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
Governments 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. Ladys 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 goalI am sure that we doof reducing
and eliminating the gender pay gap by whatever means
necessary. However,
we disagree with the hon. Ladys 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 contendI think that the
Governments own analysis supports thisthat 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 mens and
womens 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. Friends 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
disproportionateit 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 comesnot 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
policyI will not try Mr. Bentons patience,
but the hon. Lady mentioned it, so I shall illustrate itis 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 allit 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. Ladys 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. Gentlemans 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 areI have worked in
a number of small organisations which have quite sophisticated computer
systemsthere 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
Governments impact assessment. I shall confine my remarks for
the moment to quoting a comment which is attributedalthough
many areto 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 Electrics 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 dont
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 knowsone does know and we
can argue about the degree to which it is a factorthat 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
lateragain provided by the Office for National
Statisticswill 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 peoplewomenfor
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 usand probably the Liberal Democratsand 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
acceptI am sure that she does, because it is a Government
clausethat 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 do not
think that the hon. Gentleman takes on board the nature of pay
discrimination. He argues that businesses are not all bad or even
endemically bad, but the Government do not begin from the position that
there is something inherently bad about business. However, we must
appreciate that direct discrimination continues and that it is a
component. I do not know whether it is a very large or very small
componentI suspect that it is significantbut requiring
the disclosure of pay information is about not only direct
discrimination, but indirect discrimination. That fact is totally left
out whenever he argues that we are driving at a tiny bit of unequal pay
with our anti-discrimination measures. It is not tiny; it is a very
significant part of unequal
pay. 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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