Clause 73

Equality Bill – in a Public Bill Committee am ar 23 Mehefin 2009.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Gender pay gap information

Amendment proposed (this day): 14, in clause 73, page 55, line 19, at end insert—

‘( ) the Armed Forces;

( ) the Security Service, the Secret Intelligence Service or the Government Communications Headquarters;’.—(John Penrose.)

Question again proposed, That the amendment be made.

Photo of Ann Winterton Ann Winterton Ceidwadwyr, Congleton

I remind the Committee that with this we are discussing the following: amendment 13, in clause 73, page 55, line 20, leave out paragraph (b).

Government amendment 67

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

Welcome back to the Committee, Lady Winterton. I believe that I had dealt with the specific technical points raised by amendments 13 and 14 and explained Government amendment 67, but Conservative Members made it clear that they intended to use their amendments to probe the bigger point that relates to clause 73 and question why the clause does not apply to the public sector.

The Bill’s purpose is not to compare the private and public sectors, like for like. The Government’s approach to the public sector is to impose an equality duty on it. One of the things that entails is for public authorities to demonstrate their compliance by reporting on their gender pay gap, though that has not been in the requirement. The proper place for detailed public sector requirements is in secondary legislation under clause 147, which we will debate in due course. That gives us flexibility to amend the requirements, should experience suggest that that is necessary.

The reporting requirement should not be seen in isolation. It relates to a number of things that public authorities should do to advance equality, foster good relations and eliminate discrimination, which are the terms of the duty. So we are not singling it out from the other specific duties. In that way, the requirement to be transparent about gender pay is firmly anchored in the wider requirements on the public sector.

To single out that requirement by also subjecting the public sector to clause 73 would introduce a sort of unwarranted double jeopardy situation. Public authorities that do not comply with their duty obligations will be subject to Equality and Human Rights Commission  compliance notices, which are enforceable in the civil courts. It would be overkill to hit them with civil and criminal action under clause 73. It would also not make much sense.

The intention is that the duties will begin to operate from April 2011, which is two years before the power under clause 73 might be used. The duty on the public sector is more stringent. The equality duty requires it to have due regard to the need to advance equality, eliminate discrimination and foster good relations. As part of that, public authorities with more than 150 employees will report their gender pay gaps and other relevant metrics. As I have already explained, I would not want to lower the 250-or-more employee threshold in clause 73 to match that of the public sector.

If the suggestion is to replace the duty and pull it out of the single equality duty by putting public authorities under clause 73, it would be a regressive step for public sector accountability. Our detailed proposals for the specific duties are set out in the document, “Equality Bill: Making it work. Policy proposals for specific duties”, which we published on 11 June. That sets out specific duties to enable public authorities to carry out the equality duty more effectively. The closing date for that consultation is 30 September, and we hope to receive contributions from members of the Committee. We aim to publish our response before the end of the year.

I hope that that satisfies Conservative Members that we have gone in the right direction in putting the onus on gender pay reporting in the equality duty, with all its other characteristics, and not involving the public sector in clause 73.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

It is a pleasure to see you in the Chair, Lady Winterton. Based on the Minister’s response, we are quite content. We were most concerned to ensure that there would not be one law for the public sector and another for the private sector. In fact, that may still be so, but there will be a slightly tougher regime for the public sector. In that case, we have no objections, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 67, in clause 73, page 55, line 20, at end insert—

‘( ) a government department or part of the armed forces not specified in that Schedule.’. —(The Solicitor-General.)

This amendment would exclude the security and intelligence agencies and GCHQ’s military helpers from the scope of Clause 73. As a result, that clause would not apply to any government department or any part of the armed forces.

Question proposed, That the clause stand part of the Bill.

Photo of Ann Winterton Ann Winterton Ceidwadwyr, Congleton

With this it will be convenient to discuss new clause 9—Disability pay gap information—

‘(1) A Minister of the Crown may by regulations require employers to publish information relating to the pay of employees for the purpose of showing whether, by reference to factors of such description as is prescribed, there are differences in the pay of employees who have a disability and employees who do not have a disability.

(2) This section does not apply to—

(a) an employer who has fewer than 250 employees;

(b) a person specified in Schedule 19.

(3) The regulations may prescribe—

(a) descriptions of employer;

(b) descriptions of employee;

(c) how to calculate the number of employees that an employer has;

(d) descriptions of information;

(e) the time at which information is to be published;

(f) the form and manner in which it is to be published.

(4) Regulations under subsection (3)(e) may not require an employer, after the first publication of information, to publish information more frequently than at intervals of 12 months.

(5) The regulations may make provision for a failure to comply with the regulations—

(a) to be an offence punishable on summary conviction by a fine not exceeding level 5 on the standard scale;

(b) to be enforced otherwise than as an offence, by such means as is prescribed.

(6) The reference to a failure to comply with the regulations includes a reference to a failure by a person acting on behalf of an employer.’.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

During our morning sitting, when we were considering the earlier groups of amendments to the clause, we had a reasonable debate on some of its principles. I shall try to be brief, because we have given at least some of them a fair airing already. However, I want to put a couple of additional points on the record.

When I started investigating the history of the gender pay gap, I was fascinated to discover that there is something of a success story to be mentioned. That is not to say that the job is all done—far from it, there is still a serious issue, and let no one be under any illusion about its severity or importance—but it is worth while pointing everyone here and the wider world outside to the figures in “The gender pay gap in the UK” study, which the Office for National Statistics published in April 2008. Interestingly, figure 5 shows that the gender pay gap has declined from not quite 30 per cent. in 1975—the first year that the Equal Pay Act 1970 came into effect—to just under 13 per cent. in 2006. It has pretty nearly halved—albeit at a rather slow and steady, almost stately pace—over the intervening 31 years covered by the study.

It is clearly true that we have made great progress as a country, under successive Governments of different stripes, but also that there is a great deal further to go. It is interesting, looking at figure 6 in the same report, to see that the gender pay gap for full-time employees by age has declined very dramatically for people under 33. In fact, for employees under 33 the gender pay gap is now zero—or was in 2006—compared to 1975, when it was significantly higher.

It is therefore important for us all to realise that, contrary to what some people have said in the evidence that we have received, it is not fair to say that the current measures are not working. They clearly have been working over an extended period. That does not mean that there is not further to go and that progress has not been stately, as I said earlier, but this country should be proud of its track record, while none the less pointing out that an injustice remains to be dealt with.

Photo of Evan Harris Evan Harris Shadow Science Minister

The hon. Gentleman will know that his figures are controversial in concentrating only on the full-time aspect, but I understand that he wants to make a point. Would he accept that, even given those figures, it might be argued that the existing legislation and the existing framework have done all that they can in those 30-plus years and that something more is now needed to finish off the job? If the existing law was going to work, it would probably have worked by now.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I thank the hon. Gentleman for his intervention for two reasons. First, I was about to allude to his point of always having to be careful about using statistics. Anyone can make mistakes—the Secretary of State herself was picked up by Sir Michael Scholar, the head of the UK Statistics Authority, in a letter reported in The Daily Telegraph on 12 June in which he enjoined her to use the statistics rather more carefully than she had been doing. The hon. Gentleman is right to point out that we must be careful to define precisely to which statistics we are referring.

Secondly, on whether the existing measures are effectively spent or have run out of steam, we would need a significant period in which the steady decline of over 31 years went into reverse or flattened out. Certainly, until the end of 2006—the figures that I am quoting—the decline was pretty constant. One can look at the figures and say that they are not flattening out but coming down steadily. There are more recent figures—[Interruption] Perhaps the hon. Member for Hornsey and Wood Green will fill us in.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

EHRC statistics show that only 17 per cent. of employers have completed an equal pay audit, and the number of employers conducting audits has increased by just 5 per cent. since 2005. Perhaps something about the very small number of those exposing the information is the reason for the slow-down.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I might have misunderstood what the hon. Lady was saying, but I was talking about the gender pay gap, not gender pay audits. The gap is, obviously, the thing that we are all trying to close; audits are one method by which people might try to close it. The number of people doing gender pay audits might have gone up or down in the past couple of years, but the important thing is whether the gap has continued to decrease. Based on ONS figures, the decrease has been relatively steady since 1978 or so. There was an initial dip and then a surge back upwards in the first couple of years, since when it has been, if not quite a straight line, as close to a straight line as statistics will come.

I do not want to overplay things. There is clearly more to do. There is an injustice, and I hope and expect that Members from all parties are determined to deal with it and close the gap, but it is none the less worth while to put some boundaries and numbers on the size of the problem that remains to be dealt with, because it is important. During this morning’s sitting, we discussed proportionality and whether the measures proposed in clause 73 on gender pay audits are a proportional way of achieving the benefit that we all want. It is therefore important for us to quantify the size of the prize at which we are all aiming.

We alluded this morning to considering the different causes of the gender pay gap, but I wanted to give more detail and colour to the underlying reasons for the pay gap in this country, because it is clearly important to understand the enemy in order to conquer it. The Equal Opportunities Commission published “Modelling gender pay gaps” in 2004, and its findings were that a number of different factors underpin the pay gap. The document says:

“Gender differences in lifetime working patterns account for 36% of the pay gap.”

If the gap is currently 13 per cent., 36 per cent. of that is accounted for by gender differences in lifetime working patterns, which the EOC goes on to explain means that, on average, women work for fewer years than men in full-time employment and have more interruptions to employment for child care and other family care. That is understandable and perfectly reasonable, and provided that such decisions are taken on the basis of free will and individual choice, it is a facet of modern life. However, if some of those decisions are taken under societal pressures or because of an absence of adequate child care, for example, there may be some unfair systemic disadvantage for women. That is something that any Government of any stripe, I hope, would want to address.

It is interesting to note in passing that the kinds of thing that any Government would want to do to address such unfairness would revolve not necessarily around discrimination law but around social policy dealing with disadvantage. For example, the Government might try to ensure that more affordable child care is available for working women in particular, not just at the right price, but at the right times of day or night for those in shift work and on the right days of the week so that those whose jobs require them to work at weekends are not closed out of them, and so on.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

This is very interesting, but I hope that the hon. Gentleman will not overlook the part-time element. All his figures so far have related only to full-time hourly rates, and even they are a bit controversial. Does not the difficulty lie in the fact that this is not really about the element of free will? When women who have stopped working to have children want to go back, the calibre of work available to them part-time is very low, as a rule. It does not spread across many areas of work, and the jobs are low-paid. Yes, it is natural for women to have children, and they may choose to do so, but the consequence ought not to be that only low-paid work is available to them. There is a job to be done through discrimination legislation in that field as well.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills) 4:15, 23 Mehefin 2009

I thank the Minister for her intervention, because that brings me to some other causes of the gender pay gap. She is right that women’s penetration of different parts of the employment market varies widely. For example, it is sadly true that women are under-represented in some of the more senior ranks of the private sector. The question is how we deal with that.

Photo of Emily Thornberry Emily Thornberry Llafur, Islington South and Finsbury

The elephant in the corner of this Committee Room is that men and women have children, but it is  women who take primary responsibility for those children. Because of that, it is women who take the time off and then have difficulty in getting highly paid employment thereafter. Surely the biggest step that could be taken to equalise men and women’s pay is for men to start taking more responsibility for, and to take time off to have, children. Does the hon. Gentleman agree that we should be changing social policy and, possibly, legislation so that it is easier for men to take paid time off work to look after children?

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I thank the hon. Lady for her intervention, which illustrates the point that I am trying to make. She is right to say that the syndrome that she is describing is one of the root causes of the inequality that we see. That is a question of society’s attitudes, tradition and, as she rightly points out, the way in which legislation is set up and the way in which companies approach maternity and paternity leave.

The Conservative party has produced some proposals to try to reduce the mismatch between those two sets of leave. Even if the hon. Lady and I do not necessarily agree on those, it is none the less true that it would be far better to make sure that men are not just able to take a more equal share of child care, but that the system is arranged in such a way that it makes it simpler for them to do so. However, even if the Minister had a magic wand that she could wave to change that tomorrow, we would still have the issue of free will, free choice and society’s attitudes. It would be wrong for all of us in this room to dictate to parents how to allocate the child care responsibilities within their family unit. None the less, it is vital that we create an environment where it is possible for the burdens and tasks to be shared more equally.

Photo of Emily Thornberry Emily Thornberry Llafur, Islington South and Finsbury

Is it therefore the hon. Gentleman’s party’s policy to increase the amount of paid leave for fathers?

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I do not think that it is. I think that there are other ways out of the particular inequality conundrum than just levelling men’s paid leave.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

The hon. Member for Islington, South and Finsbury makes a good point. Indeed, earlier in our discussions we made that very point when we tabled a probing amendment about the maternity clauses and asked why they did not address paternity. Looking forward to this part of the debate, I made the point that, if men and women took a more even role in child care, that, in itself, would help the cause of closing the gender pay gap and giving women more opportunities.

On the specific question that the hon. Lady raises, we have published proposals to look at allowing maternity leave to be equally shared between either parent so that we encourage both fathers and mothers to share child care more equitably, without increasing the overall burden on businesses.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I thank my hon. Friend for filling in the policy details since he is our Front-Bench spokesman on the issue. I hope that that has clarified an alternative way of dealing with the real problem that the hon. Lady describes.

Photo of Emily Thornberry Emily Thornberry Llafur, Islington South and Finsbury

Is the issue pay? Is it Conservative party policy to pay men to look after children and to increase that allowance? That is my point.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I am happy to inform the hon. Lady that that is not the Conservative party’s point of view at the moment, but we will continue to roll out policies between now and the general election, whenever it is called.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

The hon. Gentleman can see the problem, can he not? If there is unequal pay, and I accept that there is, it will not be the higher paid person who takes time off for child care—unless we pay them to do so.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

The point that I am driving at is that we are all trying to attain some equality between the sexes. None of us has the answer to perfect equality, and there is a balance to be struck, particularly at a time of national recession when jobs are hard to come by, between equality and trying to ensure that we do not increase the total burden on employers.

Yes, it is an important matter and it needs to be pushed forward. My party has come up with some proposals, but I hope that the hon. Member for Islington, South and Finsbury will agree that she is supporting the original matter to which I alluded, which is that many causes of the gender pay gap are outside the question of discrimination by employers. Her example is a good one. The solutions are to do with flexible working and the balance between maternity and paternity leave rather than discrimination law.

Photo of Sandra Osborne Sandra Osborne Llafur, Ayr, Carrick and Cumnock

Does the hon. Gentleman not understand? It is gratifying to hear a Conservative MP talking almost like a feminist. We all appreciate that discrimination is rooted in the structure of society and its various cultural, social, political and economic aspects. Some of us have been fighting and campaigning against it for years and have tried to seek improvements. Does he not understand that it is the same old same old? Frankly, pigs will fly before we hear of any positive action from his party on how the overall problem should be solved. We want the solution to equal pay now, not in another 30 years’ time.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I was about to thank the hon. Lady for calling me a feminist. I would have been delighted to be described as such, but she rather spoiled it by having a go at the rest of my party’s policies. I thank her for the first part of her intervention, but not the second.

Is it not clear that the causes of the gender pay gap are far more complex and nuanced than we shall be able to explore this afternoon? This morning, we alluded briefly to the third tranche of the gender pay gap, mentioned in the study by the EOC, which is the famous 38 per cent.—the other factors associated with being female. In other words, 38 per cent. of 13 per cent. of the gap is associated with other factors. That includes direct discrimination, differences in labour market motivation and the preferences of women compared to those of men. As the Minister said this morning, some of that will be attributable to indirect discrimination or systematic disadvantage.

It is worth pausing to consider systematic disadvantage. It can hide a huge variety of things. It can hide differences in education and it can hide differences in child care, something that has already been mentioned. It can hide differences in language and it can hide differences in aspirations and expectations. All the reasons why women are not able to be as successful in business as men are subtle, slippery and hard to change, but they are all real.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

I am interested in the hon. Gentleman’s argument. Undoubtedly a great number of factors play a part, but why should that prevent the hon. Gentleman from wanting to address the factor that is discrimination?

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

The hon. Lady leads me nicely to my next point. This morning, the Minister said that we do not know what proportion of the gender pay gap is due to direct or indirect discrimination. We all have our suspicions, but we know that it is less than 38 per cent. of the 13 per cent., as the 38 per cent. includes direct and indirect discrimination plus the other factors that I have described. It must therefore be a sub-set of that 38 per cent. In other words, at the absolute most, it cannot be any more than about 6 per cent. or 7 per cent. Conceivably, it could be only 2 per cent. or 3 per cent. That would place a significant set of parameters around the size of the problem to be addressed as a result of the gender pay audits.

To come to the hon. Lady’s specific point, it is important that we acknowledge that gender pay audits might have a place. As we discussed this morning, my own party agrees on that point. Ours would be a narrower application than hers or the Minister’s. None the less we agree that they might have a place, in some cases. We are arguing for a narrower application because the size of the prize is much smaller than anyone has had a chance to illustrate in our conversations thus far. Even if the size of the prize is only 3 to 6 per cent., however, it could still be tremendously worth while.

Photo of John Mason John Mason Scottish National Party, Glasgow East

I appreciate the hon. Gentleman’s point. However, much of the Budget is also fixed annually, and only a small part of it can be changed. Presumably, he agrees that it is still worth while putting forward a Budget. By his logic, however, if only a small percentage is affected, we should not do anything.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

Again, the hon. Gentleman leads me on nicely to my next point. Even if the size of the prize is only 3 to 6 per cent., it might still be worth while. I think that we all agree that the injustice of the gender pay gap needs fixing. The question is not, therefore, whether it is worth doing, but how we do it, how much it will cost and whether other parts of the gender pay gap can be addressed faster and for less cost. Should we be focusing our fire on that area first, or more strongly? Should we do that as well as other things or instead of other things?

It might very well be that we can get rid of half of the remaining gender pay gap by making other changes, such as better child care, which we have discussed already. We could fix half of the gender pay gap quickly by doing those sorts of things, rather than by banging  on about this particular problem, which might still take many years to fix. That is my answer to the hon. Gentleman: it might still be worth while, but we must compare it with what else could be done and assess the costs and burdens being imposed in order to achieve this relatively small, but none the less potentially valuable attack on injustice.

That brings me to the Government’s figures in the impact assessment, which attempt to put a size on the financial burden of achieving this relatively small but potentially important reduction in the gender pay gap. We discussed that point briefly this morning, but I want to spend a bit more time on it now. For the purposes of this conversation, I shall ignore the Government’s figures on getting to grips with the legislation, which come under a different part of the impact assessment, because those costs will apply to a much wider range of clauses.

I shall focus on the one-off and annually recurring implementation costs, which the Government have calculated. They caused me—and others, I suspect—great concern. Just how widely did the Government check and consult on those figures before they were published? I ask because a number of business groups have told us that they were assured just one week before the Bill was published that clause 73 would not appear in the Bill at all. They said that they had been assured, informally, that gender pay audits were not part of the draft Bill—but one week later, up they popped.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

This is not a gender pay audit. Does the hon. Gentleman not know the difference between a gender pay audit and transparency? There are no gender pay audits in the Bill. I challenge him to find one.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills) 4:30, 23 Mehefin 2009

Annexe M of the impact assessment is entitled “Gender pay gap reporting in the private sector”. I apologise if I have been using the wrong technical term, but I think that what I was driving at was very clear. My concern is this: by definition, these companies are large, are at the top end of our economy’s employers and have more than 250 employees. However, the one-off implementation cost for one of those large organisations to come up with a satisfactory report on the gender pay gap is assessed at £92.24 per organisation. After that—magically—the cost per company each year is assessed at £15.38. If that was true, it would go a long way towards dissolving and salving my party’s concerns about the clause, but I am afraid that it really does not pass the sniff test.

We are gravely concerned that the figures are not worth the paper they are written on, so may I ask the Minister, please, to give us substantially more detail on how they have been calculated? From what I can see, the Government have assumed that it takes one middle manager in the human resources department a total of half a day to get everything done to prepare for reporting on gender pay gaps in that organisation for ever. After that, it takes the same middle manager 30 minutes a year to deal with the report.

In such a large company there will be different divisions, legacy software systems and data that are not held in the right way. The Government have made a series of  optimal assumptions about the way in which companies hold their data that, frankly, are not believable. Their assumptions are not just a bit unbelievable. I do not think that these numbers are wrong by a factor of two, 10 or 100; I suspect that they are wrong by a factor of between 100 and 1,000—they are badly off beam. It is impossible to envisage such a large, and therefore complicated, company needing half a day’s work of a middle manager in the HR department, with absolutely no input from anyone in the IT department. Apparently, such input will not be required at all, and the middle manager’s work will not be checked by anyone, even though it will subsequently be crawled over by auditors, trade unionists and lawyers for the very purpose to which the Minister has alluded: to check whether the company can be sued or taken to court.

It is inconceivable that the work will not be done with great care and that it will not require a great deal of IT input for at least a large proportion of the companies required to fulfil it. It is also inconceivable that when the work has been done, it will not be checked by everyone right up to, and probably including, the entire board of directors, given the severity of the issue that we are talking about. Therefore, the costs are liable to be massively—not just a bit, but massively—larger than the Government’s estimates, and that is the concern. If the costs were genuinely so low, it would be easier for everyone to say, “This is a relatively cost-free, straightforward thing that we shall all get on and do.” However, given that the size of the opportunity that we are aiming at is much smaller than we have ever had a chance to discuss until just now, and given that I fear the costs are much larger than those illustrated in the impact statement, I am afraid that the calculations start to come out the wrong way round, and that is the reason why Great Britain plc is so concerned.

Our new clause is designed to illustrate a point. It takes existing clause 73 and applies it not as a gender pay reporting mechanism, but as a disability pay reporting mechanism. If this is such an important issue—according to the Government, it clearly is, and we agree—and if the Government’s proposal is the right way to deal with it, why are we doing it only for gender pay reporting? Why are we not doing it for many other strands, such as disability, which is the one that we picked because it is a good example?

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

My hon. Friend might be interested to know—I am sure the Minister will be, especially as the issue is relevant to the public sector—that every single Government Department pays its disabled employees less on average than its non-disabled employees. In a number of them, that pay gap is significantly higher than the gender pay gap. The Home Office, which is the worst offender, pays disabled employees on average a third less than non-disabled employees. I am sure that that is not a comparison of people doing like-for-like jobs and that it has to do with the level of the organisation that people have reached. However, it touches on exactly the same issue, and the problem is bigger than the gender pay gap in some Government organisations.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I thank my hon. Friend for his helpful intervention. It precisely illustrates the point. If clause 73 is the answer to pay gaps, why is it the answer to only the gender pay gap?

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

May I ask the hon. Gentleman a different question? If he is going to vote against the clause, why is he now trying to attach disability to something he is going to oppose?

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

Because we are trying to probe the Government’s reasons for doing this only for the gender pay gap. We think that there is an inconsistency in their logic. If the clause is, as the Government claim, the answer to the problem, why should it be applied only to gender pay reporting and not other inequities? Alternatively, if the clause is not the answer, we will be happy to vote it down, because other things should be done first. That explains why we have tabled the new clause, although we are also slightly bound by the selection of the Chair. It is important that we explore the matter. Why, under the Government’s proposals, will the measure apply only to gender pay reporting, and not to other strands of discrimination—disability was the one that we happened to choose to illustrate our point?

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

It is nice to see you in the Chair again, Lady Winterton.

From listening to the hon. Member for Weston-super-Mare, it seems that he wishes to minimise the seriousness of the discrimination that women experience, either because of their “choice” of jobs, or because of their absence from the workplace due to having babies. I will certainly look at the figures he puts forward, but given my impression from the evidence session, I think that he has reduced the number as far as possible. The 13 per cent. figure that he quoted, I understand, was basically a 17 per cent. pay differential in full-time work. We are starting from a different basis and we might not agree on figures.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I take the hon. Lady’s point about having to be very careful with figures that we cite. Mine came from the ONS, as I thought that I should base my position on an official set of numbers. If she has a figure that she feels is better, I ask her to let me know.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

I thank the hon. Gentleman for that intervention. I have figures supplied by all the normal organisations. My anxiety is not truly with the gender pay information clause per se, but the timing of its introduction through regulation. I feel—I believe that there are Labour Members who feel this too—that women have waited a very long time. Organisations have been able to reduce the pay gap voluntarily for some time, although the statistics that I read from the EHRC on the number of employers that voluntarily complete equal pay audits make it clear that the rate of progress is pretty slow. I am not convinced that another four years of volunteering, even with the work that the Minister says will go on regarding metrics, will produce the step change that women need and deserve—and they deserve it now.

I was quite shocked by the CBI’s presentation at the evidence session because, like Conservative Members, it was pushing the idea that there is very little discrimination—I am still not convinced by that—or rather that that is not the reason for the pay gap.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

This is an important nuance, but it is only a nuance. It is not a question of trying to minimise the level of discrimination. The point that I was trying  to make was that no one, including the Minister, according to what she said this morning, knows precisely how much of the gender pay gap is due to discrimination. We can put boundaries on it, but we do not know within those boundaries how much is due to discrimination. I am sure that if she feels that my calculations of the boundaries are wrong, she will present alternative figures. None the less, it is important to know what we know. Without coming over all Donald Rumsfeld, it is important to understand what the known knowns and the known unknowns are.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

Of course there are other factors, but I was merely saying that I felt that minimisation was going on.

The factors are being addressed. The Government have made tremendous strides on child care, and initiatives such as Sure Start have changed lives and made significant inroads into the problems. All the things that might discriminate or do discriminate against women give them less choice and less money than their male equivalents. That issue needs to be addressed and, to some extent, it is being addressed. The significant problem that remains is hidden within business in this country. The whole point of gender pay information is to create transparency and remove the problem from its hiding place so that we can all see what is happening.

Let us say that the CBI was right about this work. I will listen intently to the argument about the cost to business, but I doubt that it would be anything like as much as the hon. Gentleman says. However, let us see what is happening. We have recently, in the case of our own expenses, seen that transparency has been the only thing that can shake the establishment and change what was being hidden underneath. Transparency is the answer when it comes to providing the step change that we want on discrimination in respect of women’s pay.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

One thing that the hon. Lady is missing is the information that one would need to produce. That is one reason why the Minister, rightly, has got the EHRC to carry out this discussion. Part of the process is straightforward, such as publishing a list of what people are paid. The difficulty comes when considering the content of jobs, comparable jobs and comparable pay. In a large organisation, if a bunch of people are doing job A and another bunch are doing job B, and they are the same, that is fine. However, if there is a multiplicity of jobs, it will mean considering the content of jobs, the skills required for them and what people are paid, and then making comparisons to determine whether that makes sense. That will not be straightforward. The CBI, the unions and the EHRC are trying to work out whether there is a way of producing that information in a simple form, but I suspect that it is not straightforward.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

That is clearly one issue that we have to grapple with, because we are talking in advance of people coming out with the information or the metrics, around which there might be a coalition of the willing to agree the way forward. As the hon. Gentleman will know from this morning’s sitting, I am in favour of somewhat more rigorous and formalised pay audits, which would not go around metrics, but would involve, as he described, full disclosure of pay, levels of pay, values of pay and packages relating to pay. As I said,  the only way to make the step change that women want for equality—without having to wait another 39 years, as we have waited since the Equal Pay Act—is to make these things compulsory. I am not convinced by the voluntary way forward.

Photo of John Mason John Mason Scottish National Party, Glasgow East 4:45, 23 Mehefin 2009

Does the hon. Lady agree that we are getting rather a lot of red herrings from the Conservatives? Companies produce masses of information—probably too much—in their accounts. For example, they produce a list of pay for the top directors within bands. That information is also open to debate and discussion as to whether one company is paying its directors too much compared with another. That is not a reason for not producing the information. The first priority should be to make the information available, which may then lead to other questions that the Conservatives can worry about in due course.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

I thank the hon. Gentleman for that helpful intervention; he is entirely right. The hon. Member for Weston-super-Mare was talking about an inordinate expense, and the point needs to be developed further. I do not accept what he said, but, were he to be right about the cost, no one would take such action voluntarily. [Interruption.] From a sedentary position, he indicates with an arm gesture that the idea is to get everyone off the hook.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

Actually, my arm gesture was supposed to indicate that the hon. Lady is right that if the costs are as high as I fear they are, no one—including her, I hope—would want to take such action.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

I do not accept the figures; I am waiting for the Minister to come back on them. From my experience in business, what we are discussing is not rocket science—particularly for big companies that have the wherewithal and the IT systems to produce such information. Little companies mostly know their pay levels. There are some issues about correctly valuing work, so we will have to disagree—pretty profoundly, actually.

Issues around discrimination are hidden in the system. The CBI has a point that often women and men are in different types of job and women’s work is paid less, even if it should be of equal value. In the evidence sessions, the Fawcett Society gave the example of paying people who pack meat in a factory differently from forklift drivers. Even though the skills and experience needed for those two jobs are comparable, because one job has been female dominated it tends to be a lot lower paid than the one that has been male dominated—that is partly a link to the previous discussion. Those employers are breaking the law and not necessarily realising it. That is why we have to require them to address the issue. If that information was published, it could be seen, realised and addressed, and the issue could be dealt with. There are some bad employers who get away with underpaying women and therefore resist transparency. Then there are those who discriminate without knowing it because they do not even realise that they are underpaying or undervaluing the work of women.

On the issue of transparency and the CBI’s assertion that many of their companies voluntarily publish gender pay information, we feel that the good guys will always publish such information. However, we are dealing not just with the good guys, and we have to go after those companies who use the fact that no one can see what they are doing to pay women less, either in particular or systemically.

I will be brief because we have already covered which factor is the largest and what the Fawcett Society said about the pay gap. However, a huge penalty attaches to part-time working, to motherhood, to discontinuous labour market records and to care and responsibility, the vast majority of which accrue to women. Organisations that are good at addressing pay, and that are open and above board and will publish such information, tend also to be those companies that have good policies and good practice and that deal with and get the benefits of diversity by promoting equality for women. Liberal Democrat Members feel that the introduction of mandatory pay audits would have a beneficial effect on companies.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

The hon. Lady has mentioned that a number of companies already disclose such information. According to the Tory version, however, they must be completely mad, because disclosure is so expensive that it would be silly to do it.

Photo of Lynne Featherstone Lynne Featherstone Shadow Minister (Children, Schools and Families), Liberal Democrat Spokeperson (Children, Schools and Families)

Conservative Members are coming from a particular place in this discussion. Those companies that already have pay audit systems seem to do everything better—they seem to have women in much higher grades, better policies for pregnancy and maternity, part-time and flexible working and so on. Liberal Democrat Members think that mandatory pay audits would have greatly beneficial effects—immediately and compulsorily—making a real difference to women. However, we understand the Government’s position and what they are trying to do. We do not agree with their position, but we will not oppose it.

Transparency, ultimately, is the key. That is why pay audits are necessary and must be mandatory. We cannot wait another four years. We did not introduce them in the times of plenty, or when the sun was shining, as Conservative Members like to put it. We do not want to see the proposals kicked into the long grass, particularly with the uncertainty about who will be the next Government. It is clear that we must take action now, and that voluntary pay audits are like waiting for Godot. If the Government fail to take such singular action in the Bill to change women’s lives for good, ironically—for they have an honourable record on equality—they will decree that women will remain second-class citizens, possibly in perpetuity if there is a change of Government.

A Labour Government could and should, if only for legacy, right the historic wrong and change the future of women. Unequal pay has meant women suffering in so many ways. Women have so many caring duties and come off so badly in terms of separation, divorce, child rearing and so on that, at the very least, we should ensure that they receive equal pay for equal work. If we do not do so now, then when, because 2013 will be too late?

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

Interestingly, the Conservative Opposition seek simultaneously to vote down a clause that they intend to add to—I am sure that there is a line of rationality somewhere and that I am failing to find it.

New clause 9 would enable the Government to require private sector employers with at least 250 employees to report on their disability pay gap as well as their gender pay gap under clause 73. The hon. Member for Weston-super-Mare has spent a considerable amount of time, not just today but on many occasions, seeking to minimise the issue of pay discrimination against women in business. He does not tell a convincing story, and I shall come to that when I have dealt with the disability point.

The hon. Gentleman tries to pinpoint the problem, which he thinks is not the pay gap. He thinks the problem is elsewhere, including in poverty of aspiration among women—a deplorable assertion that is not too far from blaming the poor for being poor, as the Tories have habitually done. When he starts talking about one of the reasons being that women do not have expectations or aspirations—

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

No. What I shall do is point out that there is a better understanding of where the disability pay gap comes from. The hon. Gentleman has had plenty of time to make his position clear. He made it all too clear for people watching—I see nods from all quarters. The hon. Member for Weston-super-Mare has, frankly, not a clue about the cause of the gender pay gap, but he argues a particular point to try to counter the need for a long-overdue toughening up of provision.

What is clearer is the cause of the disability pay gap. Let me deal with it numerically first. The disability pay gap is 6.4 per cent., compared with the figures that the hon. Gentleman quoted for the gender pay gap, which is much bigger. He of course excluded entirely from consideration the sharp end of the gender pay gap, which shows that the difference in the average hourly rate paid to a woman working part-time and a man working full-time is about 30 per cent. The lesser pay gap in relation to disability is none the less important. The hon. Gentleman made the point that we need to get more disabled people into work and to get them further up the ladder once they are in. That is where the deficit currently is in relation to disability. There is a clearer understanding of the causes and a readier recipe.

In any event, we already require private sector companies with more than 250 employees to include a statement in their directors’ reports on how they go about recruiting disabled people, retaining people when they become disabled during employment, training disabled employees and ensuring that they progress. That is the focus. We should continue to get more disabled people into work and ensure that they are represented at all levels of the workplace. That, rather than the new clause, is the route to reducing the disability pay gap and, more widely, to engendering better participation and fuller lives for disabled people because they get into better-quality jobs. Disabled people’s participation has increased some 10 per cent. since 1998. Some Government initiatives have helped, but we need to get people further in work as well as getting them into work. The positive action provisions in the Bill will help with that.

We already have a specialist disability employment programme that works with thousands of disabled people every year. In last year’s Green Paper, the Department for Work and Pensions said that we would press ahead  with an enhanced specialist disability employment programme: work preparation, Workstep and the job introduction scheme. From 2010, that will provide a more flexible and personalised service to those disabled people with the highest support needs.

Last year, we doubled the access to work budget, which helps disabled people move into work and to stay in work. It provides funding to remove practical barriers when it is unreasonable to expect an employer to fund the entirety of such costs. We also think it important as far as possible to ensure that our approaches to the public and private sectors are consistent. There are no plans at present to require the public sector, through a specific duty, to report on its disability pay gap.

The public sector equality duty will build on the existing disability equality duty with a new specific one, underpinned by greater use of evidence and more consultation, and the involvement of those who will benefit from such a specific duty. There will be transparency and strong leadership from the public bodies to which we have given the task. Progress in securing improved outcomes for disabled people in the labour market is being made through the Bill, and it will be further enhanced across the private and public sectors. We are satisfied that that is where our focus should be, and I therefore invite the hon. Gentleman not to press the new clause to a Division.

We had quite a bit of the stand part debate this morning, so I shall just add some specifics and make some general remarks about the ludicrous assertions on how much it is likely to cost to present data that are already available in businesses. Various references have been made to the burdens on business—Tories talk about those all the time—and the extra pressure of the recession. I want to make it clear that for this Government, equalities are not just for the good times; they are for the bad times too. As it happens, 2013 is some time away, and we hope to be well through the recession before any such measure is compulsory.

We acknowledge that some employers who are only just above the threshold of 250 employees might need to make adjustments, but the EHRC exists specifically to provide support in exactly such cases. We think that employers will meet their reporting obligations in the event that the power needs to be used in 2013, and there will be sanctions to follow if they do not. It is a long distance away, but it is none the less necessary to mention that there will be civil and possibly criminal sanctions for breach in due course if we cannot make voluntary arrangements. However, no criminal sanction is expected to entail a fine of more than £5,000. Contrary to what the Tories are suggesting in seeing obstacles all over the place, we hope that business understands better than it does that equality and business progress go together.

The hon. Member for Weston-super-Mare talked about equal pay being a good news story, but if we continue to progress in eroding inequality at our current rate—to use a calculation that I made for a different debate not very long ago—it will not be my daughter, my granddaughter or my great-granddaughter but my great-great-granddaughter who has a hope of equal pay with men. That simply will not do. He is pleased to say that on one measure, under-33s receive equal pay, but he  must look at the real position. For a short period, single young women and single young men might have equal pay, although there is a good deal of evidence that within 12 months of graduation, women earn less than men, even in the same fields.

The position is not as clear as the hon. Gentleman suggests, but all manner of things have an impact, notably the ghettoisation of women’s work into caring, cashiering, catering, cleaning and clerical—the well-known five Cs—which are dominated by women, dominate the available employment for women and are low-status and low-paid. The availability of good-quality part-time work is limited, and it is unfortunate that the hon. Gentleman chose to leave out the part-time figure from all that he quoted about the progress that we have made, because it is a major factor.

It is not a surprise to the world that women have children, stop working to look after them and then want to come back part-time, so why is it acceptable for part-time work to be low paid? It is not, which is why we will create transparency, find out where that low pay is and get rid of it so that women are not penalised. Many of those women, of course, are single parents, as 90 per cent. of single parents are women. They will not be penalised. We will bring the matter out.

The hon. Gentleman’s proportionality argument does not work. We are not talking about a small, defined amount of discrimination. We simply do not know what the discrimination element is, but it is considerably bigger than the figures that he quoted, as I know from my 30 years’ experience in the field and from the Fawcett Society and all the other contributors, who are not happy with the attempt to minimise its role. If a single parent suffers only £1 less pay per hour than a man, she is suffering grievous inequality, which is likely to have a knock-on effect on her lifestyle and those of her children. That is not something that lends itself to being assuaged gently by proposals without any teeth. It must be stopped, and it must be stopped now.

The hon. Gentleman said that we could perhaps stop half of unequal pay if we had child care. Working that out would need a complicated formula, but he just plucked the figure from thin air. The Tories have no particular policies to enhance child care. When it comes to sharing care between fathers and mothers in order, perhaps, to free more women for work, we find that the only Tory proposals are unfinanced. Consequently, it will always be the lower paid who look after the children, and there will not be the pressure that there ought to be to increase female pay. He has no answers to unequal pay, whether or not it comes from discrimination. He is opposed to trying to get rid of discriminatory equal pay. On what basis exactly? Because he says that our figures on the cost are “not worth the paper they are written on.” Of course, he has no figure to put in their place. He has nothing except his belief. Lots of people believe in fairies at the bottom of the garden. There is no evidence of that, but there is evidence in our impact assessment of the exact cost.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

Not right now. Many companies are already undertaking pay audits voluntarily. How does that square with the prohibitive costs agreement?  If it were as dear as the hon. Gentleman says, they would be mad to do even the small publication that we require in clause 73. People do pay audits systematically throughout their businesses because, unlike the Tories, they know that paying women fairly is good for their business and helps them to attract talented women.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

If, as the Minister says, companies are acting in that way already and recognise that such measures are good for business—a point that we have made today and my right hon. Friend the Member for Maidenhead (Mrs. May) made on Second Reading—why does she believe that the provision is necessary? The fact that she is making it voluntary for the first four years suggests that she thinks—if not she, then other members of the Government—that there is a case about its burdensome and costly nature, which is why it is not being brought in immediately and she wants to leave it to see whether businesses can be persuaded to do it by the case that she is putting.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

First, there is a big difference between those who take such action and the rest who do not, and that requires legislation. Secondly, we are not leaving it to lie because of burdens. We are seeking a consensus so that such action will be taken voluntarily and more quickly than if we suddenly slammed gender pay audits on the whole of business. Let me make it clear: it speaks volumes when the hon. Member for Weston-super-Mare does not know the difference between a gender pay audit and the provision, and suggests that businesses thought that there would not be gender pay audits one week, while there would be the next week. That shows that the Opposition do not have a clue. They are not in this field in any way. The requirements are yet to be fixed, and they do not resemble a gender pay audit.

The only gender pay audit that has ever been proposed in this Parliament is the one that the Conservatives suggested in the Bill of Baroness Morris of Bolton, which was dissected mercilessly in the Lords and shown to be a complete farce not by a member of the Labour party, but by Lord Lester of the Liberal Democrat party. The provision does not require equal pay audits. The hon. Gentleman thought that it supported a dreadful disclosure. Unfortunately, he does not understand the difference between such provisions.

We have been clear that we expect that business will—as it says it will, contrary to what the Tories are suggesting—start reporting all the more not only when the CBI helps them to do so, but when they recognise that unwittingly they pay unequal pay. As for implementation costs, businesses of 250-plus employees already collect all the information that we require. They will have the necessary IT in place; the costs will be limited to presenting the information in an accessible format and publishing it, for example, on websites. Part of the job that will be done by the teams set up under the EHRC will be to identify exactly a system that is achievable within acceptable cost parameters for business.

Should the clause stand part of the Bill, it will push forward the cause of women’s equal pay immeasurably. If the Tories vote against it, that will speak volumes to the public.

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

I obviously need to say whether we will press new clause 9 to a Division. I want also to respond to one or two points made by the Solicitor-General,  given that she was not taking interventions—from me, at least. The Minister asserted strongly that the Government know and have deeply researched the costs per company for producing the pay reports—I am calling them that to avoid upsetting her again—and she has backed that up with the Government’s impact assessment. It was revealing that she then said that there will be an extensive consultation with business to work out how it can be done, and what parameters can be reported and how in a low-cost way. I am not sure that she can have it both ways—to have an impact assessment that is done and dusted and very solid, yet saying the Government will consult on the best way to do it and minimise the cost that way. Clearly, there is a difference. [Interruption.] If the Minister would like to make an intervention, I am happy to take it.

Photo of Vera Baird Vera Baird Solicitor General, Attorney General's Office

It is a very simple point. We have a fixed point now that we think will be the cost. If we can negotiate it even lower by involving business, of course we will. Is that difficult to follow?

Photo of John Penrose John Penrose Shadow Minister (Business, Innovation and Skills)

It is delightfully easy to follow. It is, however, rather hard to believe. But I understand that the Minister feels very strongly about it. It is noticeable that she is getting rather upset by the fact that I do not agree with her, but perhaps we can maintain a degree of equilibrium and accept that reasonable people can agree to disagree on the matter. Reality will prove which one of us is right in the future.

On new clause 9, I was struck by the fact that the Minister relied heavily, and fairly, I thought, on saying that a great deal of work can be done to improve the disability pay gap by reasonable adjustments and positive action. I was struck, though, that that argument does not seem to have the same degree of salience in her mind for the gender pay gap. However, given where we are, the importance of making some progress and the fact that we have thrashed the issue very seriously, I will happily not press the new clause to a Division and come back to it later.

Question put, That the clause, as amended, stand part of the Bill.

The Committee divided: Ayes 13, Noes 4.

Rhif adran 4 Nimrod Review — Statement — Clause 73

Ie: 13 MPs

Na: 4 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly agreed to.

Clause 73, as amended, ordered to stand part of the Bill.

Clauses 74 and 75 ordered to stand part of the Bill.

Schedule 7 agreed to.