Equality Bill

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John Penrose: I point it out to the hon. Lady that we have not tabled, or had selected, an amendment that goes through Conservative policy. She is right to say what Conservative policy is, although obviously we would disagree about her analysis of its shortcomings, but we cannot necessarily enter into a debate on what she is saying without an awful lot of latitude from the Chair, because no such amendment is selected for debate.
The Chairman: Order. My mind was going along that avenue. We have been straying a little from amendment 248 and new clause 23. Perhaps we can confine ourselves to them. I shall allow the widest debate I can, but we are dealing with those amendments.
Dr. Harris: On a point of order, Mr. Benton. I think that my hon. Friend is setting out a different approach to pay audits and contrasting it, quite reasonably, with the Government’s approach. I must say I wondered to what extent she might refer to alternative approaches, in proposing her new regime, which is supported by the Liberal Democrats.
The Chairman: I have indicated that I am prepared to allow the broadest possible debate, but I want to sound a cautionary note about constant references to a Conservative amendment that is not going to figure anywhere.
Lynne Featherstone: Thank you, Mr. Benton. I merely wanted to say that any such idea would not provide the same rigour as mandatory pay audits, which can be viewed by an individual to reveal whether there is discrimination against them in pay level, work type or conditions, or more widely.
Subsection (3) of the new clause deals with packages in connection with pay. Those are often left out of such debates. The subsection would introduce the idea that the entire package, not just the pay itself, should be considered. I looked at the issue with reference to Cambridge university, and it was clear from its pay audit, which was published voluntarily, I believe, that men were being offered much better packages, including such things as accommodation and moving costs, to bring them to the job, whereas women on the same pay grade, perhaps, were not being offered such packages. That is discrimination.
In one establishment, where most market supplements for higher grades were for men, one administrator was getting 125 per cent. of salary as a market supplement. That is back-door discrimination, and we want that eradicated. It operates outside pay levels and work type, but is to do with the package that goes with getting the job. I am using that only as an example of the sort of discrimination that can happen outside the pay level. Subsection (3) would require publication so that any such bias inherent in a company would be made transparent.
Subsection (7) of the new clause would provide teeth, so that action could be taken if there was failure to publish. An employer who failed to publish would lose the right to use or submit the material factor defence for the period in which there was failure to comply with the requirement.
Those are the essential points of the new clause, apart from the fact that it would define a designated employer as one with more than 100 employees, referring back to amendment 248. I shall be pleased and interested to hear what the Minister has to say.
John Penrose: I applaud the hon. Lady’s instinct in tabling the two amendments, even though I suspect that we would disagree strongly about the means and mechanisms. It is important to put it on record that I hope and expect Committee members from all parties to share the common goal—I am sure that we do—of reducing and eliminating the gender pay gap by whatever means necessary.
However, we disagree with the hon. Lady’s proposed mechanisms. Although a degree of employer-based discrimination is clearly part of the gender pay gap, most analyses also make the valid point that a number of other important factors are at work. It is important not to pursue or base legislation on the notion that employers are the only cause. It is also necessary to ensure that any means that we take to drive through reduction of the gender pay gap are proportionate.
With your permission, Mr. Benton, I will expand on our concerns during clause stand part debate, but we contend—I think that the Government’s own analysis supports this—that the gender pay gap has many other causes, which have to do with disadvantage in society in everything from access to education and onwards. However, within companies where differentials exist between men’s and women’s pay, any direct discrimination must clearly be dealt with vigorously and strongly. That is why, during our debate on clause 72, the hon. Lady and I both emphasised our support for measures designed to ensure that it is illegal to have a contract term that stops men and women in the same company communicating about their pay. That is an important mechanism. However, there are many other reasons why pay differentials might exist in the same company. For example, women might not be well represented at senior levels. That would inevitably lead to differentials.
Lynne Featherstone: I believe that the hon. Gentleman made the same point to the panel during the evidence session. When the Fawcett Society was asked how much of the pay gap could be laid at the door of discrimination by businesses rather than other factors, it was extremely robust, saying that
“when people have decomposed the gender pay gap to look at the different elements that contribute to it, discrimination is the largest factor of all”.——[Official Report, Equality Public Bill Committee, 2 June 2009; c. 57, Q114.]
John Penrose: I am glad that the hon. Lady brought that up. Although the Fawcett Society witnesses did not mention which document they were referring to, they might have been referring to a research finding from the Equal Opportunities Commission on modelling gender pay gaps, which says that the largest single underlying cause of gender pay gaps, at 38 per cent., is
“due to other factors associated with being female, including direct discrimination and differences in the labour market motivations and preferences of women as compared with men. Some of this will be attributable to indirect discrimination or systematic disadvantage”.
The Fawcett Society was right to say that the largest single element includes direct discrimination. However, it is not true to say, and I do not think that the Fawcett Society was saying, that the largest single element is direct discrimination. That 38 per cent. includes several other crucial factors, which previous Governments have addressed, and the current Government, and I hope future Governments, will continue to address via different mechanisms. Frankly, those factors should not be addressed via discrimination. It is not necessarily true to say that direct discrimination is the largest factor. In fact, in all probability it will be only a subset of 38 per cent.
Dr. Harris: Even if we accept that it is not the largest factor, given that the hon. Gentleman said that like previous Governments, this Government and future Governments want to tackle everything else, there seems to be no good reason not to seize the opportunity set out in my hon. Friend’s new clause to tackle that component. It is only justifiable not to do so, or to seek to do so in a weaker way, if they do not think that it is a problem. To leave out employers from the package of measures is in itself disproportionate—it is out of proportion because there is a problem and no solution is being proposed, or not a strong enough one. That is where the disproportionate consideration comes—not that this measure is disproportionate.
John Penrose: I thank the hon. Gentleman for, I think, making my point. He is right to say that we cannot ignore direct discrimination by employers and I am sure that everyone agrees with that. That is why the hon. Member for Hornsey and Wood Green and I both rose to make the point on clause 72 about making sure that there is better pay transparency by ensuring that it is illegal for employers to make it a contract term that people cannot discuss their pay with their colleagues at work.
Conservative policy—I will not try Mr. Benton’s patience, but the hon. Lady mentioned it, so I shall illustrate it—is that we believe it is sensible to have pay audits for companies that have been found to be directly discriminating. That is clearly a sensible step to take in such situations. However, our contention is that it is a disproportionate approach to companies that have not been found to be involved in direct discrimination in other cases, because of all the other factors that are also at work.
John Mason: The hon. Gentleman is setting an almost impossible barrier by saying that, in the first place, discrimination has to be proved, and then there has to be an audit or information has to be provided. Surely one of the themes of the past few weeks has been that providing information is inherently a good thing and if an employer has particular reasons for differences, they could presumably then explain them.
John Penrose: I thank the hon. Gentleman for his intervention. I do not think that the barrier is impossible at all—it is perfectly reasonable. Again, it is important to assess the degree of proportionality: what is the size and cost of the burden that we are imposing to address the particular part of the gender pay gap that we are seeking to sort out? The costs of the hon. Lady’s proposal would be on the wrong side of that line. Our contention is that ours is a modest and reasonable way of balancing the two.
I take the hon. Gentleman’s point that there is a balance to be struck and that is what we are trying to do. That is why I was clarifying our reason for agreeing with the end that the hon. Lady is striving towards and our concerns about the proportionality of the means rather than anything else.
John Mason: The hon. Gentleman mentions costs. Surely, in this day and age, with computer systems as they are—I have worked in a number of small organisations which have quite sophisticated computer systems—there is not a great cost in providing the information.
John Penrose: The hon. Gentleman comes on to a point that I plan to make in the clause stand part debate about the Government’s impact assessment. I shall confine my remarks for the moment to quoting a comment which is attributed—although many are—to Jack Welch, former, much celebrated chief executive of General Electric in the States. When he was being presented with a very long and involved set of financial projections by someone from General Electric’s finance department, which involved detailed calculations that were expressed to many decimal points, he looked at the chap making the presentation and said, “Son, I don’t know about the accuracy of those last two digits in that number, but I am pretty sure that the first one is wrong.” I feel that the calculation of the costs of this measure is woefully under-egged, which goes directly to my contention about proportionality.
Dr. Harris: The hon. Gentleman argued briefly that it is legitimate to do the audit work where a case of direct discrimination has been identified. However, if one knows—one does know and we can argue about the degree to which it is a factor—that it is endemic, that is like arguing that people should be advised to eat healthily only after they have had a heart attack. That misses the point of the whole range of people whose health would benefit from that. Will he explain the rationale for such an after-the-fact approach, even if it were to work?
John Penrose: I would use a different analogy, which is that people, and in this case companies, should be innocent until proven guilty. The hon. Gentleman is right to say that there is a degree of direct discrimination, but by describing it as endemic he is assuming that all companies are guilty of it. That is a dangerous assumption, which is not necessarily supported by any data. A large number of companies have taken enormous steps, and the data that I will quote later—again provided by the Office for National Statistics—will show that there have been real steps in reducing the gender pay gap since the equal pay legislation was first passed. We have still further to go, but it is deeply unfair and inaccurate to assume that all companies are guilty of gender pay discrimination and direct discrimination. There is no evidence for that.
12.15 pm
Dr. Harris: Reluctant though I am to go to the dictionary, given what the Minister said previously, medically “endemic” does not mean that everyone has a condition, but that it is widespread and ingrained. The allegation that I said every company is guilty is wrong, and the hon. Gentleman understates the issue by saying that only those found guilty have a problem. He thinks that the problem of the pay gap and direct discrimination has not been a big enough problem for enough people—women—for long enough for more action to be imposed on employers. That is the nub of the political disagreement between us. I suppose that is why we have politics and elections.
John Penrose: I thank the hon. Gentleman for his dictionary definition, which, I hope, makes it clear that he does not think that all employers, or even a majority, are involved in direct discrimination. I hope that he thinks that it is a minority of employers, and a reducing minority. My point is that it is unfair to assume that everyone is guilty until proven innocent.
I would pick up the hon. Gentleman on his attempt to put words into my mouth about the description of Conservative policy. I believe it is important to apply the measures. [Interruption.]
The Chairman: Order. There is far too much background noise.
John Penrose: I had just finished.
The Solicitor-General: Obviously, we will have a clause stand part debate, so let me not spread my remarks too widely. In relation to the comments of the hon. Member for Weston-super-Mare about all companies being innocent until proven guilty, without a provision such as clause 73 companies would be able to hide their guilt by not disclosing the figures. Surely that is the major policy difference between us—and probably the Liberal Democrats—and the Conservatives. He says that there should be a mandatory pay audit when direct discrimination against someone is proven, but, as we all know, such cases rarely get to court. It is a tour de force to get one, as it requires a lot of courage for a person to be present.
As for the nature of the proposed pay audit after a finding of unequal pay in a tribunal, it would be mandatory for the tribunal to impose the pay audit on the business, even if the case itself had had the effect of making a business put its business right. That would be absolutely onerous on business and is a fatal flaw in the Conservative proposals.
John Penrose: Will the Minister expand on her comments about the difficulty of getting information about pay inequality? We have just had a brief stand part debate on clause 72, which provides important clarification and transparency. I hope she will accept—I am sure that she does, because it is a Government clause—that that is an important mechanism for improving and introducing transparency in future of the kind that she has described.
The Solicitor-General: It is a useful tool, as we all agree. The provision is about one-to-one disclosure and is relatively modest. Unequal pay is systemic and we have to find a way of getting it out of the system. Much of the time the only way to do that is to make people disclose that it might be there. If it is not, there is no problem. If it is, they must disclose it so that we can get rid of it, or we simply have no way of getting through. Although that is not the only difficulty with the legislation that we have had since 1974, it is a key one.
It is fine to give someone the right to bring an action for equal pay, but if they do not know that they are suffering from unequal pay, then it is hard to exercise such a right. We have to go way beyond the previous clause, which would allow me to ask the man sitting next to me whether he is getting £10 more an hour than I am. That is obviously a first step, but there is a need for a great deal more transparency across the piece before we can start to tackle continuing pay discrimination.
I say that to be as fair to business as I can: I am pretty satisfied that experience shows that the kind of disclosure that we will require through the mechanisms in clause 73 often takes businesses by surprise. Some businesses have not deliberately had indirectly discriminatory provisions, although some probably have. Discriminatory provisions might result from a business never having looked at them. They might also result from historic mergers, separations and reorganisations. It might be that nobody has evaluated whether component A of the business in warehouse Z is being underpaid in relation to warehouse Y in another part of the country. None the less, the employer is the same and so it needs to have equal pay. The figures are the way to get that out. That is another important element of discrimination that the hon. Gentleman never takes on board: he only ever talks about direct discrimination.
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