Considered in Grand Committee
My Lords, these regulations which are being introduced under powers in Section 153 of the Equality Act 2010 replace and amend the Equality Act 2010 (Specific Duties) Regulations 2011. Under this power, Ministers can impose specific duties on public authorities to secure the better performance of the public sector equality duty. These regulations replicate the measures from the previous specific duties regulations, namely that public bodies must publish information every year to demonstrate their compliance with the equality duty and set equality objectives every four years.
Tackling the gender pay gap is an absolute priority for this Government. That is why we have used these powers to include new duties for the relevant public authorities, if they have 250 or more employees, to report on their gender pay differences. We have already delivered on our manifesto commitment to introduce mandatory gender pay gap reporting for large employers in the private and voluntary sectors. The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 were approved by both Houses last month and signed by the Secretary of State on 6 February.
Of course, it is only right that public bodies, including government departments, are subject to the same reporting requirements. That is why we announced in October 2015 that we would be extending the manifesto commitment to the public sector. We want government to be a trail-blazer and lead by example. These regulations apply to specified public authorities in England, non-devolved organisations and certain cross-border authorities. Scottish and Welsh public bodies are subject to separate specific duties regulations. The devolved Administrations in Scotland and Wales have been consulted on the proposed changes. Both sets of regulations will require the same gender pay gap calculations and use the same methodology for calculating the data.
Public authorities that are subject to these regulations will need to publish the mean and median differences between the average hourly rate of pay for male and female employees. They will need to publish the mean and median differences between the average bonuses paid to male and female employees. They will also need to report on the proportions of men and women who receive bonuses, and the proportions in each quartile of their pay distribution.
All specified public bodies will need to publish their gender pay gap data on a website that is accessible to members of the public. Organisations will also need to upload data to a government-sponsored website, which will allow us to establish a database of compliant employers and closely monitor compliance. We have aligned the reporting timetables and obligations as closely as possible for employers in different sectors to achieve consistency and comparable sets of data. The two sets of regulations will provide unprecedented transparency on gender pay differences in all sectors and create the environment needed to drive change. I beg to move.
My Lords, first, I thank the Minister for bringing these regulations before us tonight. We waited seven years for the Government to come forward, but I am very pleased that they have finally introduced mandatory pay audits for large companies in the private and voluntary sectors. It is a shame that it has taken this Government so long to bring into force the measures created by the last Labour Government, but at least now we are taking some steps forward, which is very good. I commend the Government for extending the mandatory pay gap reporting duties to public sector employers, as they promised to do in October 2015. This again is another step forward towards progress.
The regulations discussed today, under Section 153 of the Equality Act, mirror almost exactly the regulations under Section 78, although I have concerns that some of the new duties could have gone further. As with the duties on private and voluntary sector organisations, they apply only to public authorities with 250 employees or more. The maintenance of such a high employee threshold for application of these duties in the public sector was raised as a concern by a significant number of organisations and individuals responding to the Government’s consultation, but the Government have chosen not to set a lower threshold for public bodies.
It is understandable that the Government would want to create comparable data between the public sector and private and voluntary sectors but, clearly, limiting the application to public sector bodies with more than 250 employees will severely limit the number of public authorities caught under this regulation. The Government claim that of course a public authority of any size could choose to adopt mandatory reporting, but to what extent will a voluntary expectation create practice in reality? What communication does the Minister intend to have with all public bodies, regardless of their number of employees, to encourage them to publish their gender pay gap information? Have any indicated to her that they will take this voluntary action? In the consultation response, the Government promised to keep under review setting a lower employee threshold, but failed to give an assurance on a timescale. When will this be reviewed? What evidence will she require to persuade her that the figure of 250 employees is too high a threshold?
The regulations impose a reporting duty on public authority employers that obliges them to publish information demonstrating compliance with the public sector equality duty and how they will work towards achieving any of the three core objectives of the duty. Despite the requirement to make these objectives specific and measurable, the regulations do not require an employer to publish an action plan or equality objectives aimed specifically at tackling the gender pay gap, as recommended by the Equality and Human Rights Commission. In the consultation response, the commission stated:
“public authorities should be required to publish one or more objectives showing how they will contribute to reducing the gender pay gap, supported by an action plan setting out the steps they will take to achieve their objective(s) and the timescales for taking those steps”.
Will the Minister confirm that the Government will ensure that employers will act to tackle the issues raised through mandatory gender pay gap reporting? I am concerned because the information on employer compliance with the public sector equality duty is to be published by 30 March 2018, and then only every four years. I look forward to March 2018, after the first gender pay gap reports under the regulations have been published, but it is not enough just to know that employers have a problem. The Government must do all they can to ensure that the problems are tackled.
The consultation says that the issue will be reviewed. When will that take place? The Government have said that they will publish tables by sector of employers reporting gender pay gaps, published under Section 78 of the Equalities Act. Will they do the same for public authorities, and will the Minister go further and publish an annual league table, ranking public bodies by pay gap? Will the Minister commit today to bring an annual report to Parliament with the raw data responses from the information from public authorities, demonstrating compliance with the public sector equality duty and, of fundamental importance, a government action plan to narrow the gap in the following 12 months?
Progress in tackling the gender pay gap must not be just incremental and piecemeal. Already, progress initiated by the previous Labour Government has been implemented—we think, far too slowly—by subsequent coalition and Tory Governments. We are aware of the deep, corrosive structural barriers at the core of the gender pay gap: occupational segregation, with women stuck in chronically low-paid and undervalued sectors of the economy; unequal caring responsibilities; the undervaluing of roles predominantly done by women; and such matters as maternity discrimination.
I hope that the Minister can say why the Government have rejected almost all of the 17 recommendations made by the cross-party Women and Equalities Committee on tackling the gender pay gap—recommendations which aim at improving working conditions for women of all ages, in all sectors and across the country. It is a shame that the Government are ignoring the evidence of experts as well as the voices and lived experiences of thousands of women in chronically low-paid, undervalued sectors of the economy, such as care, hospitality and retail.
Government research done with the Equality and Human Rights Commission estimated that 54,000 women per year are forced out of their jobs due to maternity discrimination, yet since the introduction of employment tribunal fees fewer than 1% of maternity discrimination cases now end up in a tribunal. On 31 January 2017, the Government published their own review of employment tribunal fees, admitting that:
“The fall in claims has been significantly greater than was estimated when fees were first introduced”.
The only way that women have to enforce their rights at work is through employment tribunals, so it is difficult to see how the Government can claim to show commitment to tackling the gender pay gap when they have effectively priced women out of their own employment rights.
I am very pleased that these regulations are before us today, and it is good that we are bringing them in for the public sector. However, I am sure the Minister will agree that far more needs to be done, and at a faster pace than we have seen so far, so that we can close the gender pay gap. I look forward to the Minister’s response.
My Lords, nothing that I am about to say should be interpreted as anything other than strong support for the regulations, but I think some history is important. In 1970 Barbara Castle introduced an Equal Pay Act that was virtually useless. In 1974 I left the Bar to work for a Labour Government, with Roy Jenkins, to pioneer sex and race discrimination legislation. We were forbidden to do anything about the Equal Pay Act, which in any case was to be brought in within five years of 1970. So in 1975 a virtually useless Equal Pay Act from a Labour Government was brought into force. What then happened was that it was challenged under EU law by the EU Commission, as a result of which it became necessary in Margaret Thatcher’s time to amend the useless Equal Pay Act in order to deal with different work of equal value. I do not think any noble Lords in the Committee are old enough to remember this, but there was a drunken Minister in that Government at the time who introduced the regulations while barely able to speak. When the regulations came in, they were tortuous and virtually unenforceable.
In 2010 we in the Liberal Democrats supported Labour in getting the Equality Act 2010 on to the statute book. Again, we tried to do something about the tortuous and unenforceable equal pay legislation, and the best that we could do—the best that Harriet Harman could do—was something along the lines of these regulations today. The idea was that, at the very least, transparency might be able to assist in tackling the gender pay gap. That was the idea, and of course we support it; it was the idea of the coalition Government, and it is the idea now.
I am sorry to say, as someone married to a vegetarian, that the problem is that there is no beef. The problem is that you can have all the transparency you like but, unless something is done to enforce the law and tackle discriminatory patterns in employment, promotion, recruitment and pay, women will continue to suffer from unequal pay for work of equal value. If Members do not agree with that, they have only to read the admirable gender pay gap information regulations impact assessment from 2017—I think there is no separate impact assessment for these regulations—which explains why mere voluntarism will not work. It explains how they tried to persuade employers of a voluntary approach but it failed and they tried to explain that they hope that these regulations or the other ones that we have already approved will compel action where required.
I promise noble Lords that they will not. How do I know that? I have had four or five decades of experience in trying to tackle patterns of discrimination. We gave the Equality and Human Rights Commission wide powers for strategic enforcement. Those powers were stronger than those given to the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission. However, those powers have not been used. It is all very well for the Equality and Human Rights Commission, as the noble Baroness, Lady Gale, has said, to call for an action plan, but what is actually needed is an action plan by the Equality and Human Rights Commission, which was set up with ample powers that it does not use. I am not saying this behind the back of the commission. David Isaac, its admirable chairman, knows my views and I think he agrees with them.
I remember, as part of the ancient history I am trying to summarise, that there was a wonderful businessman called Oscar Hahn. He was, I think, the head of the Midlands Employers Federation. In those days we were trying to persuade employers and trade unions that there should be legislation to tackle these problems. Oscar Hahn made a wonderful speech in which he said something like: “Archbishop William Temple said: ‘Whenever I travel on the Underground, I always intend to buy a ticket but the fact that there is a ticket collector at the end of the line just clinches it’. In the same way legislation and its enforcement just clinches the good intentions of employers and trade unions”. I think that is right.
We are dealing today, rightly, with gender equality and with the gender pay gap. The noble Baroness, Lady McGregor-Smith—a Conservative Member of this House—recently produced a devastating review that deals not with gender but ethnicity. She has called it, The Time For Talking Is Over. Now Is The Time To Act. Although today we are dealing with gender not ethnicity, I urge Members of this House, and especially the Government, to take very seriously what she says. She says:
“The time for talking is over”.
I agree. She says: “The reward is huge”. I agree. She says:
“Daylight is the best disinfectant”.
I agree, provided that there is some enforcement. She says:
“We need to stop hiding behind the mantle of ‘unconscious bias’”.
I agree, and that applies to gender and race. She says:
“The public sector must use its purchasing power to drive change”.
Again, I agree. She then explains why she has been trying to persuade people to take voluntary action but has found that it is not good enough. She concludes that legislative measures are necessary. The Government’s response to her report, as I understand it, has been to give voluntarism further time in dealing with ethnicity.
I am now 80 years old and I have been campaigning for race equality since 1964. I have to say to the Committee that voluntarism, as the gender pay gap illustrates, will not succeed. Therefore, even if the Government will not act, even if Parliament will not act, I very much hope that the Equality and Human Rights Commission will use its resources for strategic law enforcement so that the regulations we are about to approve will be given bite by the enforcement agency. I hope that what I have just said will not seem controversial.
I thank both noble Lords for their thoughtful contributions. I think there is broad support for what we are bringing forward but I shall answer some of the specific questions the noble Lords asked.
The first question from the noble Baroness, Lady Gale, was about why the number of employees was not lower than 250. We estimate that the obligations for authorities with 250 or more employees will affect more than 3.8 million employees in the public sector, and that means they will be covered by the new gender pay gap reporting requirements. Indeed, the combined coverage of these regulations and the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 will be over 15 million employees in 9,000 organisations, representing nearly half the total workforce. In addition, public bodies with more than 150 employees are already required to report on the diversity of their workforce and are encouraged to publish gender pay gap information.
We are keen in the first instance to place the same requirements of gender pay reporting across all employers to ensure consistency and comparability, so we have started in the public sector with that 250 threshold, which matches the threshold in Section 78 of the Equality Act. However, we will keep the threshold under review, and I think that review period will be reviewed by the Minister for Women and Equalities five years after commencement. Although this is the formal point for reviewing the new obligations, we will be closely monitoring compliance on a more regular basis to ensure that the measures are effective and working properly. With regard to what the response was to the public consultation about the proposed scope, the majority agreed that gender pay gap obligations should apply to authorities with 250 or more employees.
The noble Baroness asked whether the reporting requirements were too narrow. The regulations do not require mandatory equality objectives connected to gender pay gap data or, indeed, action plans. However, all employers will be strongly encouraged to publish information on how they intend to tackle the gender pay gap in their organisations. Many public bodies have actually indicated that they are keen to publish that narrative alongside their gender pay gap calculations, so that they can provide more context for any gender pay differences and highlight work to reduce any gaps.
Transparency may not be a silver bullet, as the noble Lord said, but it will incentivise employers to analyse the drivers behind their gender pay gap and explore the extent to which their own policies and practices may be contributing to it. The regulations that will apply to the public sector will not include an explicit requirement for a senior official to sign a statement or authenticate an organisation’s gender pay gap, but this is in line with the existing obligations under the specific duties regulations.
The noble Baroness asked what assessment has been made of the effect of tribunal fees for people with protected characteristics. The review of the employment tribunal fees, published on 31 January this year, confirms that the objectives have been broadly met and that the current scheme is generally working effectively and operating lawfully. However, that does not mean there is no room for improvement. In particular, the fall in claims and the evidence that some people have found fees off-putting have persuaded us that some action is necessary, so we launched a consultation on 31 January regarding the proposal to widen the support available to people under the help with fees scheme. This would help people with low incomes and is expected to particularly benefit women, disabled people and people from black and minority ethnic backgrounds, who figure disproportionately among those in low-income groups.
The noble Baroness also asked: will the Government be publishing league tables to name and shame employers? The public will be able to search the government website to check whether employers in scope have complied with the regulations and compare them with other employers in the same sector. We will consider the most effective way to present the published information in discussion with a wide range of stakeholders but, as I am sure the noble Baroness and the noble Lord know, the press soon get hold of such figures, so we can probably rely on them to highlight the success and failure stories.
I hope that we can also rely on the Equality and Human Rights Commission, which is funded for this purpose. I forgot to mention the issue of access to tribunals. It is my view as a lawyer that it is unlawful and an obstruction of justice to do what has been done to the employment tribunal fees, because they deter people with discrimination cases. I bet that if it goes to the European Court of Human Rights it will declare it to be incompatible, so I am glad that the Government are moving on that.
I thank the noble Lord for that and will come to the EHRC shortly to give a bit more detail.
The noble Baroness also asked why the Government have rejected the recommendation from the Women and Equalities Select Committee to reduce the gender pay gap. We appreciate and recognise the important work that the committee does on this issue, and we carefully considered its recommendations. The report makes a number of recommendations for the Government, several of which have already been actioned. For example, the right to request flexible working already allows those working fewer than full-time hours to request the opportunity to work more. Many of the recommendations made by the Select Committee would involve significant cost to businesses and we are keen not to place too heavy a burden on employers at this time.
We crossed into the equal pay realm. I thought I might make the point at this juncture that pay discrimination and the size of an employer’s gender pay gap are two quite different things, but I am sure that the noble Lord knows that, given his background.
The noble Baroness talked about pregnancy and maternity discrimination. That is unlawful as well as unacceptable and has no place in today’s society. The Government are working with a range of partners, including the EHRC and ACAS to promote opportunities for women, including pregnant women and new mothers. That will ensure that female talent is recognised and rewarded, and make more employers aware of their legal obligations.
I turn to the EHRC’s failure to ensure compliance. The EHRC takes a proportionate approach to enforcement, resolving many matters via pre-enforcement work and using its formal enforcement powers when absolutely necessary. It also takes a strategic approach to enforcement, focusing on those issues where it can have an impact on systemic, persistent and/or pervasive inequalities. Many less strategic cases are resolved through pre-enforcement work, involving discussions with organisations to encourage them to meet their obligations.
The noble Lord, Lord Lester, may draw some comfort from the fact that when the Women and Equalities Select Committee examined the EHRC’s chair and CEO in January, it asked searching questions about why its enforcement and compliance work, potentially involving legal interventions, seemed so limited. The EHRC’s chair, David Isaac, who the noble Lord mentioned, agreed that putting more resource into enforcement and compliance is a priority for him. Let us see what progress it makes in the coming year.
Finally, the noble Lord mentioned the Ruby McGregor-Smith review. It is an industry-led review, so we are going into a slightly different realm, but I shall not split hairs about that. The Government believe that non-legislative solutions are the right approach for now, but we will monitor progress and stand ready to act if sufficient progress is not delivered.
I am sure that noble Lords will remember this time last year, when the number of women on boards was a push for the Government and we tried to do it in a non-legislative way. That yielded very good results, so we always try the non-legislative way first before taking action, but we will always take action if we need to.
I hope that noble Lords are satisfied with those responses and thank them for taking part in this debate.
Committee adjourned at 7.25 pm.