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In other words, we have compromised even to the point where there will still be groups of people out there working on ships who are paid at the rate of their country of origin. We tried to reach a compromise with the Government whereby at least the bulk of them would be paid a fair rate for the job.

Gwyn Prosser: Again, my hon. Friend is absolutely right. In my view, the Government have moved the minimum amount that they were forced to move in order to comply with European Union law. That means that they have left out all sorts of other categories of workers of other nationalities who are being exploited today and will be exploited in future. We look forward to receiving responses from Ministers that are, I hope, a bit more reassuring than what we have had in the past.

Ms Katy Clark: First, I want to put on record my support for the Bill, which is a landmark piece of legislation that will help hundreds of thousands of people in the years to come.

I want to speak to new clause 33, which I have tabled and would like to put to the vote at the appropriate time. I noted the comments of the hon. Member for Hornsey and Wood Green (Lynne Featherstone). It is important that this House debates and divides on the issue of mandatory pay audits, and I believe that my new clause would be the appropriate one to vote on given that it proposes a lower threshold of 21 employees in the workplace. I will come to that at a later stage in my speech, which I will try to keep relatively brief given the time constraints on the House.

The Equal Pay Act 1970 came into effect in 1975. There has been considerable movement in relation to men's and women's pay since then, but it has been very slow and it has been a struggle. As a result of the equal pay legislation, thousands of women have gone to employment tribunals with equal value and equal pay cases. Those cases have been very difficult to take
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forward; in many cases, it has taken many years. I was involved in a piece of mass litigation on equal value in the national health service that took eight years, and I know of a case involving women speech therapists-a landmark case-that took 13 years to resolve. At the end of those lengthy periods, the women concerned did not get the full value of compensation that they would have achieved had they won at the employment tribunal. Because they knew that they were going to have to wait for many more years before they got to that stage of the proceedings, they decided to take a proportion of the compensation that they would have been successful in obtaining had the case gone through the whole process. Too many of those involved had retired or died, or their circumstances had otherwise changed, and they took the view that they had to take compensation at that stage instead of pursuing the matter to the bitter end.

Equal pay and equal value cases take such a huge amount of time because of the difficulty of taking them through the tribunal and the wide range of technical defences that are available to employers. Cases of this nature place a huge burden on the women who bring them; being the focus of such a case is a very pressurised experience. I therefore support new clause 4 on representative actions. We need to look at the ways that other countries have dealt with these problems. It is clear that taking class actions, or representative actions, is a way of ensuring not only that the onus is not on one individual at the tribunal but that more people benefit when they win.

I also support the amendment on hypothetical comparators. That factor applies in many other countries and there have been many employment tribunal decisions about it. I think that it is already lawful in this country, but putting it on to a statutory footing would help to underpin it.

Ms Abbott: Does my hon. Friend agree that class actions have proved very effective in places such as America? By their very nature, people bringing class actions will be the lowest paid, often the most junior and marginal members of an organisation, and it is asking too much of them, as individuals, to take action one by one.

Ms Clark: My hon. Friend is absolutely right. It is women workers such as cleaners, catering assistants and shop assistants who are taking these types of actions, and they are simply not equipped to take on such litigation. That is why trade unions often fund these cases, which are very expensive.

John McDonnell: I agree. However, it is not only a case of not being equipped-there is also retaliatory action. We have just discovered, through the Information Commissioner, that 3,000 workers have been blacklisted by employers, mostly because they have taken actions against employers.

Ms Clark: Indeed, and I understand that regulations were published today on that issue. I have not had the opportunity to examine them, but I understand that the 3,000 people involved will not really get any justice or compensation for the discrimination against them. We know from our history that those who stand up, take action and fight are victimised. That is why many of us have fought for many years to bring in anti-victimisation legislation-so that people can take up such cases. I agree with my hon. Friend the Member for Hackney,
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North and Stoke Newington (Ms Abbott) that class actions are one of the most effective ways to do that.

We still have a huge problem with equal pay in this country. We have had quite a bit of banter about statistics, but it is clear that since 1975, when the 1970 Act came into effect, the trend has been in the right direction in the sense that the gap between men's and women's earnings has narrowed. That has not been a constant trend, and there have been years when it has increased. In the last year for which we have statistics, 2008-09, the gap got smaller, but in the year before that it widened.

We have heard a lot about the figures, and we know that the pay gap for full-time employees is somewhere between 12 and 13 per cent. For all employees it is more like 22 per cent. As has been pointed out, different information becomes clear depending on how we look at the statistics. Far more women work part time, including those who are well qualified and had well-paid employment before having children and then deciding to go back to work on a part-time basis. It is clear from the extensive research that such women are paid a lower hourly rate than men undertaking similar work of like value. There is huge discrimination against part-time workers, particularly women.

It is also clear from the work that has been done that there are huge regional variations in discrimination against women and in the gender gap. The Fawcett Society has shown that the gender gap is 53 per cent. in west Somerset and 49 per cent. in Windsor and Maidenhead, but in Sevenoaks and Kent it is 1 per cent. Similarly, when we look at some employers, we find that women are paid more than men on average because of the types of jobs that are done. One can do all sorts of things with statistics, but the general picture that there is still discrimination against women cannot be argued against.

One of my concerns is our failure to make such speedy progress as comparable countries. The international comparisons show that Britain is moving down the scale and our situation is getting worse. Of the 130 countries that are part of the World Economic Forum's global gender gap index, Britain was ninth in 2006. Last year we had fallen to 13th, and now we are ranked 15th, so it is clear that other countries are addressing the problem better. We must examine what they are doing and consider how they are achieving that. I agree with my hon. Friends that representative and class actions are part of that, but so are mandatory equal pay audits. What has happened in other countries makes it clear that that form of transparency works. In Sweden, where such audits were introduced in 1991, the pay gap is now only 3 per cent., and they have also worked in other countries where similar action has been taken. It is shameful that the business lobby has succeeded in persuading the Government not to take a mandatory approach.

Ms Abbott: We are in an era of declining levels of trade union organisation of the work force, which makes mandatory pay audits even more important.

Ms Clark: I agree. We know that in spheres of employment in which there is a high level of trade union organisation, the level of discrimination is far lower, not just on equal pay but on a whole raft of matters, most importantly health and safety. There are people ensuring
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that the laws passed in this place are implemented in the workplace. Unfortunately from our perspective, the public sector is now the sphere in which the trade unions are best organised, and over a lengthy period the level of trade union organisation in the private sector has diminished.

3.15 pm

Since 1997, the Government have attempted relatively successfully to address some of the problems in the public sector. Although Labour brought in the equal pay legislation in the 1970s, in many ways it was not implemented as it should have been because of the difficulty for individual women of taking equal pay cases. That problem was taken on board, and the attempts to bring in job evaluation and examine pay scales have succeeded in addressing many difficulties. However, one problem that has been mentioned is that insufficient funds have been provided to address historical discrimination, and bin men are being asked to take a salary cut so that a catering assistant or cleaner can get their salary increase. That is not the way to deal with discrimination. The only way to address the problem would have been to bring everybody up to the same level over a long period rather than level down, which would have required greater funding.

Jeremy Corbyn: I am pleased that my hon. Friend has mentioned refuse collectors, probably in the light of the strike in Leeds. Apparently, some people there have been expected to take a pay cut. Does she agree that it will require greater expenditure by local authorities to maintain male earnings and bring female earnings up to the same level, and that that should be recognised in the standard spending assessment for local government next year?

Ms Clark: There is indeed a problem in Leeds, and also in my constituency, where refuse workers are being asked to take pay cuts. I suspect that it is a live issue in many parts of the country. The problem was not created in 1997-it goes back decades, and our failure to address it over a lengthy period makes it more difficult and expensive to do so now. I agree with my hon. Friend that it has to be taken on board when considering local government finance.

John Mason: I agree with the hon. Lady that we should be pulling people's pay up rather than down, but that creates the knock-on effect that it is harder for a council providing a service to compete with the private sector, which may underpay workers, often women, for the same thing. We need to address that, too.

Ms Clark: Yes, that is a massive problem for local government and throughout the national health service and all parts of the public sector. As I said, at least there has been an attempt to grapple with the problems since 1997, with all their complexities and difficulties. Unfortunately, that cannot be said to the same extent of the private sector, in which about 80 per cent. of employees work. Gender discrimination is an even more difficult problem in that sector, and it is even more difficult to bring equal value cases because of the lack of transparency.

When I took equal value cases in the health service, we knew what a cleaner was paid, and we also knew what the wall washer, who was a man, was being paid.
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He was paid more, even though he was washing the wall and the women were washing the floor. We were therefore able to put a case together. That is not the situation in the private sector, because there is no transparency and different people doing the same job are on very different terms and conditions of employment. That makes it even more difficult to achieve any kind of equality, because people do not know what is going on round about them. They get information accidentally and anecdotally, and it may or may not be correct. They could therefore be well into an equal value case before they knew what the ball game is and what they were being paid in comparison with others.

I welcome clause 75, which opens the way for a more mandatory approach in that it gives Ministers a power to make regulations to require employers with 250 or more employees to publish information. However, a voluntary approach has not worked over the past 40 years, so I find it difficult to believe that there is going to be significant movement in the next four years, in which time the Government say they hope there will be an improvement in the situation. They have said that they do not intend to use the power until 2013, and I hope they will revisit that mandatory aspect.

The figure of 250 employees will simply exclude considerable numbers of people who could benefit from the Bill, so I welcome new clause 3, which was tabled a considerable time ago by the Liberal Democrats. It would be a significant improvement, but my concern is that it would still exclude many people who could be helped by this legislation. As I understand it, the measure was drafted in line with the equal pay task force recommendations, which were published in 2001. That authoritative report, which was commissioned by the Equal Opportunities Commission, has already been quoted in our debate.

The reality, however, is that even if new clause 33, which would introduce a threshold of 21 employees, were successful, 32 per cent. of women would be excluded, because they are employed in organisations with 20 or fewer employees. Only 68 per cent. of women and a slightly higher number of men would be in organisations that had to make such information available.

The figure of 21 employees was chosen simply because it fits in with the Government's approach to other legislation, such as trade union recognition, and not for any other reason. There is a very strong argument that there should be no threshold at all, because this form of transparency is easier the smaller the organisation. However, we took the view that some people would feel able to support a threshold in the region of 21, but would not support no threshold whatever.

I believe that mandatory pay auditing legislation would help significant numbers of men and women in this country-of course, not only women take equal pay cases, but men too, and they do so successfully. However, the vast majority of people who are discriminated against in their pay on the ground of gender tend to be women, so women will be the major benefactors of successful legislation.

This is an important issue for our party in government, and I very much hope that the Government will feel able to look at it again. They will be very well aware that many Labour MPs are very sympathetic and supportive of proposed new clause 33, as I suspect are many Ministers who have been involved in the Bill.

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Lynne Featherstone: Does the hon. Lady agree that if we do not get such a measure in this Bill and should there be a change of Government, we may never get one?

Ms Clark: I do not believe that there is going to be a change of Government, so if we do not get such a measure in the Bill, I will be back here fighting next time round. It is a general rule that we need such measures now. The longer we delay, the less we can be sure what is going to happen in future. If this Government felt able to go down the line of mandatory equal pay audits, it would be a huge advance and a significant achievement. If we do not go down that line, I suspect that we will be back here in four years' time to have this debate again, after the voluntary approach has yet again proved unsuccessful. I hope that we will today achieve a significant step forward, particularly for women, and that we will get one of the proposals for mandatory equal pay audits passed.

The Solicitor-General: I congratulate all the contributors, not excepting the hon. Member for Shipley (Philip Davies), on the vigour with which they expressed their views. I will respond not in the order in which people have spoken, which would not be possible, but in the order of the proposals, as best I can.

New clauses 3, 26 and 33 are on one of the topics that my hon. Friend the Member for North Ayrshire and Arran (Ms Clark) spoke about. They are the successors to the proposals on mandatory pay audits that were extensively debated in Committee. It is true that there was a very full debate indeed in Committee, setting out where the divisions lay. However, I must say that in my view, there is a danger of a sort of inadvertent sloganising. What is the significant difference between a mandatory pay audit and what it would disclose, and requiring, as we will immediately of the public sector and ultimately of the private sector if it does not comply, the disclosure of information from which the pay gap in a firm can be seen, so that pressure can be applied to narrow it?

If mandatory pay audits, which are pursued by two of the proposals, are going to be the same as those that have failed to work in a number of areas, we are unsurprisingly not going to support them. The kind of consultant-based mandatory pay audit that has been prevalent is often sexist in its conclusions and has had to be fought. Local authorities that have tried rigorously, with the best will in the world, since 1997 and the single status agreement, to have what amount to mandatory pay audits, have in very large measure, as everybody agrees, landed themselves in employment tribunals because the management of the audits has not been transparent and has therefore produced sex discrimination of its own kind. The audits are quite difficult to get right and can be an enormous burden. For instance, in Sweden, which has had mandatory pay audits for some time, there is simply no evidence that they have worked effectively at all. We are looking to get away from the term "mandatory pay audits" if what it means is what I have just described, and to arrive at a practical solution that will advance the equality of women's pay, which has been unfairly different from that of men for far, far, far too long.

My hon. Friend the Member for North Ayrshire and Arran talked about transparency, and that is the name of the game. She complained that in the private sector
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she was not able to learn about pay differentials, but there will be no place for the private sector to hide on pay differentials in the future. Secrecy clauses will be banned under this Bill, and we will require that immediately-it is not a case of waiting until 2013 to ask the private sector to publish its pay figures. I will come later to the most up-to-date information that I have about the work that is being done, which is being thoroughly supported by the CBI and other employers, with the EHRC and the TUC, to try to work out the optimum measurements that will disclose pay structures effectively without imposing an unfair and unnecessary burden. However, the whole negotiation has been on the basis that pay transparency is agreed to be the most important factor. The issue is what measurements will be needed to disclose those structures. The issue of burden is much further back. However, we are seeking the optimal solution so that clarity may be obtained and action taken on the basis of what is disclosed.

3.30 pm

I asked a rhetorical question about the difference between a mandatory pay audit and disclosing enough information so that people can discover what is going wrong with pay scales and put that right. That goes beyond direct discrimination. The hon. Member for Weston-super-Mare (John Penrose) does not understand that figures will disclose not just deliberate discrimination, but inadvertent discrimination, historic ghettoisation and many other factors.

I suppose that the answer to the rhetorical question is the mandatory element. The issue is whether we continue as we have been doing, as the realisation is emerging that equality, diversity and good business go together and are not the enemies of each other. Should we encourage that to flourish-and observe participation in that-or should we say, "Hey, businesses, you're all under arrest and you must all do mandatory pay audits", even though such audits have not made a significant difference in those countries where they have been tried? The Government's position should not be construed as demonstrating the slightest lack of political will, determination or certainty that we will advance the cause of equal pay, and quickly. I am confident that it will go up 10 gears when the legislation comes into force.

Ms Katy Clark: My key point was my concern about the lack of enforcement and the fact that a voluntary scheme is being proposed, rather than a compulsory scheme. The Minister's points are about the detail of the information that should be provided. Experience has shown that unless such schemes are made compulsory, people do not co-operate. We do not have time to wait another four years. In the public sector, that would mean another four years of equal pay cases-as it would in the private sector. Surely we have waited long enough, and the scheme should be compulsory.

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