Women in the City - Treasury Contents

Conclusions and recommendations

Women on boards

1.  Concern about the under-representation of women on boards can be about business performance as much as fairness. There is a consensus that an effective challenge function within a board is required in financial institutions, and that diversity on boards can promote such challenge. While it is impossible to know whether more female board members would have lessened the impact of the financial crisis, the arguments for fairness, improved corporate governance, a stronger challenge function and not wasting a large proportion of talent seem more than sufficient to conclude that increased gender diversity is desirable. (Paragraph 13)

2.  There are already 2,281 women on boards and executive committees of all FTSE listed companies. We believe financial institutions seeking new board members should broaden their horizons, and consider a wider range of sources for their personnel. (Paragraph 18)

3.  We recommend the FRC should respond rapidly to the Government's suggestions on the Corporate Governance Code. (Paragraph 22)

4.  We do not consider that a legal requirement for boards to contain a particular proportion of women is appropriate. However, action by firms would be a clear signal to the public that the sector is serious about gender equality and this is especially true of financial institutions where the taxpayer has a significant shareholding. It is disappointing that the CBI no longer appears to be working on a voluntary pledge to encourage its members to increase the number of women employed at senior levels. We note that the changes proposed to the Corporate Governance Code would, of course involve compulsory reporting rather than the voluntary action a pledge would entail. (Paragraph 23)

5.  Board membership is, of course, the culmination of a long career. If increased female representation on boards is desirable, then one must look more widely at industry structures, to ensure that able women who wish to progress are not held back. We recognise that differences in male and female working patterns may stem from preference rather than prejudice and that there are circumstances in which employers need to make great demands on their employees' time and flexibility. But the City needs to ensure that it has access to the best talent—female as well as male. (Paragraph 26)

6.  Board members of all City firms should consider the extent to which female employees can progress within their organisation. As Sir David Walker said, promoting the development of women to senior positions within the companies which employ them will be an essential element in boosting the scale and diversity of the pool of talent available for future board positions. (Paragraph 27)

Gender pay gaps

7.  The EHRC found that large gender pay gaps exist in the financial services sector. Women working full time earn 55% less than male full time staff. The pay gap for bonuses and performance related pay is even higher at 80%. However, these figures are largely driven by occupational segregation. The evidence may suggest that even when controlling for seniority, a significant gender pay gap exists in the City, but policy makers need a firmer evidence base than that currently provided by the EHRC. We trust the next stage of the EHRC's financial services inquiry will provide more rigorous analysis. We recommend our successor Committee continues to monitor levels and structures of remuneration in the City. (Paragraph 33)

Monitoring the pay gap

8.  There is evidence that equal pay audits can identify gender pay gaps and inform firms about the possible reasons behind them. This is especially important at entry level so that pay gaps do not persist. We urge City firms to follow the EHRC's recommendation to conduct equal pay audits and publish their results. We note that Clydesdale Bank has volunteered to carry out such an audit. (Paragraph 42)

9.  We note Mr Phillips's view that equal pay audits should not be mandatory. Any regulations requiring companies to publish information about gender pay differences will require Parliamentary approval. Government and Parliament will doubtless take into account the extent to which there is evidence that unjustifiable pay differences persist when deciding whether such regulations are appropriate. However, we suggest firms which are found guilty of discrimination at an employment tribunal should be required to carry out regular equal pay audits. (Paragraph 43)

Flexible working

10.  There is an obvious conflict between a long hours culture and flexible working. Sometimes long hours may be unavoidable, but we are disappointed that many City firms do not appear to have been successful in introducing flexible working policies for senior staff, both male and female. (Paragraph 54)

Parental leave

11.  Discrimination against women on the grounds that they may require maternity leave, or may not return to work full time after their leave has ended, is illegal and there are legal remedies for obvious cases of discrimination. Such protection is long established, and employers should pay heed to it. However, it would be naive to think that it is easy to prove discrimination on these grounds, and that the existence of protective legislation alone will prevent discrimination. (Paragraph 55)

12.  While some maternity leave will always be needed, we welcome the proposals to allow more flexibility in the use of parental leave by both men and women. This would allow couples to choose how to arrange their childcare responsibilities as they see fit. It would also lessen the incentives for companies to try to evade the law. (Paragraph 57)

Information on tribunal cases

13.  There is little information about the effectiveness of legal remedies. We understand the constraints of confidentiality, and we also understand the limitations of official statistics, but we recommend that the EHRC and the Tribunals Service consider whether there is a way in which official statistics could give more information about the nature and outcomes of sex discrimination cases brought. (Paragraph 59)

The role of regulators

14.  We acknowledge that some companies are taking action to improve the diversity of their organisations. It is important that these plans succeed. The United Kingdom has had laws in place outlawing discrimination for over three decades. Despite this, the evidence suggests that women in some city companies can be at a disadvantage, and even companies which are attempting to implement equal opportunity policies can design them poorly. This is not just a problem for the individuals concerned; over the long term, it may affect the governance, and consequently the performance, of the companies themselves. We recognise that action by companies will take time to have an effect, but we would expect to see improvements in years rather than decades. (Paragraph 66)

15.  We consider that the EHRC should be more rigorous in its approach to research: good policy requires good data. We also note that the recent EHRC report suggests that it will rely on persuasion to ensure that financial companies comply with the law. The EHRC should monitor the effectiveness of this approach. There is a danger that responsible companies will be over burdened by requests for information, while bad ones will go unchecked. We also would like more information on how the EHRC will ensure that the recommendations and actions in their recent report have a real effect, and are not forgotten as soon as made. We are mindful of its powers to conduct investigations. We recommend that EHRC work more closely with the FSA and on the implementation of the Walker Review to ensure that progress is made. (Paragraph 73)

16.  The FSA recognises its role in paying "due regard" to promoting gender equality and eliminating discrimination. It is continuing to liaise with the EHRC and we recommend that this liaison is strengthened. We believe this Committee, or its successor, should be informed about the actions taken or planned as a result of these discussions. We recommend the EHRC monitors the equality plans and progress of City firms, in consultation with the FSA, where appropriate. (Paragraph 77)


17.  Transparency and public scrutiny are important ways to ensure that discrimination does not persist; we trust that our successor Committee will return to this issue to monitor the progress made. In places in this Report we have suggested that our successor Committee return to this work; we believe that some progress will be made through sustained scrutiny without legislative fiat. We also believe there needs to be a dialogue between companies and policy makers, so that the reasons for gender imbalances are properly explored. We have focussed on the City in this Report. However, the place of women in the economy is not a matter for the Treasury Committee alone, and we hope that other Committees will join these efforts. (Paragraph 78)

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