunal. We know that this has been one of the few ways that people have actually made progress on this. Last year’s figures show that the average award for sex discrimination was £50,000, while for race discrimination it was £10,000, and for disability it was £17,000, but some of the awards went up to nearly £100,000. I pay tribute to women such as Carrie Gracie and Samira Ahmed, who took on major household names who were not paying women equally. This problem is widespread in our society.

I want to return to the issue of the motherhood pay gap, because it is not just that women face a penalty when they have children, it is that men receive a premium. The evidence from workplaces is clear that even when women do return to work after motherhood, they are undervalued, underpaid, and considered to be less committed. The reverse is true for men. What a waste of talent in this country. What on earth are we doing as a nation, if we think that when someone is able to juggle looking after a family, they are somehow less rather than more capable, and when we do not recognise that we are asking men to do something impossible, which is to not be around their children at an early age and be the guy that they want to be, because we are asking women to pick up the slack for men’s employers?

I am proud of many aspects of the Employment Rights Bill. I am proud of the equality action statements. They will be part of shining the light of disinfectant on the problem of the pay gap. Yet when we talk about the tools to tackle this, we have to recognise that if we inadvertently reinforce the stereotype that only women look after children, we may make the pay gap worse. There is a lot of evidence that even those women who do not have children experience discrimination in the workplace because employers think they might go and have children.

The concern I raise with the Minister is not only the need to introduce a “right to know”—that 2020 legislation was not written by me, but by a brilliant woman called Daphne Romney, who is a fantastic QC on these issues and who worked with the Fawcett Society. I hope I can encourage the Minister to have a look at it and see if there is anything she might want to pick up. However, I also want to bring to the Minister’s attention my concern that if we only strengthen mothers’ rights in the workplace, we might reinforce the idea that it is only mothers who look after children, and therefore the gender pay gap could get worse and not better, and people will be left out. The answer is, therefore, not to reduce those rights, but to give fathers and second carers in a relationship rights to equally paid and protected leave, so that everybody of a certain age who might be looking after children is equally discriminated against.

PAPa, paid and protected leave for fathers and second carers, is something that we could do through this piece of legislation. I will not tell the Minister how long it should be, but the principle that fathers need protected time in their own right is possibly one of the greatest tools for equality and improving productivity that we could bring into our economy.

Many of us, who are so delighted to see a Government that are prioritising tackling the pay gap, are equally concerned to ensure that we do not miss this opportunity to make the progress we need: to give dads back the time they need to be brilliant dads and employees, and to give mums the opportunities in the workplace denied to them, because too often society thinks that they put themselves out to pasture by having children. Only a Labour Government can understand the challenges that we face, but only a Labour Government can live to the highest standards, which Barbara Castle called us to, because it is her legacy that we are here to fight for and her legacy that will deliver for this country.

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[Ben Obese-Jecty (Huntingdon) (Con)]

It is a pleasure to see you in the Chair for this debate, Sir Roger. I congratulate the hon. Member for Brent East (Dawn Butler) on securing today’s debate, which marks Ethnicity Pay Gap Day.

We have heard from a host of Members this morning on the impact of pay gaps in the workplace. The hon. Members for Brent East and for Dewsbury and Batley (Iqbal Mohamed) both asked what can be done to hold companies that do not address identified pay gaps to account. The hon. Members for Walthamstow (Ms Creasy) and for Montgomeryshire and Glyndŵr (Steve Witherden) addressed the rights of parents and the motherhood pay gap. The hon. Member for Ealing Southall (Deirdre Costigan) spoke about the disability pay gap and improving the working lives of disabled workers. The hon. Members for Strangford (Jim Shannon) and for Alloa and Grangemouth (Brian Leishman) spoke about regional pay gaps in Northern Ireland and Scotland respectively. These are important topics in an area where there is still work to be done, despite the progress made over the last half a century, first by addressing gender pay discrimination and, more recently, by addressing discrimination based on ethnicity and disability. The Labour party’s manifesto pledged to address the issue of pay gaps and stated that it intended to build upon the existing legislation.

Paying men and women different pay for the same work has been prohibited in Great Britain since the Equal Pay Act 1970—legislation that has since been superseded by the Equality Act 2010. Gender pay gap reporting was introduced by the Conservative Government in 2017, through world-leading legislation that made it statutory for organisations with 250 or more employees to report annually on their gender pay gap. Since 2017, the gender pay gap has declined steadily from 18.4% to 13.1% in 2024. I ask the Minister: do the Government anticipate that trend continuing and, to that end, do they believe that the introduction of additional legislation will close the remaining gap more quickly or have no impact on the current trajectory?

Data from the Office for National Statistics on the gender pay gap from 2024 show that it was highest in skilled trades and occupations, and lowest in caring, leisure and other service occupations. Although the Government’s new legislation will seek to ensure that gender pay disparities are eradicated within organisations, what plans do the Government have to address the differing pay gaps across industries?

The gender pay gap is much higher for full-time employees aged 40 years or over than it is for employees aged below 40 years. There are a variety of reasons for why that might be the case. Although I do not have a breakdown for the rationale for that observation, one reason might be the impact of motherhood on careers and earning potential. What steps are the Government taking to address the gender pay gap within that demographic? It is notable that, in occupations where pay generally increases with age, the proportion of women decreases. Additionally, the difference in pay between the sexes is largest among higher earners.

In May 2021, the Labour party pledged to modernise pay laws to give women the right to know what their male counterparts earn, as alluded to by the hon. Members for Brent East and for Walthamstow. Although that detail did not make it into the manifesto—not that that has stopped the Government from implementing some of their other recent policies—do the Government still intend to introduce that right, and if so, will the Minister outline how such a policy would work in practice? Can the Minister provide assurances that private sector pay will remain confidential and not subject to inquiry by co-workers by law?

Close to home, we see how this presents itself in our political parties. In 2023, the Conservative party had a mean gender pay gap of minus 1.8%. Labour party reporting shows that it has a mean gender pay gap of 2% and that:

“The gender pay gap for men and women therefore shows that on average, men’s hourly earnings are higher than women’s within the Party. There has been a change from the -2% recorded in 2022.”

Can the Minister outline what steps have been taken to address the seemingly worsening gender pay gap within the party of Government since the 2023 report was published?

[Ms Creasy]

I am pleased to hear that the shadow Minister thinks that gender pay gap reporting is something that should drive change. Does he therefore want to apologise for the fact that the only business reporting that his party’s Government abolished, during the pandemic, was gender pay gap reporting? If he thinks the gender pay gap is such an important metric, does he now recognise that that move sent a terrible message about this data?

[Ben Obese-Jecty]

Obviously, that was before my time in this House, so I am not completely au fait with the detail the hon. Member is referring to, but I will come back to her with some clarification.

I was unable to find a Labour gender pay gap report for 2024, nor could I find any ethnicity or disability pay gap reporting, so I ask the Minister whether she can provide an update on the 2024 pay gap figures for gender, ethnicity and disability for Labour party employees. It would be reassuring to see the party of Government lead by example, by placing itself in the vanguard of organisations that voluntarily provide such clear data ahead of the introduction of the legal requirement to do so.

On race, Labour’s manifesto pledged to introduce a landmark race equality Act to enshrine in law the full right to equal pay for black, Asian and other ethnic minority people. The Minister for Women and Equalities, the right hon. Member for Houghton and Sunderland South (Bridget Phillipson), pledged 18 months ago that such an Act would form a core part of Labour’s plans in government. The aspect of that Act applicable to this debate is the Government’s commitment to fine companies that do not act on data highlighting a racial pay disparity. The right hon. Lady stated that that was a Labour priority, yet as we approach the six-month point of Labour being in office, I ask the Minister who here today to clarify when that Act will be brought before the House and when companies can be expected to have to implement ethnicity pay gap reporting. Labour first made the pledge to introduce ethnicity pay gap reporting in 2021, in a document that has now been deleted from the Labour party website, but I ask the Minister to say how such a policy is likely to be implemented.

In March 2022, the previous Government published “Inclusive Britain”, its response to the Commission on Race and Ethnic Disparities. Action 16, which directly addressed ethnicity pay gap reporting and responded to recommendation 9 in the report, was to

“Investigate what causes existing ethnic pay disparities.”

It stated:

“We will address the challenges with ethnicity pay gap reporting to support employers who want to demonstrate and drive greater fairness in the workplace.”

It also said that the Department for Business, Energy and Industrial Strategy would

“publish guidance to employers on voluntary ethnicity pay reporting in summer 2022. This guidance, which will include case studies of those companies who are already reporting, will give employers the tools to understand and tackle pay gaps within their organisations and build trust with employees.”

The previous Government published their guidance to employers in April 2023. I ask the Minister whether this Government will retain the existing guidance and use the measures already in place. Once reporting becomes mandatory, how will the Government ensure that enough workers disclose their ethnicity to make reporting accurate? Can she give assurances that employees will not be forced to disclose their ethnicity on record? How will the legislation improve individual situations if an ethnicity pay gap is identified? Will employees on the wrong side of an identified ethnicity pay gap be informed of their specific circumstances, or will they be left to see the gap identified in the reporting and then have to rely upon the organisation’s action plan to redress any imbalance?

In January 2023, the then Labour party chairman, who is now the Minister for Women and Equalities, addressed the reported 9% ethnicity pay gap within the Labour party between its black and minority staff, and its white staff. She stated:

“Labour is determined to close these pay gaps, not just among our own staff.”

Two years later, and ahead of mandatory ethnicity pay gap reporting being introduced, I ask the Minister to say whether the Labour party has now addressed its own ethnicity pay gap. The Guardian reported in November that senior Labour MPs were frustrated that

“there were no senior black staff members at the very centre of a Labour Government.”

It would appear that the party of Government still has some work to do.

Lastly, the disability pay gap receives far less scrutiny than either the gender pay gap or the ethnicity pay gap. As someone with a close relative who is a wheelchair user, it is easy for me to see how disabilities, both visible and hidden, can be overlooked. The Government pledged in their manifesto to introduce a full right to equal pay for disabled people, as well as mandatory disability pay gap reporting for large employers.

A TUC report from last November highlighted the current disability pay gap, and we would all benefit if that gap was closed. Can the Minister say when the Government intend to introduce mandatory disability pay gap reporting and also how the mandatory action plans will be used to address identified gaps?

A proactive step would be to introduce reasonable adjustments passports to ensure that the impact of employees’ disabilities is documented. Adjustments can be agreed and any future potential adjustments can be identified. An employer then has a clear record of adjustments that have been agreed upon, which can be easily communicated to new managers. I believe Labour also pledged to improve access in its manifesto, so can the Minister outline what progress has been made in that regard?

ONS data for 2023 showed that the disability pay gap was 12.7%. Unlike the gender pay gap, the disability pay gap has remained constant for around a decade, as highlighted by the hon. Member for Ealing Southall (Deirdre Costigan). That gap is actually wider for men, at 15.5%, than it is for women, at 9.6%. It is also wider for full-time employees than it is for part- time employees. The ONS’s disability pay gap analysis showed that disabled men earn a median hourly pay that is similar to that of non-disabled women. The ONS data also showed that the biggest impact is on those with autism, epilepsy or learning difficulties. Disabled employees with autism had one of the widest pay gaps, with a 27.9% difference, and those with epilepsy had a 26.9% difference.

I ask the Minister what steps the Government are taking to reduce those categories of pay gap with the highest difference. Given the increase in instances of autism in children with special educational needs and disabilities, I ask the Minister: what steps are being taken now to ensure that a better structure is in place for what is likely to be an increase in those disabilities in the workforce?

There is still progress to be made on addressing pay gaps in our workforce. I look forward to the Minister’s response and await clarity from her on the steps the Government have pledged to take to address those issues.

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[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.