Ethnicity Pay Gap

Wera Hobhouse Excerpts

Monday 20th September 2021 Westminster Hall

[Wera Hobhouse (Bath) (LD)]

It is a pleasure to speak in the debate with you in the Chair, Mr Hosie. I congratulate the petitioners on bringing the important issue of ethnicity pay gaps to this Chamber so that we can have a good debate about it. I have listened carefully, and thoughtful contributions have already been made. It is not easy, but we are all in politics—I include the Minister in this—not to do the easy thing but to put our minds to the more difficult stuff. Anybody can do the easy thing. I hope we hear a positive reply from the Minister.

Saturday marked the UN’s International Equal Pay Day. In the UK, women make 87p for every £1 earned by men. I mention the gender pay gap because all too often the gaps within the gap are overlooked. We must recognise how financial inequalities disproportionately affect some women in our society, including LGBT+ women and women with disabilities. The right hon. Member for Romsey and Southampton North (Caroline Nokes) mentioned intersectionality and the fact that one disadvantage plus another disadvantage increases the problems that people face. While women in the UK earn 12.5% less than men, ethnic minority women earn an average of 2.1% less than white women. We must ensure that women from all parts of our society are included in our efforts to close the pay gap.

I mention the gender pay gap because we have seen the effectiveness of mandatory gender pay gap reporting. I echo the right hon. Lady’s words about the importance of making it mandatory. Some companies are already doing it voluntarily, of course, but the real need is for it to become mandatory.

I am proud of the Liberal Democrats’ role in introducing that legislation in 2015, and of our first female leader, who fought hard to get it on the agenda in her time as Business Secretary. Before that legislation was introduced, only six companies published their pay gap data under the voluntary initiative. There is no doubt that the policy has driven greater transparency and accelerated progress towards workplace equality.

In contrast, statistics show that the ethnicity pay gap has not significantly improved over that time. Given that recent reports suggest that ethnic minority workers have been worst hit by job cuts during the pandemic, there could be no more pressing time for action. The McGregor-Smith report identifies a lack of transparency in corporate Britain as a key barrier to progress. Without data, how can employers identify the disparities within their own companies and make informed decisions that will improve their recruitment, promotion and management policies? Research shows that most employers believe that ensuring workplace diversity is a priority, but little more than a third actually collect and analyse data to identify differences in pay and progression for employees from different ethnic groups.

The voluntary approach has driven, at best, slow and inconsistent progress. Currently, only 13 FTSE 100 companies report their ethnicity data publicly. Government action is needed if we are serious about tackling the pay gap, its causes and its effects. As with gender pay gap reporting, there is a clear case for introducing mandatory ethnicity pay gap reporting. I ask the Government to set out a timetable for getting that into law.

Equality monitoring of the workforce is also an essential step to carrying out ethnicity pay gap reporting. I ask the Minister, when will the Government introduce legislation to ensure that all listed companies and businesses employing more than 50 people publish workplace data broken down by race and pay band? I have listened carefully to the difficulties, but let us tackle them, because the end result will be so much more positive for employers and businesses.

It is four years since the McGregor-Smith review, four years since the Government committed in their manifesto to ask large employers to publish information on their ethnicity pay gaps, and three years since the Government launched a consultation on ethnicity pay gap reporting. We are still waiting for the results of that consultation. The Government must stop dragging their feet. Only once businesses begin to publicly report the diversity of their workforces will we see the start of real change. As the Black Lives Matter movement showed, action is needed now to build a more inclusive and more equal society. Addressing race equality at all levels in the workplace can no longer be optional.