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Westminster Hall

Wednesday 18 March 2015

[John Robertson in the Chair]

Women Entrepreneurs

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Wallace.)

9.30 am

Seema Malhotra (Feltham and Heston) (Lab/Co-op): I am delighted to open this debate on the important topic of women and entrepreneurship. I grew up above my parents’ shop in Osterley, just half a mile from my constituency, and I have spent time self-employed and running my own business. I have visited women’s business centres in America and the UK and I passionately believe in the need for an ambitious strategy to support women-led enterprise. I would like to acknowledge the work Hounslow chamber of commerce does in my constituency and across Hounslow to support women-led enterprise. A number of women have set up and started their own businesses in the community, making a huge difference to the local economy.

Women’s entrepreneurship has great potential for growth, creating jobs and wealth while reducing gender inequality. Women-led small and medium-sized enterprises already add £70 billion to the UK economy, yet women are only half as likely as men to start their own business. According to the findings of the Women’s Business Council, chaired by Ruby McGregor-Smith, CEO of Mitie, it is estimated that if women were concentrated in entrepreneurial activity at the same rate as men, there could be an extra 1 million female entrepreneurs. Indeed, according to the most recent OECD data, there is a gender gap of almost 50% in entrepreneurship in the UK: total entrepreneurial activity, defined as the percentage of the working-age population either in the process of starting a business or running a new business, among working-age women was 7.5% in 2014, lagging behind the rate for men, which was 13.5%. In the US, the rate is 11.2% for women, compared with 16.5% for men.

There are real challenges, therefore, in realising the economic benefits that can come from women-led enterprise, but that should not be the case. Research published last week by the business software group Xero, for example, found that women-led start-ups tend on average to lose less money and to have more success in winning new contracts. Emerging findings from research being undertaken by the Centre for Entrepreneurs suggest that, although women have entrepreneurial and growth ambitions, men seem to be better than women at realising those ambitions. Continuing to understand and to deal with the barriers to women’s entrepreneurship needs to remain a core part of our economic policy.

A review of that policy area in the UK shows a growing focus on women entrepreneurs since 1997. The then Department of Trade and Industry formed a women’s enterprise policy team in its Small Business Service, and in 2003, the then Labour Government published “A Strategic Framework for Women’s Enterprise”, which was the first policy response of any kind from a UK

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Government on the potential for economic growth if women were encouraged to start their own businesses in a similar way to men. The report set out targets, and the women’s enterprise panel was formed to advise the Government.

David Simpson (Upper Bann) (DUP): I congratulate the hon. Lady on bringing this debate to Westminster Hall. If I did not speak in it, my wife would be very angry, because she has been an entrepreneur for many years and has been very successful. Does the hon. Lady agree that to encourage young women to start up businesses or whatever, we need to start at the very root, in further education colleges, schools and universities, to encourage them to come out and use their skills?

Seema Malhotra: I thank the hon. Gentleman for his intervention. He is absolutely right. Although the Government have made some progress on increasing enterprise education, we have a long way to go. One finding from research that I undertook last summer was that women who were starting their businesses later in life wished that they had had that education earlier. Women never know at which stage in their life they will be starting a business. It is increasingly common for both very young women and those who may have taken time out of the workplace to have children to become returners to start enterprises and suddenly find that they do not have the support or knowledge they need. I therefore thank the hon. Gentleman for his wise comment.

The Women’s Enterprise Task Force, established in 2006, took forward some of the work. Although not a delivery body, the WETF provided input to Government on key policy areas that affected women’s entrepreneurial uptake. The WETF produced several recommendations and directed and implemented Aspire, a £12.5 million women’s co-investment fund to support high-growth, women-owned enterprises. In 2008, policy developments taken forward included Government provision of enterprise support focused on women through the regional development agencies and Business Link.

In recent years, there has been a slow-down in support for women-led enterprise. Although the Women’s Business Council, formed in 2010, has done very important work, Prowess, the UK advocacy network for women in enterprise, has been scaled back to, in effect, a newsletter service, and the regional women’s ambassador programmes have been disbanded. For the recently published Burt report, a survey was done of local enterprise partnerships. The author wrote to ask all 39 local enterprise partnerships about their current engagement with women entrepreneurs, but only seven responded; of those, none had more than one female director for every three male directors and none had a strategy for promoting women in enterprise.

I remain extremely concerned that activity is being scaled back instead of pushed forward in the way the Government have reallocated resources for development programmes across the regions. The Department for Business, Innovation and Skills small business survey in 2014 suggested that women-led businesses fare less well over time than equally led or entirely male-led businesses. In 2014, 24% of one-year-old businesses were female- led and 45% were male-led, but of four to five-year-old businesses, only 14% were female-led and 49% were male-led.

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I mentioned research on women and entrepreneurship that I undertook some months ago. Through a series of seminars and public meetings, I looked at three dimensions of the gender gap in entrepreneurship in the UK: the rate of business start-up, the sustainability of enterprises, and the speed of growth of female-led versus male-led enterprise. Findings from our focus groups research suggest that there is greater support for starting up an enterprise, as well as perhaps at the top end, but a lack of support for established women entrepreneurs in the middle who are looking to grow their enterprise and are struggling to find support and advice on how to do so. Access to finance can be harder to come by, with investors and banks assessing some women’s businesses as more risky. Indeed, one woman I met, who had set up a child care business in Reading, was turned down for investment by her bank because it could not understand her business model—frankly, it did not understand the business of child care. She remortgaged her house to put her own finance into the business, and went on to increase her turnover and to employ about 20 people.

The needs of this group of women are not being met, so their economic potential is not being realised. The key question that emerges is what more needs to be done by the UK to bridge the gender gap not just in start-ups but in growth and sustainability. Closing the gap means understanding better the circumstances and gender differences in entrepreneurship, so I will spend a few minutes talking about motivations and barriers.

We know that although women have the ambition to set up businesses and grow them, different motivations make entrepreneurship attractive to them. They can include pursuing social goals, a personal passion or a niche in the market, or seeking a work-life balance, flexibility or more control over one’s life. It is positive that young mothers are leading an entrepreneurial surge in new business start-ups—the high cost of child care and the easy availability of technology that allows businesses to be started and run from home contribute to that surge—but if our current statistics are anything to go by, those businesses will need support to survive and grow. A new breed of business women, dubbed “the returners”, has made an excellent contribution to the increase in the proportion of small and medium-sized enterprises run by women from 14% a few years ago to 20% today. The number of women over the age of 30 seeking start-up finance and mentoring has increased by a third in recent years. In some measures, therefore, we see some positive trends, but the research suggests that women-led enterprises have less of a chance of surviving and growing.

Barriers to growth may be encountered by female and male entrepreneurs. According to emerging research by the Centre for Entrepreneurs, all groups express concerns about cash flow and about getting the right people and skills, but women are more likely than men to identify child care and supporting their partner’s career as barriers that affect their own enterprise. They were also more likely to want specific business education—a point made by the hon. Member for Upper Bann (David Simpson)—face-to-face contact, and good mentors, in contrast with men, who specified that they sought advice.

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That may shed some light on another gender-specific barrier: lower self-belief, as identified in research by Xero. A third of women said that a lack of self-belief had been the biggest barrier standing in the way of launching their small business, and it was the single reason most often given. In my research, I found that access to support and advice remains a problem. Women want forms of business education that are better tailored to their needs, and they raised with me the need for enterprise education in schools, so that young people can build entrepreneurial skills. We do not know who will become the entrepreneurs of the future, and that door should be open to children from a very young age.

In Liverpool, I saw an excellent example of networking and advice tailored to reach women when I visited the outstanding Women’s Organisation. Simply by moving the sessions to more family-friendly times, the organisation ensured that the number of women who attended business support events increased. The classic timing of business events and drinks right after work at 5.30 pm clashes perfectly with the time when kids are at home, or at after-school clubs, and dinner needs to be made.

Confidence can also be a significant factor in personal risk levels that may guide or limit the decisions that women make. Women may calibrate risk and confidence differently in taking tough decisions; they may also be less likely to see themselves as entrepreneurs than as business owners or founders, which may affect how they perceive and respond to marketing campaigns.

The Government have introduced some strategies, but there is still a long way to go. The Government published the Burt report, “Inclusive Support for Women in Enterprise” in February. That was helpful, but it is unfortunate that when the role was established, it was aimed at promoting and supporting female entrepreneurs, focusing on raising awareness rather than producing sound, evidence-based policy recommendations. The report recognises some initiatives such as StartUp loans, the enterprise allowance and local growth hubs, but it also suggests that there have been deficiencies in the way support has reached women, because it has been extremely patchy, rather than universal.

The report recognises the need to change some of our language around support, so that it looks and sounds more accessible and relevant to women entrepreneurs, who may search for it online. I am often struck by the huge contrast between the US Small Business Administration website, which has mainstreamed women’s business support and which feels customer-centric and targeted towards small business, and the website of the Department for Business, Innovation and Skills, which I believes serves Ministers more than it does those who seek access to services.

I welcome the fact that the Government have recognised the need to give diverse businesses diverse support. They have extended the types of support that may need to be provided to businesses set up by different people—for example, young people and those from ethnic minority backgrounds—to ensure that there is access and guidance for mentoring, networking and sources of finance. However, women have told me that they feel the Government’s support is located in a range of places and those who are looking for support find it hard to join up; they also find it difficult to identify what is really relevant and where to get the quality help they need. A page for women-led enterprise is attached to the GREAT Business

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website, but it feels like an add-on and a collation of bits and pieces. It could be far more integrated. I would be interested to know why the Aspire fund, a £12.5 million fund that makes equity investments of between £100,000 and £1 million on a co-investment basis, has so far invested only £4.7 million in women-led enterprises. It is certain that problems remain. As David Prosser wrote in

The Independent

last week:

“There is certainly a problem to tackle here. Government statistics suggest that fewer than one in five smaller companies are led by women. That’s not enough—not just because social justice demands equality of opportunity, though of course it does, but also because there is every reason to expect women-led companies to outperform.”

I will close with a few questions for the Minister. First, what cross-Government work is going on to integrate support for women-led enterprises at start-up and growth stages, and which Departments are actively involved? Secondly, what consideration have the Government given to putting the Women’s Business Council, which has done some important work, on a statutory footing so that it remains part of our business and policy-making infrastructure? Thirdly, why has the Aspire fund, which is designed to invest in women-led enterprises, invested only a third of its intended funds? Fourthly, which Minister is accountable for closing the gender gap in entrepreneurship, and whose dashboard is it on?

9.46 am

Dr Julian Huppert (Cambridge) (LD): It is a pleasure to serve under your chairmanship, Mr Robertson. I am really pleased that this debate has been brought to Westminster Hall, and I congratulate the hon. Member for Feltham and Heston (Seema Malhotra) on securing it. It is a shame that there are so few hon. Members here from both sides of the House. We are discussing a really important subject, and it would be good to have more participants.

I know from my constituency what a key role women entrepreneurs can play, have played and will play in our communities and economy. I have some experience in the matter, because I set up a very small biotech company with two women entrepreneurs and two other colleagues. It was extremely successful in every respect other than having a product that actually worked; as it turned out, that was quite important. One of the women with whom I worked has continued in entrepreneurial roles, and I am delighted about that.

Too often, we do not hear about women entrepreneurs. They are not the stereotype; they are too often the unsung heroes, and we must do far more about that. There has been some progress in the past five years, as the hon. Member for Feltham and Heston has described, in support for women entrepreneurs, including the appointment of an ambassador for women in enterprise, my hon. Friend the Member for Solihull (Lorely Burt), who is upset that she cannot be here this morning. Far more needs to be done, however. No Government have yet got it right, and we need to go much further.

Let me pick up on some of the examples in my constituency. It being Cambridge, many of our successful women entrepreneurs are involved in the tech sector. One example is Lily Bacon, who co-founded the pioneering software company RealVNC. She worked incredibly hard to get that company up and running in perhaps one of the earliest attempts at crowdfunding. Remarkably,

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the initial money for the company came from selling merchandise bearing the company’s logo. It is quite impressive to be able to do that ahead of time, and that was entirely Lily’s idea. The company is now a world-leading provider of remote-access software, and it has won three Queen’s awards for enterprise in three years.

There are many others, such as Martina King, who is doing amazing work at Featurespace, Julie Barnes at Abcodia and Annie Brooking at Bactest. I particularly want to mention Emily Mackay, who is doing some nice work with Crowdsurfer. She started the company while she was having her first child, and she has turned it into something quite exceptional. Sherry Coutu is an angel investor who helps entrepreneurs in a whole range of things and who is really committed to evidence base. She produced the “Scale-Up” report for the Government, which was excellent work. Outside technology, to pick one example, we have Julie Deane, who co-founded the Cambridge Satchel Company in 2008 with her mother. Only a couple of years later, they were making at least 3,000 bags a week in the UK and selling to 86 countries. It is an amazing company that makes very nice bags, Mr Robertson, if you ever want a satchel.

To enable women entrepreneurs to thrive, we must set the right conditions across the piece. I will talk about finance later, but much of the issue is not directly about entrepreneurs. It is about our society’s attitudes: the explicit and implicit discrimination that holds women back. We have regressive attitudes in so many areas, and one of those attitudes implies that women cannot and should not be innovators in our economy, that women should not take risks and that women should go for a safer job. I come across that attitude all too often. It is not right, and it has no place in what we are doing.

Another issue is imposter syndrome, which has been highlighted by one of my former colleagues, Professor Athene Donald. Many people, disproportionately women according to Athene and others to whom I have spoken, feel that however they are doing, they should not really be there and that they have not really earned their position. Frankly, that feeling strikes all of us. Anyone who claims that they have never felt that they do not deserve to be where they are is probably either over-confident or not telling the truth, but the feeling is expressed disproportionately by women. I recommend some of Athene Donald’s writings and comments on the subject.

We must address, rebut and debunk all those issues to make more progress. There has been work done, and I particularly highlight the work of my hon. Friend the Member for East Dunbartonshire (Jo Swinson) in both her roles as Parliamentary Under-Secretary of State for Women and Equalities and for Business, Innovation and Skills in trying to send forceful messages about sexist dogma in the workplace and, more broadly, society. Similarly, we have seen the work of my hon. Friend the Member for Solihull.

We have made some progress. We still have a society in which it is expected that women will do a disproportionate share of child care. We need to break that apart, and we have introduced shared parental leave, which is important not only for women but for men; parental leave should be open to everyone. Having spoken to many female and budding entrepreneurs, I know that that is an important issue for them. We have also worked to encourage parity of pay for men and women. There is

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no reason why men and women should be paid differentially for the same job. We have seen the gender pay gap come down, and after some internal coalition disagreements, we are now introducing measures so that large companies will have to publish the average pay of men and women. There are a number of schemes for women entrepreneurs, some of which the hon. Member for Feltham and Heston has already mentioned. There is the women and broadband challenge fund, support for women in rural areas, the road show of mentoring events and much more, so we are making some progress but not enough.

I completely agree with the hon. Lady that we are not there, and so long as we do not have more women entrepreneurs, we and our economy are missing out on a pool of talented, able people who could contribute much more. Research by Enders Analysis shows that raising women’s employment to the same level as men’s could lift GDP by 10% by 2030, which we should all want. As she said, the Women’s Business Council has said that if women had the confidence and support to start businesses at the same rate as men, the UK would be home to an extra 1 million female entrepreneurs, which we would all welcome. We are missing out, and we are doing too badly. Women majority-own only about one business in five, and they are about a third less likely than men to start a business. There is a lot to do.

We need to ensure that education is far more gender-neutral and to encourage women to take subjects that are not seen as traditionally feminine. I recently looked at the application rates for different subjects at the university of Cambridge in my constituency, and there is huge discrepancy between the subjects for which women do not apply and the subjects for which they do. We have to change that. Computer science is at one end and education is at the other. There is no good reason for that, and we have to change it. One thing we would like to do is to change application rates in science, technology, engineering and maths. We support initiatives such as the STEM diversity programme to address gender stereotypes. We need to ensure that each school has access to a female science champion to encourage the idea that women can be successful in technology and science.

Seema Malhotra: The hon. Gentleman is making an excellent speech. He reminds me that my sister studied engineering at Cambridge and now works with racing cars in America. He makes an important point about how we can attract more women into subjects that have not been female-led. Does he have a view on how we can build a stronger connection between schools and women who are running businesses and who have been successful in science or technology? Those women can be great role models and can encourage more women to come forward.

Dr Huppert: The hon. Lady is right that we have to do far more. In fact, her sister could perhaps be doing some of that. Various studies have asked people to draw an engineer, and almost invariably the person they draw is a man. We have to break that stereotype. There have been some great examples and, rather embarrassingly, I have forgotten the name of the brilliant engineer who

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worked on the Shard project. She featured in some of the television programmes, and I have met her, but I do not remember her name. She has gone out to try to encourage people in schools, which is essential. We need to show that there is diversity and that people from all walks of life can do it, whatever their background. The hon. Lady is right to raise that issue.

Female entrepreneurs have a particular issue with obtaining finance. Even if they have the background, the idea and the confidence to go for it, access to finance can be very difficult. As the hon. Lady said, banks can be very unsupportive of women entrepreneurs. Studies in the US found that when banks changed their approach to female enterprise, there was growth in female entrepreneurship. I am not saying that we should necessarily copy exactly what was done in the US—it might not exactly work here—but we should try to change the banking culture. We should work with the British Bankers Association to find information on lending to female entrepreneurs in England so that we can see how we can change it.

There are also non-bank funding issues. At the initial stage of funding, women are apparently rather more concerned to seek the three f’s: friends, family and fools. It can be difficult to ask people for money at that stage. There are similar figures for angel and venture capital investment. Only 8% of angel and venture capital investment goes to companies that are run or co-founded by women, which is an astonishingly small fraction. One ray of light is that we are seeing crowdfunding and equity crowdfunding, and 41% of successful equity crowdfunding goes to companies that are run or co-founded by women—we are seeing much more.

Amanda Boyle, the chief executive officer of Bloom VC, has talked about how crowdfunding is opening access to women. I do not have the figures with me, but I understand that men are still more likely to ask for money but women are more likely actually to get the money, which is changing the dynamics. I support all the recommendations of the report by my hon. Friend the Member for Solihull on inclusive support for women in enterprise.

I have spoken at length on some issues, and far, far more could be covered. It is good that we are having this discussion, and it is good that we are trying to make a difference. Whoever forms the next Government, and whoever is in the next Parliament, I hope that women entrepreneurs will be prioritised. So long as we have a society that stereotypes and gives the impression that women should like pink things and should be doing feminine jobs—we have no truck with those attitudes here—we will be weakening our economy and making our society less fair, which is the exact opposite of what we want. We want opportunity for everyone.

9.57 am

Jim Shannon (Strangford) (DUP): It is a pleasure to speak in this debate, which I thank the hon. Member for Feltham and Heston (Seema Malhotra) for securing. I note that my party, the Democratic Unionist party, has the most Members in this debate. I am sure that is not a reflection on the other parties’ interest in this matter, and I am sure everyone would be down here if they did not have other things to do. Those of us who are here underline the importance of supporting women entrepreneurs.

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I recently read an article on nibusinessinfo.co.uk stating that:

“If as many women as men were thinking of setting up a business in Northern Ireland we would have over 28,000 more entrepreneurs.”

To put that in perspective, if it created 28,000 new jobs—it would probably create more—there could in theory be zero unemployment in Northern Ireland. That is a possibility, and it would have a dramatic and positive effect on the local economy. That idea is not far-fetched. We must encourage ladies in Northern Ireland to be entrepreneurs, and we must ensure that they have a chance to do so. The article continues:

“The Global Entrepreneurship Monitor (GEM) report shows that women in Northern Ireland have a very positive view of entrepreneurship as a career choice.”

Entrepreneurship is not alien to women in Northern Ireland. They do not find entrepreneurship strange; they want to sign up to it.

“The report indicates that increasing the level of entrepreneurial activity among women will make a huge contribution to the diversity and success of the local economy.”

The Library debate pack has made me aware of one negative. It refers to:

“better support structures for women—think mentorship and networking”.

On the other hand, there is a problem with such an approach. If women are not starting businesses because they lack the confidence to do so, singling them out as a group in need of special treatment risks undermining that confidence even further. So there is a negative, and there needs to be a balance. At a women’s networking event at Middlesbrough football club in 2000, one of the award winners was south Wales-based Christine Atkinson, who said:

“Lack of confidence is so pervasive.”

Again, we cannot ignore that.

David Simpson: I am sure my hon. Friend will agree that the retail sector in the United Kingdom is vastly run by females. Within the commercial industry, there has to be opportunity as well.

Jim Shannon: I thank my hon. Friend for that intervention. His business expertise is good for this Chamber and for the House. He will not mind my saying this, but a part of his success is his wife. I mean that genuinely. My hon. Friend and his wife have a business partnership and they both work equally hard. The success of that business is due to the efforts of both of them. He and I know that, and his wife knows that as well.

When women take it upon themselves to launch businesses, often it is to beat the high cost of child care. Perhaps the Minister will address that issue. Child care costs are a big factor in whether ladies are able to start their businesses and move forward.

It is always good to give an example. A retired lady comes to my office. She does craft work and makes bits and bobs to help to raise money for orphan projects in Africa. I am amazed at her ingenuity at times. For example—my colleagues will know this—I am apt to give out business cards. As Members will know, they come in wee plastic boxes. Given the amount of business cards that I have given out over the past five years—and

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long before that—there are a lot of those wee plastic boxes. She has turned those wee boxes into memory boxes and she fills them with little cards with a poem on them or a thought for the day. She does that for her Elim church mission to raise money for Africa. She has used her skills as an entrepreneur and her skills in crafts to create a business of sorts. If that did not come under charitable purposes, I have every certainty that she could make enough money to live on with all the crafts and things that she sells. That is what an entrepreneur does—that is what it is all about—and that is a lovely example of what can happen.

Mr Gregory Campbell (East Londonderry) (DUP): Does my hon. Friend agree that whenever there is a successful woman locally in business, quite often she is perceived and projected in the local press as achieving success against the odds in an uphill struggle? It is almost a perception that the woman is not a natural fit within a particular system, rather than giving encouragement that this is an automatic thing. It ought to be a natural phenomenon, rather than something that is the exception. It should become the rule and the norm.

Jim Shannon: My hon. Friend is absolutely right. It should not be something that happens against the norm, but naturally. We welcome every business start-up, and we want to ensure that women do not feel out of place by starting a business.

The reign of the internet is now allowing more women to use their skills in a way that will benefit them. It is not simply men who are now suiting themselves with their working hours and flexible dot.com businesses. One need only look at Facebook to see how people use that medium to display their abilities. We can have anything personalised and sent almost overnight by those who choose to make the best of their time on the internet. There are many possibilities and opportunities. This is entrepreneurship at its best.

I recently met a man and a woman who own a few clothing shops in my constituency and in the neighbouring constituency. They realised that the potential for online shopping was within their grasp and expanded to include that. A business that had a turnover of £3,000 in its first few months will this year have a turnover of £1 million in online sales. That gives us an idea of the possibilities that there are. We had a meeting this week with the Department of Enterprise, Trade and Investment, and we want DETI and BT to ensure that better broadband is available for shops to make the work a lot easier. The fact is that those people saw an opportunity and took it, and we need to encourage more women—and men—to take such opportunities.

In Northern Ireland, the average age for a female entrepreneur is late 30s. The hon. Member for Feltham and Heston referred to that figure in her introduction, but anyone of any age can be an entrepreneur. Opportunities should be there earlier. Many women work part time while setting up a business, which gives them the chance to develop their business idea, while reducing the financial risk that may be involved. Others work flexible hours in their new business to allow them to look after a home or to fulfil other commitments while getting their business off the ground. Sometimes women have to care for elderly parents or their partners or children. We need to help people who have caring responsibilities.

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Seema Malhotra: The hon. Gentleman is making a powerful point about older women coming into entrepreneurship. There is no age barrier and someone can start a business when younger or when circumstances are different, but then need to accelerate later. Does he support my call for a more integrated approach to supporting women’s entrepreneurship, which has the backing and support of a range of different Departments where they may have different ways of interfacing with women’s lives?

Jim Shannon: I could not have said it better myself. I thank the hon. Lady for that intervention. Clearly, we need all Government bodies to work together to encourage people at whatever age they decide to start a business, whatever the reasons for starting at the time they started, and whether they are caring for a disabled relative or have family responsibilities. Whatever time they start a business, let us encourage them.

The opportunities are endless and it is clear that help and support should be given by the Government to allow people to understand how best they can begin a new business. In Northern Ireland, Invest Northern Ireland, in partnership with the Department of Enterprise, Trade and Investment, has help available. Indeed, it has a mentor programme. Perhaps the Minister and shadow Minister will say whether there is a mentor programme here in the UK mainland. If not, may I suggest they look at what Invest NI and DETI are doing in Northern Ireland? New starts are helped. There is a Training for Women website that has useful courses and guidance, and a lot of other help available.

Women into Business is Northern Ireland’s premier business women’s programme aimed at encouraging and supporting the progression of women hoping to enter or re-enter the workplace through employment or self-employment. Women in Business NI—WIBNI—is Northern Ireland’s largest and fastest-growing network for business women and entrepreneurs. WIBNI has more than 1,000 members and offers events aimed at helping women develop both personally and professionally, and to make connections and ultimately grow their business. WIBNI also offers a variety of free marketing benefits to all members, including publication of their news articles in a quarterly and a monthly magazine.

DETI and Invest Northern Ireland have worked out a strategy to encourage women in business and entrepreneurs in Northern Ireland. My hon. Friend the Member for Upper Bann (David Simpson) mentioned the importance of further education colleges. We see lots of good students coming through and taking up courses. The South Eastern Regional College does tremendous work in Newtownards and in my constituency, Strangford. It encourages young people when it comes to business start-ups and ideas, and helps to move them along the way. There are as many young girls and young women as there are young men involved in that college and those courses, and it is good to underline that as well.

There is an onus on the Government to offer help; more help can and should be offered. Again, I congratulate the hon. Member for Feltham and Heston on raising this issue today and on highlighting the great work that has been done, and the fact that there is the potential for so much more to be done, if only more support were offered.

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It must be remembered that the greater the success of new businesses, the greater the benefit to the local economy and to the country as a whole. So, whether a woman wishes to create her own business at home, or open a shop, or indeed five shops or 10 shops—whatever their potential dream or wish may be—the advice and support must exist to help them do so. And the onus is on those of us in this place and in Northern Ireland, where this matter is a devolved one, to ensure that that advice and support are provided.

10.10 am

Stella Creasy (Walthamstow) (Lab/Co-op): It is a pleasure to serve under your erudite chairmanship and beady eye this morning, Mr Robertson; you will ensure that all of us are well-served this morning.

I congratulate my hon. Friend the Member for Feltham and Heston (Seema Malhotra) on securing this debate. I know that this is a subject she is really passionate about. She has done a lot of research on it, which really shows in the insight she offers into it and the things that we can do about it.

I also want to put on record my interest in and support for the fact that there are a number of MPs here. May I venture to say to the hon. Member for Upper Bann (David Simpson), who sadly has now left Westminster Hall—

Jim Shannon: He will be back.

Stella Creasy: I am pleased that the hon. Gentleman will be back, because it is good to see male MPs supporting the idea that there is a gender gap that needs to be addressed. However, may I venture to say that that is not necessarily a concern because of his wife but because when 51% of the population are not fully utilised it is a concern for us all that we are missing out on the contribution that they could make? Frankly, sorting this issue out would help a lot of men, because it would help our economy, and therefore it perhaps has less to do with his wife and more to do with his constituents. It is because of them that he should be concerned about why we have such a gender gap. In particular, my hon. Friend set out well the particular gender gap that we see in the UK, because the situation is not the same in other countries, which should be very telling about what we can do in this country to address these issues.

A number of Members have already pointed out that there would be many more businesses if women were starting up businesses at the same rate as men. However, it is worth considering the situation in other countries. It is not only America that has a higher level of female entrepreneurship than the UK but countries around the world. Therefore, there is something happening in the UK. It is also worth noting that we have a higher rate of churn in the UK, so even when women start up businesses here they are failing more often than in other countries. Women entrepreneurs here are also less likely than elsewhere to attribute the closure of their business to business failure and more likely to cite personal reasons as one of the reasons why their businesses were not successful.

Why does this issue matter to us all? It is because equalising the labour market participation rates of men and women would boost the UK economy by an average 0.5 percentage points every year, with a potential gain

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of 10% of GDP by 2030. Given the recession that we have just gone through and given the fact that our recovery appears to be beginning to slow, getting more women into business and into leading more businesses would clearly make a tremendous difference to us all and our future economic position. Indeed, the Royal Bank of Scotland has calculated that boosting female entrepreneurship could deliver an extra £60 billion to the UK economy.

Seema Malhotra: As always, the shadow Minister is making an excellent speech. She raised the issue of female participation in the labour force and the important contribution to the economy that could be made by boosting the number of women entrepreneurs. Does she also see this situation as an opportunity for us to see women not only as entrepreneurs but as the employers of the future, who employ others and make changes as their businesses start to grow?

Stella Creasy: My hon. Friend has pre-empted one of the points that I was going to make, namely that this issue is not just about women employing themselves. Indeed, all the evidence suggests that on the whole women’s businesses tend to be better at creating jobs than men’s businesses, because women’s businesses are generally more labour-intensive than men’s businesses. Again, I go back to my initial theme that it would do men, and not just women themselves, a big favour if we could get more women into business.

Therefore, it is worth asking ourselves why we are not seeing that kind of progression in the UK, given that we need it within our economy to make it more stable. My hon. Friend set out the admirable record of the previous Government in bringing forward this agenda and I am very proud of the previous Government for making women’s business a priority for all, and not just for women. However, as the hon. Member for Cambridge (Dr Huppert) rightly said, we have all seen that the progress on this issue has been too slow. Since 2008, the percentage of small and medium-sized enterprises run by women in this country has only gone from 14% of the total number of SMEs to 20%, which is a 6 percentage point increase in that time period. That is simply not good enough. As a result, women own only about one business in five in this country. When we compare that with America, where women are twice as likely to be entrepreneurially active as women in the UK, even though the rates of entrepreneurship for men are very similar for both countries, that tells us the problem that we face here.

In that same time—the period since 2008—it is also worth reflecting on just how quickly women’s employment in and of itself has changed. Not only have women been hit disproportionately hard by the Government cuts but in terms of unemployment. Therefore, it is not a surprise that in the boom in self-employment that we have seen in this country in the last five or six years, women have accounted for much of that growth. Women account for under a third of those who are in self-employment in our country, but more than half of the increase in self-employment since 2008 has been among women. In fact, between 2008 and 2011 women accounted for an unprecedented 80% of the new self-employed people within our economy, which means about 300,000 more women going into self-employment since the economic downturn.

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What sort of businesses might those new businesses be? I am sorry to see that the Members from Northern Ireland in Westminster Hall have now shrunk down to one—the hon. Member for Strangford (Jim Shannon)—but I hope that it is a case of quality not quantity. The hon. Gentleman himself talked about online shopping and women using their interest in that to drive business. What we have certainly seen is a boom in the internet economy and the opportunity not so much to shop online as to sell online; we have certainly seen that women have been taking advantage of that opportunity. I would wager that that is not so much because of women’s interest in shopping but because of the reduction in barriers to entrepreneurship that online activity creates. The fact that now someone needs only a few hundred pounds to set up a business rather than several thousand pounds, because it is possible to sell online, changes our economy in substantial ways. Indeed, online businesses have accounted for almost a quarter of total UK growth in recent years, and much of that has been driven by new entrants into the market, including women benefiting from the fact that they can combine work around some of their other commitments to get into that online business.

Seema Malhotra: The shadow Minister is making an excellent point and I am reminded of the excellent phrase in the book, “A Woman’s Place is in the Boardroom”, by Peninah Thomson, in which she talked about the “customer being queen”, because of the fact that women are responsible for more than 80% of retail purchases, or decisions about them. Does my hon. Friend agree that that highlights even further the need to focus on women and what they can bring to our economy through setting up enterprises? The fact is that when women make decisions about what to purchase for themselves and their families, they understand the market so much more than men, and when they come forward and start businesses they are often filling niches and going on—just as Anita Roddick did with the Body Shop—to be hugely successful.

Stella Creasy: Again, my hon. Friend shows her experience in this area. What we are certainly seeing is that women who start businesses tend to bring forward new products, as opposed to men who start businesses, who tend to bring forward competitor products. So women are certainly driving innovation.

My point in referring to the online economy is to set on the record that Labour thinks this issue is less about women bringing their previous experience of purchasing to business so much as their ability to use the opportunity that online behaviour offers to open up markets to people. When someone is bringing a new creative product to the market, having a window that sells to millions of people rather than perhaps having a window just in their local high street opens up the potential for greater success, and it is important that we consider that and ask ourselves how, for example, we can support more women to learn skills, such as coding, to be able to sell online.

A number of Members today have obviously focused on women themselves and what might be stopping them from getting into business. Certainly, one of the issues that people have come up with is child care. So let us be very clear that there probably is an issue around child

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care and helping women to be able to juggle, which suggests men are holding women back, because, after all, it takes two to have a baby. One thing that I would be interested to hear the Minister’s view on is how we can make men hold up their part of the bargain in looking after children, so that their wives can be the successful entrepreneurs that they want to be.

Labour’s child care proposals will probably help a lot of women entrepreneurs. For example, there is our proposal to increase the number of hours of free child care that are available. With child care costs rising by up to 30%, there could be many parents—for example, the women who want to be the next Anita Roddick or Laura Tenison—who find their ability to be entrepreneurial being hampered as a result of this Government, because they find they cannot afford the child care necessary for them to spend the time setting up a business.

Today, therefore, I will set out four areas that I would like to hear the Government’s response about. They are less to do with women and more to do with the environment that we are asking women entrepreneurs to enter.

First, hon. Members talked about finance. Clearly, finance matters. The evidence shows us that women start businesses undercapitalised, and with not just less finance, but fewer human resources and less social capital. That puts them at a disadvantage by comparison with their male counterparts. Not having the same level of resource is a factor in respect of confidence and risk-aversion among female entrepreneurs. It is important to say that it is not always a bad thing that women are risk-averse, but we should recognise it when they do not have the same resources, and so cannot take the same risks, as their male counterparts. We must consider how to ensure that they have access to more resources, rather than encouraging them to take more risks, and we should recognise that their lack of confidence may not be misplaced and that they might not have the resources to succeed.

How much of a barrier is finance? Some 10% of female entrepreneurs say that access to finance is their only barrier to entrepreneurship, and that it is a particular challenge in respect of expanding in the way they would like to. Again, that appears to be a bigger problem in the UK than in other countries, particularly in Europe. Women in Europe are much more likely to be able to access finance to start and run their businesses than their UK counterparts. Some 20% of women in the UK have tried to get money to start a business but have been turned down, compared with only 11% of European female entrepreneurs.

My hon. Friend talked about the Aspire fund, which was set up in 2008 to try to deal with this challenge and ensure that there was a dedicated pot of money to support women in business. As she said, as of last year only £4.7 million of the £12 million had been invested. It is worth comparing that with other forms of start-up finance backed by the Government to see what the difference is. For example, in the same period, the enterprise finance guarantee scheme, set up to provide assistance to small businesses with an annual turnover of less than £41 million, has offered £2.6 billion, and £2.3 billion has been drawn down. The regional growth fund, which matches private finance with public assistance,

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has awarded £2.6 billion, of which £1.15 billion has been drawn down. There is a differential. It would be interesting to hear the Minister’s view on why the Aspire fund has not been as successful in promoting and supporting women’s businesses as some other start-up funds.

Research by Strathclyde university states that decisions regarding women and finance are based on the interaction between women, who may lack confidence—perhaps because they recognise that they do not have the same level of resource to start a business—and those offering them finance, who may have a certain attitude and approach. There is an interesting challenge for us: if we can change the attitudes of those offering finance—for example, through the Aspire fund—will more women go into business?

Secondly, we have to acknowledge the issue of confidence. I challenge slightly the vicious circle that the hon. Member for Strangford mentioned: he said that dedicated schemes for women could undermine their confidence. I assure the hon. Gentleman that the other way of looking at that is that it recognises that they are a priority. Dedicated schemes, with mentoring and support for women, recognising that there is a gap, and bringing other women forward are helpful and supportive.

Some 38% of women in the UK, compared with just 3% of women in Europe, take advice from Government business support projects. Women are more likely to use all forms of business support than men, whether public or private, and are more likely to access support from professional services. It is important that mentoring schemes exist. It matters that other women are in business, because you cannot be what you cannot see. It is a simple principle, but seeing other women being successful in business offers a road map for women, showing them how they could be successful.

I pay tribute, as other hon. Members have, to a women’s business forum in my constituency. I venture to say that that forum, run by the amazing Jo Sealy, is more successful than our general business forum.

Jim Shannon: I just want to go back one sentence, with the hon. Lady’s permission, and talk about confidence. I was saying that we all have different natures. I have a different nature from other gentlemen in this Chamber, and the hon. Lady is different from other ladies here. It is important, when encouraging ladies to take a job up or move forward with their idea for entrepreneurship, that it is done in such a way that their confidence is encouraged. It is not that what is happening is not right; it is right for some, but perhaps not right for all.

Stella Creasy: I thank the hon. Gentleman for his clarification. My point is that he was querying whether a gendered approach to mentoring might not be counter-productive. I wanted to reassure him that such an approach is important for a lot of women, because it shows them a road map of where they could get to.

I also pay tribute to Simone Roche of Women 1st, Kate Hardcastle of Insight with Passion, Bev Hurley of Enterprising Women, Heather Jackson of An Inspirational Journey, and Margaret Wood of Opportunity Plus, who supports older women entrepreneurs. There are a number of schemes out there, and what they all have in common is that they were set up by women volunteering. Some of them have become social enterprises. I share the

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concern of my hon. Friend the Member for Feltham and Heston that, over the last couple of years, the work to support women doing that work has been downgraded. My second question for the Minister is: does he share our concern and think there should be a renewed effort to support and prioritise those mentoring networks, not just in local enterprise partnerships?

My hon. Friend and colleague the Member for Feltham and Heston is a fan of the work of the national Women’s Business Council, which was set up for a year as an independent body. Does the Minister think there is a case for making that a perpetual scheme and for considering how it could support mentoring, using and drawing on the experience there?

Thirdly, with regard to women finding it hard to see other women whom they might aspire to be, does the Minister share my disappointment and concern about the slow pace of progress in getting women into leadership positions in business across the piece? He must be disappointed with the slow pace of change, given the diversity dividend that comes from getting more women into boardrooms. He must also share the disappointment of his colleague, the Minister for Business and Enterprise, about the decisions of many businesses to appoint women to non-executive positions. The vast majority of women who have gone into leadership positions on business boards during the past couple of years have simply been appointed as non-execs and have not been in decision-making positions. I know that the Minister will be worried about that unacceptable situation, because it sends a message to women entrepreneurs that there are not women to trade with. Does he think that there is now a case for getting on with looking at what quotas could offer us, in respect of non-exec and exec positions, and the way that businesses are working with women?

My final questions to the Minister are about women to trade with. There is a slow pace of change when it comes to not just women in boardrooms and in entrepreneurship, but women to trade with. In a world economy, the way our businesses work with other businesses could provide huge opportunities for women entrepreneurs, but at the moment, women-owned businesses are winning less than 5% of corporate and public sector contracts.

The Government’s adviser has called for the Government to collect data on diversity in procurement processes, and said that the pre-qualification questionnaire should ask about women-owned business. Is the Minister concerned that the talk about removing the pre-qualification questionnaire for contracts smaller than €250,000 may mean that we will not see that level of engagement with the question of whether the Government are selling to women and doing all they can, through their own supply chain, to promote women’s business?

Although UK Trade & Investment measures women-led firms that export, we do not measure women being sold to and traded with in our economy. The Government have dismissed the idea of having a quota for tenders and the idea of measuring the number of women being sold to, although clearly that would help us understand the scale of the challenge and whether the Government are doing what they can. If the Minister wants insight into what difference that could make, he should look no further than that socialist utopia, the United States of America, where some 30% of all businesses are majority female-owned and the number of women-owned businesses continues to grow at twice the rate of all US firms.

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Women are increasing their economic clout and driving the American recovery. That is not happening by accident; it is being driven by the US Government’s deliberate choice. The USA Women’s Business Ownership Act 1988 put in place long-term infrastructure to support women’s enterprise development. The quotas and targets set by the US Government for women in their supply chain are changing the behaviour of companies in America.

In 1994, the federal Government established a 5% spending goal for federal agencies to encourage contracting with women-owned small businesses. That target has not yet been met, but it is almost being met and it is making a massive difference to women entrepreneurs in America. Indeed, it is changing the debate not just in the public sector in America, but in the private sector. Companies such as Walmart—again, not perhaps seen as a socialist leader, if the Minister is worried about that—have introduced “women-owned” labels since last year, allowing consumers to clearly identify products created by women-led businesses and buy accordingly. That company sees a commercial interest in this.

The Minister may be worried that I am talking straight away about bringing in a direct quota for selling to women. I recognise that first and foremost we have to ask the question, so will the Minister commit the Government to asking, in the public sector, about selling to women and to starting to monitor just how women’s businesses are being traded with in this country? Through that, we can understand the gaps in the industry. Perhaps there is a role in that for the Women’s Business Council and that dedicated lead on women’s entrepreneurship and business that my hon. Friend the Member for Feltham and Heston set out so clearly as being required.

Ultimately, if we want to give women confidence that their businesses will be supported, that they will be successful and that we can bridge the confidence gap, we have to show that the issue is a priority. The Opposition are committed to that; I hope that the Minister will show a similar commitment, so that we can all benefit from the increase in economic activity and productivity that bringing more women into the UK economy would offer.

10.30 am

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (George Freeman): It is a pleasure to serve under your chairmanship, Mr Robertson in the closing phase of this Parliament. I congratulate the hon. Member for Feltham and Heston (Seema Malhotra) on introducing this debate on Budget day—an important day, when attention will be rightly focused on the Government’s initiatives to support business and entrepreneurship. As a Business Minister, it is a pleasure to be here and to be able to respond to the debate. I pay tribute to the Members who have spoken today. We heard powerfully from the hon. Member for Strangford (Jim Shannon) on some of the good practice in Northern Ireland. I was there recently celebrating and supporting the Northern Ireland life sciences cluster. He made a powerful point about the importance of rebalancing the Northern Ireland economy from public to private sector and the role of women entrepreneurs in that. He also made an important point on mentoring—I would be interested to look at the scheme he mentioned—and also touched on child care.

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The hon. Member for Feltham and Heston made a number of points and I will try to deal with them in my speech, as well as to answer some of her specific questions. I pay tribute to the large number of women who have contributed to the driving of the agenda outside this House. A number of pioneering entrepreneurs and women in policy have been mentioned today. It is another area where more needs to be done. I am proud of what this and the previous Government have done, but the Government agree that we need to keep our foot to the pedal and keep at it.

I particularly thank and congratulate those behind the Aspire fund, the taskforce and the Women’s Business Council for their work. The subject is close to my heart, partly because I have a 14-year-old daughter whose career I take a close interest in, and partly because I come from a 15-year career in the entrepreneurial sector in Cambridge and elsewhere around the country starting high-growth technology companies, particularly in the life sciences. In that sector, I am glad to say, there is a proud record of women achieving very highly both in our larger companies—I recently met a delegation from GlaxoSmithKline, and Members will be delighted to know that all five representatives were women—and in the smaller companies. There are huge opportunities for women in life sciences, both at the bench and in driving small businesses.

Women and entrepreneurship is also an area of interest from a policy point of view. Through the 2020 Conservatives group, I have set out a number of measures on how, in driving the rebalanced economy and the long-term economic plan, we have to liberate the entrepreneurial talents of all our citizens, and in particular reach into those areas where we have not properly unleashed them before. It is clear from what Members of all parties have said this morning that there is a lot of latent entrepreneurial talent in our female community. In our inner cities and our black and minority ethnic communities, there are incredible rates of entrepreneurial activity that we have not recognised, properly reached into and supported. Family finance supports a lot of our small businesses in some very business-hostile environments in some of our inner cities.

In the public services—before the shadow Minister leaps to her feet, I do not mean privatisation—we should unleash the spirit of entrepreneurship and the talents of people in the public services to deliver more for less. The economy nationally needs a strong focus on unleashing that spirit of enterprise. That does not always mean for-profit or very acquisitive, venture capital-backed businesses; it means a culture of delivering more for less and innovating. We need that to modernise our public services and to continue to drive the recovery that we are leading. The subject is close to my heart, and on Budget day it is close to the Government’s mission more widely.

The truth is that small businesses are the lifeblood of our economy. Every village, town and city in Britain contains shops, garages, cafes, manufacturing firms, hairdressers and so on. We take those small businesses for granted, but they are backed by enterprising and hard-working people who are taking risks to run those businesses. Responsible society depends on the ties that bind us, and as well as the economic benefits it brings,

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an entrepreneurial, small business economy does something else: it builds the ties and social capital that link communities.

Jim Shannon: The Minister is making a powerful response, saying what he feels he can do. One of the growth industries in my constituency and across the whole of Northern Ireland, particularly among ladies, has been the craft industry, where there are special talents and the ability to create products for sale. The Minister mentioned shops, small businesses and restaurants and so on, but the craft industry could release enormous talent and job opportunities across the whole United Kingdom. What are his thoughts on that?

George Freeman: The hon. Gentleman makes an important point. I was about to talk about the importance of small business in driving innovation if we want an innovation economy. Small businesses tend to be quicker to adopt innovation and to drive it. They are a force for insurgency in the economy. In tourism and crafts, we should not forget that small businesses are important in our theatre, media, digital and tourism sectors. A culture of empowering people and unleashing the talents of women in every walk of life is incredibly important if we are to build a diverse and strong economy and a strong and linked society.

That is why I am absolutely delighted that the UK is a truly great place to start a business. This year we have seen data confirming that 760,000 small businesses have been created in this Parliament since 2010. We are backing business every step of the way, making it easier to start, succeed and grow. We will hear about more such measures in the Budget later today, I have no doubt. I am delighted, too—but not complacent for a minute—that in 2013 there were more women-led businesses in the UK than ever before: 990,000 of our SMEs were run by women or a team that was more than 50% female, an increase of 140,000 since 2010. We know that more needs to be done, and we need to build on that positive momentum. I am also delighted that in the UK, women-led small businesses are contributing £82 billion to the gross value added of the UK economy.

Before the debate, I looked at the latest data, which are even more encouraging. The data from the Office for National Statistics for October to December 2014 show that there were 1.45 million self-employed women in the UK, which is 42,000 more than in the previous quarter and 281,000 more than in May to July 2010. Some 672,000 of those self-employed women were working full time and 778,000 were part time.

I pay tribute to the work of the Women’s Business Council and the important policy work that it has done and intends to follow up. It has rightly, as a number of Members have highlighted, pointed out that if we had women starting businesses at the same rate as men, we would have up to 1 million more entrepreneurs. That is a good reminder of the latent potential that we need to continue to drive at.

One or two Members asked about the Government’s commitment and which Minister is responsible for this. I am delighted to say that a number of Ministers are responsible. The Minister for Business and Enterprise leads on enterprise policy for the Government. The Secretary of State for Education is also the Minister for Women and Equalities. The Under-Secretary of State

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for Women and Equalities at the Department for Education is also an Under-Secretary of State for Business, Innovation and Skills. They are all working to develop joined-up policies with the Government Equalities Office. We take it seriously as part of our commitment to social justice and to the long-term economic plan.

Research by the Enterprise Research Centre has shown the challenges that confront women entrepreneurs, but in many ways they are similar to those facing men.

Seema Malhotra: The Minister has acknowledged the important work that the Government Equalities Office has been doing and the different Departments involved, but he has not been so clear on who is actually in charge of the policy area. Having many people involved is good, but who is in charge? Also, he has not mentioned what plans the Government might have for the Women’s Business Council and whether they think its role needs to be strengthened. Should it be looking at more diverse aspects of business? Should it be put on a statutory footing?

George Freeman: With eight days of this Parliament left, perhaps I could undertake to write formally to the hon. Lady to confirm the various initiatives that we have running. I assure her that if this Government are returned on 9 May, we will continue to keep our foot to the pedal and drive on this agenda. She would not expect me to commit now to what that might look like, given the uncertainties that we all face.

A number of colleagues mentioned access to finance, which is rightly regarded as a major obstacle preventing women from starting and growing a successful enterprise. It is worth pointing out that access to finance is an issue for all businesses, but although it is in many ways gender neutral, the truth is that women perceive higher financial barriers and the evidence shows that they are more likely to be discouraged, particularly by some forms of borrowing. Sources of finance for male and female-led businesses are similar, but studies show that women-owned businesses start with lower levels of overall capitalisation, use lower ratios of debt finance and are much less likely to use private equity or venture capital.

Encouraging women to start their own business is a key part of our long-term economic plan, which his why we have put in place a range of Government initiatives to support women. Through the GREAT website, we have brought together in one place all the relevant Government advice, guidance and support, but there is more to do. I am delighted that, this week, we in the Office for Life Sciences have redone our business support portal to make navigation easier for those outside the system. The Department for Business, Innovation and Skills has also launched a range of new measures, including a new web page specifically aimed at potential and existing female entrepreneurs.

The Government’s “Business is GREAT Britain” campaign has been highly effective at making small businesses aware of the range of support on offer to help them to grow. Specifically for women, we have committed additional funding to understand in communications terms the particular challenges that female entrepreneurs face, and we are making sure that existing activity is widely promoted among women. We have managed to match up experienced business women with those new to enterprise and invested £1.9 million

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in the “Get Mentoring” project—a number of colleagues mentioned mentoring. That project has recruited and trained more than 15,000 volunteer business mentors from the small business community, 42% of whom are women, I am delighted to say; that is more than 6,000 mentors trained specifically to support female entrepreneurs. Owing to the success of that project, the Government recently announced an extra £150,000 to host 12 “Meet a Mentor” roadshows throughout the UK for female entrepreneurs.

Seema Malhotra: The Minister mentioned the GREAT Business website, which I referred to, and said that it has been successful in raising awareness among small businesses. Has there been any formal evaluation of how successful it has been?

George Freeman: The process of evaluating the BIS portals has been taking place only in the past few months. Perhaps I could come back to the hon. Lady with the latest details of that assessment.

Stella Creasy: Will the Minister give way?

George Freeman: If I can just finish this section of my speech, I will happily give way.

We have invested in the women’s start-up project to provide opportunities for young women studying in the creative industries and the leisure and tourism sectors to start their own businesses. This pilot project, in partnership with Young Enterprise, will see the Government provide funding of up to £50,000 for teams of young women aged 19 to 24 studying at undergraduate level to set up and run their own businesses. We have also provided £2 million for small grants of up to £500 for those wishing to set up new child care businesses—help with child care is of course a major part of support, and I will say more about that in a moment. In the autumn statement, the Chancellor announced that that scheme would be extended until March 2016, with a further £2 million made available for next year.

As a number of colleagues have mentioned, we have provided a £1 million women and broadband challenge fund to help women to move their business online and take advantage of superfast broadband. Sixteen local authorities have been awarded a grant to support actions to encourage women’s enterprise in areas where superfast broadband is being deployed. I want to touch on the particular challenge faced by women entrepreneurs in rural areas such as my own.

Stella Creasy: Will the Minister give way?

George Freeman: I will just finish my point, then I will give way.

The Government are actively addressing a number of additional barriers for women in rural areas. We have provided £1.6 million to support women’s start-ups in rural areas, including improved access to transport links, virtual assistants for those in the most remote areas, online help, and local business support through mentoring, skills training and networking.

Stella Creasy: Before the Minister moves on from discussing Government support to women’s business, I want to press him on the Aspire fund—I hope that he

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has just received a note on it from his officials. He mentioned a number of different pots of money that are being given out to support women in business in various ways—for example, the broadband challenge. The Aspire fund was set up with £12 million to support high-growth women-owned ventures, but six years on, only £4.7 million has been invested. Will he say more about why that is the case and what the Government are doing to reduce the gap? If that money is there to support women’s business, surely we should ensure that it gets to women in business.

George Freeman: With her typical prescience, the hon. Lady anticipates the next paragraph of my speech. We recognise that the sector needs particular support, which is why we are so keen on the Aspire fund, which makes equity investments of between £100,000 and £1 million on a co-investment basis and is designed to help female-led businesses that aim to grow. The fund invested £1.3 million and supported £5.5 million of investment in 2013-14, and it has a total of £12.5 million to invest.

It is worth remembering that the fund was not intended to fund a large number of businesses; it is there as a beacon project to support women-only businesses and catalyse the sector. I am delighted that we have also made additional investment available to businesses led by women, as well as those led by men, through the £100 million business angel co-investment fund. We must not forget that although we are catalysing and driving women-only entrepreneurs, the whole range of business support mechanisms we have put in place—including the seed investment enterprise scheme and the expanded enterprise investment scheme—are all available to women entrepreneurs.

Stella Creasy: Will the Minister give way on that point?

George Freeman: I just want to finish this point about funding.

Without the right funding, it would be hard for anyone to realise the potential of their ideas. The Aspire fund is one of a much larger range of measures. Women are also benefiting from the full range of start-up loans and the new enterprise allowance. More than 25,000 loans worth more than £160 million have now been made, with 37% going to women. The 25,000th loan was given to a female entrepreneur.

To help more parents to start their own business, from autumn 2015 tax-free child care will be available to nearly 2 million households to help with the cost of child care. That will enable more parents to go to work and, unlike the current scheme—employer-supported child care—it will be available to self-employed parents.

Stella Creasy: There is a £7 million gap between the £12 million that has been made available for women’s businesses and the money that has actually been drawn down. I take the Minister’s point, and I am not suggesting that that is the only funding available for women entrepreneurs, but compared with other Government-led schemes, there is a substantial disparity. Why does he think that is? Why has the Aspire fund not been able to

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lend at the same rate as the other available start-up funds? Will he commit the Government to monitoring across the piece the gender of those to whom they are lending through start-up schemes? The Government have not always monitored that, but they must do so to truly understand what we might have to change about finance for women to ensure that they all get the support that they need.

George Freeman: It is important to realise that we do not want the investment funds that take equity stakes simply to shovel the money out of the door irrespective of the quality of the bids. The decisions have to be based on proper investment criteria, and it is not for me or the hon. Lady to second-guess such judgments. I am pleased to see that after an initial period during which the rate of investment was slower, it has picked up. We are actively monitoring and supporting the fund, and our ambition is for it to be spent and invested, but it is important that we send a signal that the money is going into high-quality business propositions.

As we have all acknowledged this morning, there is a challenge in trying to observe the wider cultural point made by my hon. Friend the Member for Cambridge (Dr Huppert). He said that we must promote world-class, aspirational, high start-up businesses that are capable of receiving that sort of venture capital. It is not for us to signal that the money should be pumped out of the door irrespective of the quality of the bids. It is for the fund manager to ensure that they are picking the right investments.

I have tried to be generous in giving way, but time is running out, so I want to complete my remarks. For all the reasons I have outlined, and because we agreed that we must do more, in April 2014, my right hon. Friend the Secretary of State appointed my hon. Friend the Member for Solihull (Lorely Burt) to the role of women in enterprise champion, to promote the support available to women starting a business. In February, she presented her report on how the Government could boost support for female entrepreneurs, and we agree with much of the thinking and analysis it contains. I cannot be expected to commit the Government to agree with every single one of the recommendations, but we are actively looking at them and working on an implementation plan.

I want to pick up on some of the comments. My hon. Friend the Member for Cambridge focused in particular on science and start-up companies. I join him in paying tribute to the people in the high-tech and life sciences sector, which we both know well from Cambridge, and to entrepreneurs such as Julie Deane of the Cambridge Satchel Company. He made a number of interesting points about cultural attitudes and the need to ensure that, in what can sometimes be the quite macho world of finance, the quality of women entrepreneurs and of women in science is properly recognised.

My hon. Friend also talked about the importance of getting schools better connected to businesses. We can all do something about that in our own constituencies. Tomorrow night, the Norfolk Way is launching our first innovation awards for Norfolk, linking up science teachers and students in schools with local businesses in the area. He made an important point about 8% of venture capital funding but 41% of crowdfunding going to women-led businesses. That sends a signal about the power of some of the new financing mechanisms to

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support women’s businesses. Although the Enterprise Research Centre has shown that there are no specific obstacles to access to finance for women, strong perceptions have a powerful effect, and that is something we need to monitor.

My hon. Friend made a particular point about STEM. Since 2009-10 the number of women starting engineering in manufacturing apprenticeships has increased threefold, which is a real success for the coalition’s apprenticeships policy in that we are getting more and more women in the STEM subjects. More action is necessary, but with the apprenticeship ambassadors STEMNET programme we are making progress. The Your Life “Call to Action”, part of the campaign launched by the Chancellor and the Secretary of State for Environment, Food and Rural Affairs, has brought together employers, educators and the professions to make concrete pledges to increase the number of women in engineering and technology. I am delighted that more than 200,000 organisations have now pledged to create in excess of 2,000 entry-level positions, including apprenticeships, graduate jobs and paid work experience posts, as well as action to support their female work force.

Dr Huppert: The hon. Member for Feltham and Heston (Seema Malhotra) talked about mentors and I could not remember a name. I hope that the Minister will join me in congratulating Roma Agrawal, who worked on the Shard and has a website, romatheengineer.com, which promotes females going into engineering.

George Freeman: I absolutely join my hon. Friend in paying tribute to another beacon project that is sending out such a powerful signal to girls and women about opportunities available to them. I am delighted, too, that we allocated a further £20 million in the engineering skills fund to help employers to tackle skills shortages in engineering, including to develop women engineers.

Finally, my hon. Friend made a point about enterprise education. I am delighted to confirm that we are working actively with schools, colleges and higher education institutions to encourage and promote entrepreneurial attitudes and skills training, as well as providing mentors and role models and improving access to finance support.

I want to deal with the questions about child care and women on boards. A number of colleagues asked about child care support. The Government have increased the number of funded hours of free child care from 12.5 to 15 hours a week for all three and four-year-olds, saving families an additional £425 a year per child. Since September 2014, we have funded an additional 15 hours a week of free child care for the 40% most disadvantaged two-year-olds, saving families £2,500 a year per child. We have also increased child tax credit well above inflation to £2,780 a year, which is £480 more a year than at the beginning of the Parliament. All families under universal credit will be able to receive 80% support for child care costs, which is up from 70% under the existing working tax credit system. The introduction of tax-free child care could also save a working family up to £2,000 a year per child. In addition, we have committed an extra £50 million to introduce a new early years pupil premium in 2015-16 to support the most disadvantaged three and four-year-olds to access Government-funded early education. That is important if we are to support

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our entrepreneurs and innovators in all walks of society and to ensure that entrepreneurship is not the preserve of the well-off.

Women on boards is an important subject. A lot of our entrepreneurial companies do well and go on to become substantial, significant companies quoted on the stock market. We are ensuring that, at that point, women continue in leadership roles. Following Lord Davies’s recommendations in the 2011 “Women on boards” report, the Government are committed to achieving the target he set for the end of 2015 of 25% of FTSE 100 boards being women. We also want to increase the number of women on FTSE 250 boards. The graph that I have in my hands shows a line slowly climbing from 2004 to 2011, but then turning sharply upwards, going from 12.5% of women on the boards of FTSE 100 companies to 20.7% at the end of 2014. We are making a real impact and we must continue to do so. I am delighted that now 22.8% of FTSE 100 board members are women and that women now account for 28% of FTSE 100 non-executive directorships and 8.5% of FTSE 100 executive directorships. There is much more to do, but we are making real progress.

Stella Creasy: Does the Minister share the view of his colleague, the Minister for Business and Enterprise, that it is unacceptable that boards are only appointing women to non-executive positions and that what we need therefore is a target not only for women on boards, but for women in decision-making positions? Also, will the Minister answer the questions about the Women’s Business Council and about the supply chain? It would be incredibly helpful to hear his response on those issues as well.

George Freeman: I do share the ambition and desire of my fellow BIS Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), to see a continuing increase in the rate of women being appointed to the boards of our top companies. The hon. Lady is right to highlight that we do not want women only to be in non-executive roles; they must be in executive roles as well. That is why I was saying that we are very much focused on that. We are pleased with the progress, but we need to go further—not, I hasten to add, because of a politically correct desire to hit some quota, but because women are talented and represent more than half of our work force. By not giving women fair representation in the leadership positions of our great companies, we deny those companies their talents. We are being hard-headed and not only concerned with social justice. It is in the interests of the country in every way. I am glad that we agree on that.

In closing, I want to return to the point with which I started. Many of the arguments used in the Chamber today relate to the economic contribution of women in entrepreneurship and start-up businesses and to the need to unleash the talents of women, because that is so important to our economy, but I want to highlight the importance of a small business and entrepreneurial economy to the wider stock of social capital and the ties that bind us. I am absolutely certain that if we are to rebalance our economy in the broadest sense, we need to create one in which small business not only contributes to economic success, but helps to bring communities together. Give me a deal between two small companies any day of the week and I will show people a deal that

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includes not only an economic deliverable, but a contribution to social capital and to building trust between communities. In many of our small towns, neighbourhoods, villages and inner-city communities, small businesses working together produce and deliver so much more than just economic growth. It is vital that we build women into that network as well.

For those reasons, I am delighted that, while there is not a shred of complacency in the Government, we are making real progress. We now have 1.45 million women enjoying the freedoms and flexibilities of self-employment, which is 42,000 more than in the previous quarter and 281,000 more than in 2010. We also have 900,000 SMEs run by women, more than at any time in our history. I am not complacent, but the Government are making progress.

Stella Creasy: Before the Minister closes, I wanted his response to two specific questions about the future of the Women’s Business Council and the supply chain. His own Government adviser on women-led businesses has suggested that the Government should monitor women in the procurement supply chain. Will he commit the Government to that, yes or no?

George Freeman: I have taken a lot of interventions and questions, but I will happily get back to the hon. Lady in detail. She made an interesting point about procurement. Through the work of the Cabinet Office, we are driving hard to ensure that we use every procurement power to support innovation throughout the economy. That is an important part of it and I will happily come back to her on it later.

The 900,000 SMEs run by women in our economy, the highest number in history, suggests that we are making real progress. I am not complacent for a moment, but we are on the right track.

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AEA Technology Pension Scheme

11 am

Geoffrey Clifton-Brown (The Cotswolds) (Con): I am grateful to you, Mr Robertson, and to Mr Speaker for giving me the opportunity to raise the matter of the AEA Technology pension scheme, following the company’s pre-pack administration in 2012. I am also grateful to the Minister, my parliamentary neighbour, for being here to respond to the debate, and to my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) and my hon. Friends the Members for Newbury (Richard Benyon), for Reading West (Alok Sharma) and for Oxford West and Abingdon (Nicola Blackwood) for being here to support me. I give special thanks to the Minister for Culture and the Digital Economy, my hon. Friend the Member for Wantage (Mr Vaizey), and to his staff. He is the constituency Member concerned with the matter, and he and his staff have been very active on it, as have lots of other right hon. and hon. Members.

I have received continuing representations from my constituent Dr Ken Nicholson, who has been affected by the issue. I know that constituents of other Members have also been affected. I will start with some background information for context. The AEA Technology pension scheme is a defined-benefit final salary scheme, set up when AEA Technology, which was previously the commercial arm of the United Kingdom Atomic Energy Authority, was floated on the stock exchange in September 1996. AEA Technology had become a Government-owned company that April, although staff remained members of the UKAEA pension scheme until flotation.

The Atomic Energy Authority Act 1995 detailed the conditions for the privatisation of AEA Technology and included specific information regarding the pension arrangements for transferring staff. A schedule to the Act stated that benefits from the daughter scheme should be “no less favourable” than those that would have arisen from the UKAEA scheme as it was at the time. There was a duty to ensure the arrangements for the new scheme satisfied the demands specified in the Act, something the then Energy Minister, Tim Eggar, stressed on Second Reading of the Bill in March 1995.

Alok Sharma (Reading West) (Con): My hon. Friend has come quickly to the nub of the matter. People made the transfer because they believed that the terms would be no less favourable than those they were enjoying before they did so. Does he agree that the key question is, who will compensate those who have lost out? I know that it happened many years ago under a previous Minister, but perhaps the Minister will address that point as well when he makes his remarks.

Geoffrey Clifton-Brown: My hon. Friend has made his point cogently. I will return to the matter of compensation later in my speech.

Once part of the new scheme, members were encouraged to transfer all accrued pension service from the UKAEA scheme, by a leaflet presented as impartial advice from the Government Actuary’s Department; it has recently been found that the leaflet was changed several times at the request of the UKAEA to remove references to risks involved in the transfer. Scheme members were assured that their pension would be safe. As both schemes were based on final salary, the decision by scheme

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members on whether to transfer service to the new scheme or to freeze it in the UKAEA scheme was based on a judgment of what would happen to their own salary in future years. They could not make the decision based on whether the new scheme contained more risk, since they had not been warned of any.

Nicola Blackwood (Oxford West and Abingdon) (Con): The AEA Technology staff are nuclear physicists accustomed to identifying risk and weighing cost-benefit. If they could not identify risk within the GAD advice, who could have?

Geoffrey Clifton-Brown: My hon. Friend makes a really potent point, which I will come on to later in my speech.

People had not been warned of the risks by the official leaflets that they received. The AEA Technology pension scheme received an initial injection of cash from its mother scheme, the UKAEA scheme, based on the accrued service and pension entitlements of the transferred members. The mother scheme was operating with a notional surplus at the time, but none of that surplus was passed to the new scheme, giving the Treasury an increased windfall. Since the AEA Technology pension scheme ran into deficit because of changes in actuarial valuations, it has now become apparent that insufficient funds were transferred into it when it was set up. Moreover, no written agreements appear to have been made to cover such an eventuality. In other words, either the Government have a continuing moral, and possibly legal, duty to those transferred members or they cannot have fully discharged their responsibility under the Atomic Energy Authority Act.

The Department for Work and Pensions has suggested the requirements of the Act may have been fulfilled because when it was launched the benefits from the new scheme matched those of the mother scheme. However, none of the transferring scheme members—my hon. Friend has made the very good point that they were extremely bright and able people—were eligible to draw benefits at the time, because none of them were retired, so the DWP’s claim cannot be true. The Act’s intention must have been that the new pension scheme would not change in future years if the UKAEA one did not, meaning the benefits were secure.

It is now proposed that the AEA Technology pension scheme be transferred to the Pension Protection Fund, where index-linking of benefits would be removed and replaced by an inflationary allowance, capped at a maximum of 2.5% for service from April 1997 onwards. That covers almost all post-privatisation service. It would further mean that all index-linking would be removed from service prior to that date—that is, from all service transferred from the Government sector, which the scheme members were told was secure. In addition, all members below retirement age would suffer a further 10% drop in their pension. The overall effect is a greatly diminished pension that is far less than the benefits that would have been due from the UKAEA scheme. It would not be equivalent, as was specified in the Atomic Energy Authority Act.

Richard Benyon (Newbury) (Con): My hon. Friend is making a good point. The key point to which we want the Minister to respond is that, as a public sector

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pension, the AEA Technology scheme had full protection linked to the retail price index. That has now been lost, on the basis of wrong advice that was given at the time.

Geoffrey Clifton-Brown: As I will explain in a minute, it was partly wrong advice at the time and partly the fact that the subsequent company went into a pre-pack.

As I was saying, the proposed transfer to the PPF means that the scheme would not be equivalent to the UKAEA scheme, as was specified in the 1995 Act. I would be grateful to hear the Minister’s views on whether the AEA Technology pension scheme should present a special case because it was formed as a result of privatisation, as my hon. Friend the Member for Newbury said. Additionally, does the Minister believe that the Government should have a duty of care to those staff who were transferred into the AEA Technology scheme? Do the Government have a moral and legal duty to act to protect the pension scheme members against loss, given the assurances that, as my hon. Friend said, were made to staff as part of the privatisation process both in Parliament and in the printed materials provided to scheme members by an arm of the Government at the time?

I understand that in 2010 AEA Technology made an unsuccessful acquisition of the US firm Eastern Research Group by issuing a large number of shares. Problems arose with ERG the following year because of late payments and delays in the US Government’s awarding of contracts. AEA Technology issued a statement in November 2011, which played down the prospects of the UK-based part of the company and highlighted ERG’s problems. That drove the company share price down to virtually zero. Notwithstanding that, the long-term prospects for ERG appeared good, as it had recently won a £100 million contract, and AEA Technology’s successful UK-based business, which had originated from the privatisation exercise, was profitable and actively recruiting at the time.

Given its financial situation and low share price, AEA Technology ran into cash-flow problems. Therefore, in November 2011, it began negotiating with various parties, including its bank, the scheme trustees, the PPF and the Pensions Regulator. The aim of the negotiations was to improve its financial position, and the plan that was agreed involved arranging a pre-pack administration to allow it to default on its pensions obligations and to start afresh under new, improved trading conditions—AEA’s original pensioners were about to suffer a serious double whammy.

The company’s share price was driven down so low—to about 0.05p, following a peak of almost £10 soon after flotation—that the company’s market capitalisation was less than £l million, which was less than the annual profit from the UK-based business alone. Given the low share price, investors would face no great financial loss from entering administration. The idea was for the PPF to take over the pension scheme and its assets. However, the PPF has fixed rates of compensation and, in particular, limitations on its rates for inflationary allowances. The net effect on scheme members, therefore, would be to reduce their pension pots to less than half of what they might originally have expected. That drop is greater than that explained by the scheme deficit. To add insult to injury, the scheme is contracted out, which means that its members will not be eligible for an additional state pension.

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The pension scheme trustees initiated the pre-pack administration of AEA Technology by electing to wind up the pension scheme and to invoice AEA Technology for the full buy-out costs. Such action would be enough to make almost any company insolvent. The argument for entering a pre-pack administration was that it would maximise—that is pretty unrealistic—the company’s value, which would, in turn, maximise the scheme’s value for its members. Of course, that later turned out to be totally false. The money put into the scheme from the sale of the company was negligible by comparison with the losses caused by winding the scheme up. Scheme members could never have benefited from that; the beneficiaries could only ever have been the bank and the PPF.

AEA Technology was profitable and expanding, and it had a healthy order book, when it elected to enter pre-pack administration. The surviving parts of the company have continued to prosper. An air of secrecy shrouds the pre-pack negotiations, with everyone stating they are someone else’s responsibility or that information is commercially sensitive. Who it is who is commercially vulnerable is a big secret. That has also been the disingenuous response of the relevant Departments, while the various ombudsmen have thus far refused to get involved. What is the purpose of an ombudsman if, the moment they encounter a really difficult case, they fold and refuse to investigate?

Pre-pack administrations were set up with the intention of being for the benefit of creditors. The PPF was set up as a safety net for company pension schemes that run into trouble. The Pensions Regulator has a duty to protect pension scheme members’ best interests, as have the trustees. Yet in the case of AEA Technology, it appears that all those parties got together to help the company financially, at the expense, yet again, of those they were supposed to protect—the pension scheme members.

The AEA Technology case is special because the company was formed through privatisation. Many of its pension scheme members are ex-Government employees, who are extremely well qualified and extremely intelligent, and the Government have a continuing duty of care towards them. For that reason alone, the pre-pack administration needs careful investigation.

The case has highlighted other important issues. For example, there is the question whether pre-pack administrations are being abused. Additionally, the implications of defaulting on pensions for commercial reasons need to be understood and controlled if the Government are to be successful in promoting saving for retirement and in introducing a unified, simplified pension system into which transfers are the norm.

Sadly, in this case, it is all too clear that a large number of very bright people were misled by the information issued by a Department. Some of the information—the drafting was heavily influenced to minimise any reference to risk—may also amount to a misleading prospectus, and it needs to be thoroughly examined by the Government regulator.

I end by saying that the pre-pack administration of the AEA Technology pension fund and the information on which members transferred their entitlements need proper and thorough investigation, and scheme members

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need compensating accordingly. I look forward very much to what my right hon. Friend the Minister has to say, and I thank him for listening.

11.15 am

The Minister for Pensions (Steve Webb): I congratulate my constituency neighbour, my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown), on securing this important debate. As he knows, I have taken an interest in the issue, and I met his constituent Dr Nicholson with him in 2013. I have also had a number of meetings with hon. Members and scheme members.

It is important to say, for what it is worth, that I hugely sympathise with anybody who built up pension rights, was expecting a certain pension and then did not get it. Nothing I say subsequently about the Government’s position takes away from the fact that we are dealing with a very unsatisfactory situation that all of us would want to avoid.

Let me go through the points my hon. Friend raised and respond to them as best as I can. The first is the issue of what the legislation meant when it said that the value of accruals in the new scheme had to be “no less favourable”. The scheme people came out of was essentially a civil service-type scheme. That meant the new scheme had to enable people to go on building up benefits that were no less favourable; it did not mean that what was then a private company had its pension deficit, for example, underwritten by the taxpayer indefinitely—it could not have meant that.

Let us suppose that the trustees of a hypothetical privatised new scheme invested recklessly and generated a huge deficit, resulting in insolvency. Would the taxpayer be responsible for the trustees’ actions? Similarly, if investment returns went badly for that private company or other private companies, would the taxpayer be indefinitely on the hook for any deficit? Clearly, that is not what the law meant, and it is not our understanding of what it meant; indeed, the more one thinks about it, the more one sees that it could not have been what the law meant. The law was quite clear that people transferring across had to build up benefits on the same—no less favourable—basis as under the scheme they had left. That was the scheme that was set up, which complied with the legislation.

Geoffrey Clifton-Brown: I understand, and I agree with my right hon. Friend’s point. My point was that, at the time of transfer, the scheme was in surplus. Subsequently, the actuarial valuation proved that insufficient money had been transferred from the mother scheme to the daughter scheme. If insufficient money was transferred, the new scheme was never going to perform to the level the pensioners expected.

Steve Webb: Let me address that point. The first thing to say is that the trustees of the scheme the money went into agreed the transfer values. They could have said, “You’re not putting in enough money to reflect the benefits we are going to have to pay out,” but they signed off the transfer values at the time.

The notion of a surplus is strange, because this is an unfunded pension scheme until the point of transfer. It is just a liability on the Government’s books for decades to come. A flow of contributions has come in, and

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those are given a notional investment return in the Government books. The concept of a surplus is not what this means in plain language; it is not like the Government were sitting on a pot of money that they hid. Government accounting for public service unfunded pension schemes is very different from that for funded pension schemes, where a surplus has a real meaning. It sounds as though what we are talking about means something when it does not. This is about the way the Government accounts for public service unfunded schemes; it is not that money was held back.

A valuation was done on quite a prudent basis. If the money transferred across had been invested in quite a low-risk way, it would, at the point of transfer—that is the crucial point—have been enough to pay the liabilities that were transferred across. However, the world changed subsequently for this scheme and every other scheme: people started living longer, investment returns over time started falling and, as my hon. Friend said, accounting practices changed. All sorts of things changed, which meant that all sorts of private sector company pension schemes began to face bigger deficits. The AEA Technology pension scheme was not different or unique in that respect. The trustees accepted the transfer value, which was fair for the liabilities that were transferred across, even on a quite prudent basis.

Alok Sharma: Will the Minister give way?

Steve Webb: I wonder if I may make more progress, to be fair to my hon. Friend the Member for The Cotswolds, as I want to respond on a few points.

The money went across; the firm was then private. Clearly, the business went on trading for 15 years or so. An issue arises about whether it was a prosperous, expanding firm where something funny went on, or on the brink of insolvency. I want to clarify what went on; my hon. Friend referred to it in part. In November 2011, the company issued a trading statement saying its financial position was deteriorating, and it was discussing the situation with its banks. In April 2012, AEA Technology’s latest forecast indicated that the company would be insolvent on a cash-flow basis by June 2012.

It can be simultaneously true that a company is recruiting more people and that it has terrible cash-flow problems. If the point is reached where it cannot meet its liabilities, it becomes insolvent. To give a sense of scale, the deficit in the pension fund as of 2011, on a standard basis, was £315 million, and the company could not afford to pay £6 million towards it. That is how bad things had got. So on the notion that somehow that £315 million deficit, which was £450 million on a buy-out basis, was going to be cleared, that was not going to happen.

Pre-pack administration is controversial and difficult and happens only when the options are insolvency with jobs lost and the pension fund going to the PPF, or insolvency with jobs saved and the pension fund going to the PPF. That was the choice. In fact, because of the pre-pack, hundreds of jobs were saved. To make a comparison with a straight insolvency, I am advised that the scheme would have got about £1 million with a routine insolvency, but the pre-pack enabled it to get between £6 million and £8 million.

My hon. Friend is quite right: frankly, when a scheme is £300 million in deficit that will not make any difference, because it is going to end up in the PPF anyway, so the

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benefit is to the PPF and not the members. However, the Government do not encourage struggling firms to shovel their pension fund deficits off to the PPF and carry on trading. It is allowed only where insolvency is inevitable. Our judgment was that that was the state of the company at the time, and the goal was to save some jobs, because the scheme was going to end up in the PPF anyway.

My hon. Friend asked about PPF benefits, and he is right: it is a compensation scheme. It is not a pension scheme that replaces and mirrors the benefits that were to be provided in the scheme. The reason for that is that the money for the PPF comes from other pension schemes, so any improvement in the benefits under the PPF is a bigger levy on employers who run other pension schemes. We should bear in mind that it did not exist much more than a decade ago. When it was set up, it was decided that it would offer broad compensation—100% above pension age, and 90% below, and indexation post-1997. That is the statutory requirement; schemes must index post-1997, and not pre-1997, and that is why the PPF does so.

My hon. Friend asked whether, because the firm was privatised, it should be made a special case. Of course I sympathise, but on the other hand vast numbers of workers now work for private companies that were previously nationalised. If AEA Technology were to be declared a special case, the pension funds of all the people who used to work for BT or British Airways and all the privatised companies would have to have special arrangements, too, with huge cost implications.

The question about the advice note given at the time is important. I have read the GAD note, and its introduction says, at 1.1.3:

“The note is not intended to suggest that any one course of action is better than any other. This would depend on individual circumstances, and if you are unsure of the most suitable course of action you should seek Independent Financial Advice which would take into account your particular circumstances.”

That was the point of the note. People could leave the money where it was, transfer it across to the AEA scheme or take a personal pension transfer. The note was explicit from the start that it was not designed to lead people down a particular route. In a sense, from the Government’s point of view it did not matter. The Government were going to transfer across the cash value of the rights built up, so they did not care whether people transferred across. There would have been no reason for GAD to write a note designed to lead people to a particular outcome. It would cost the Government the same either way.

Sir Alan Haselhurst (Saffron Walden) (Con): Does my right hon. Friend understand that the frustration of the pensioners and those of us trying to represent them is compounded by the fact that there seem to be different players in the game, including another Department? We are grateful to him for responding to the debate, but perhaps he could nudge the Department for Business, Innovation and Skills to reply to questions I tabled to try to get further answers for my constituents.

Steve Webb: I am very happy to ask colleagues at the Department to respond to my right hon. Friend’s questions. Obviously, as he said, the issue of PPF is a DWP responsibility, but insolvency policy—pre-packs and so

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on—is a BIS responsibility, and of course he should get prompt responses to his questions. If my hon. Friend the Member for Reading West still wants to intervene I am happy to give way.

Alok Sharma: I wanted to make the point that people affected by the scheme will be listening to the debate, and the bottom line for them is that what the Minister is saying—perhaps he will correct me if I am wrong—is that no compensation or redress will be forthcoming from the Government.

Steve Webb: Clearly, the Government have set up the Pension Protection Fund. As I have said, more than about 10 years ago, people in the situation we are talking about might have received a tiny fraction of the pension they had been going to get. In the present case, the base calculation for those over scheme pension age is 100%. I take the point about indexation, but it is 100%. It is 90% for those under scheme pension age. That is obviously still a significant part of their pension rights. Clearly, the reduction in indexation is important. I would not play that down.

The other thing to mention—my hon. Friend the Member for The Cotswolds did not refer to it—is that at the moment scheme benefits are capped. There is implicitly a salary cap—a cap on the amount of money that someone can get through the scheme. We legislated during this Parliament, with the support of my right hon. and hon. Friends, for that cap to be raised for long-serving employees. One reason I was keen to do that is if a relatively large pension through the PPF is capped, it may not be because the person in question was a ridiculously high earner; it could simply be because of very long service with that employer. I believe that that is so for many of my hon. Friend’s constituents.

I felt it was unjust that the cap applied quite as brutally as it does in those cases, so we are now working on the secondary legislation necessary to get the cap lifted. It will rise by 3% per year for each year above 20 years of service, so long-serving employees will get a higher cap. We are working on the measure, and if we can get it done this year, we will. I suspect that realistically we are probably looking at this time next year. However, I do not have a pot of money to offer beyond that. Clearly, the PPF is there for all employees of private sector companies.

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Geoffrey Clifton-Brown: I am grateful to my right hon. Friend for that announcement, which I think affected scheme members will warmly welcome. I mentioned one other matter: being contracted out from the state pension scheme. Given what has happened to the poor people involved, is there any change that can be made, so that they could be considered contracted into the state pension scheme, and therefore receive additional state pension?

Steve Webb: The challenge is that the flip side of being contracted out is that both the employee and the employer paid a reduced rate of national insurance, so lower state benefits accrue, and the scheme essentially replaces part of the state benefit, up to a certain amount, often called a guaranteed minimum pension. The employee benefits from low contributions and has part of the state pension replaced by the scheme pension. I hesitate to say this definitively, but the vast majority of scheme members will certainly get at least the guaranteed minimum pension, I would expect, through the equivalent—through the PPF, now. I cannot swear that that will be true in every case. It will be very difficult to unwind all of that and to go back and say, “We offset your reduced NI, so we work out how much you and the employer saved by reduced NI; we take account of that and give you a bigger state pension and we net off the saving.” That would be a very complex calculation. I think there are occasions when this sort of thing gets unwound, but they are exceptional, and I would not want to raise my hon. Friend’s hopes.

I want to reiterate my sympathy. I believe that the Government transferred a fair amount of money across at the time and fulfilled their legal obligations to provide matching—at least as favourable—benefits. Obviously, we all regret where things ended up. I do not believe that the company was pressured into pre-pack administration. I believe that at the time that was done to save jobs, which it did. I am pleased that PPF exists to provide at least a safety net, and I hope that my hon. Friends will welcome the fact that we have done what we could to improve it during this Parliament. That will benefit a significant number of people who worked for AEA Technology and unfortunately will not get the full pension that they expected.

11.29 am

Sitting suspended.

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Equal Pay

[Mr Mike Weir in the Chair]

2.30 pm

Emily Thornberry (Islington South and Finsbury) (Lab): It is a pleasure to serve under your chairmanship, Mr Weir. I thank hon. Members for taking the time to discuss this matter with me and to give their points of view. I hope that this debate will be part of a larger one. It is about time we had that.

Forty-five years ago, Barbara Castle’s Equal Pay Act 1970 inspired a generation of young women and girls, which included me. I was a member of St Mary’s church choir in Guildford the year the Act was passed and I was galvanised into action when I heard that the boys in a church choir in the same parish were getting paid twice as much as we were. With my friends, Bryony and Lesley, I wrote to the rector to complain about that great injustice. That did not go well. He showed what he thought of our protest in his next school assembly when he gave us an honourable mention in his sermon on avarice and greed. While I was inspired by that landmark law, I never imagined that I would be here today, talking about the need for a new one. However, like many other products of the 1970s—Status Quo, mood rings and cassette tapes—the Equal Pay Act has not really stood the test of time.

Thanks to the hit film and west end musical “Made in Dagenham”, many who were not around at the time are now familiar with the circumstances that helped the Equal Pay Act into being. In 1968, women sewing-machinists at Ford’s Dagenham plant walked out after their jobs were classified as less skilled, allowing managers to pay them 15% less than men doing comparable work. The women, who made car seat covers, managed to bring about a complete halt in the plant’s car production during their three-week strike. However, much more than that, they were the catalyst for a series of events that included a 1,000-strong rally for equal pay in Trafalgar square the following year, which culminated in the passage of legislation that, for the first time, explicitly outlawed the unequal treatment of men and women with regard to pay and terms and conditions of their employment.

On Second Reading, Barbara Castle rightly hailed the Equal Pay Act as an

“historic advance in the struggle against discrimination in our society”.—[Official Report, 9 February 1970; Vol. 795, c. 914.]

It certainly was an advance. Today, the wage gap between men and women is a quarter of the size it was at that time. I am afraid, however, that that was not a perfect solution, as Barbara acknowledged at the time. As anyone who was around then will know—as will those who have seen “Made in Dagenham”—the Equal Pay Act was a product of a time when, all too often, pay discrimination was blatant. Many women knew that they were being paid less than their male colleagues for no reason other than being women. The Act was crafted to fit the challenges the situation presented and the time of its passage. As such, its approach was essentially reactive. For example, a woman had to find a comparator: a male colleague who was paid more for similar work. She then had to marshal evidence to present to a tribunal. If successful, she would be compensated for loss of wages and achieve equal pay for the future.

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That sounds like an entirely reasonable and simple solution, and at the time it was, but a law written to give women the tools to fight blatant discrimination was, perhaps inevitably and understandably, a blunt instrument. For a start, compensation paid to an individual was limited to that individual. At that stage there was no understanding of the importance of looking also at the impact on others affected in the same way and there was no requirement for offending employers to correct practices that led to such discrimination in the first place. Therefore, unless a claimant joined in an action at the outset, a sister colleague working in the same plant, doing the same work, would have to relitigate the matter from scratch even if her colleague had made a successful claim in identical circumstances. It has never been easy to take an employer to a tribunal, even before the near disappearance of legal aid for employment law cases and the introduction of tribunal fees that have led to an immediate 79% drop in the number of equal pay claims and that have been called—I think rightly—a tax on justice. However, there is more to it than that.

A fundamental problem with the Equal Pay Act is that its authors could not have predicted the extent to which the rise of fractured employment practices and insecure working have changed the context in which the law operates today. As Karon Monaghan, QC, a leading employment law specialist, has pointed out, the requirement that a male comparator be employed by the same employer, or an associated employer at the same establishment, causes

“very significant disadvantage to women employed in public sector services that have been contracted out to private contractors”.

Similarly, the increased fragmentation of pay setting in large organisations has undermined women’s ability to bring a claim under the Act. Robertson v. the Department for Environment, Food and Rural Affairs is a case in point. Civil servants employed by DEFRA sought to bring a claim using a male comparator at the Department for Transport. The Court of Appeal held that, although civil servants were all employees of the same Government, the claim could not be directed at a single source because pay was devolved for individual Departments to determine.

Many other loopholes have helped mire the legislation in inefficiency. Perhaps the most ridiculous is that the law explicitly states that a comparator must be someone employed at the time. Therefore, if a woman leaves a job and a man takes it and gets paid much more, that cannot be used as a comparator. Frankly, that is ridiculous and flies in the face of common sense. That is exactly the sort of thing that should be classed as discrimination and that any Equal Pay Act ought to deal with. I should clarify that I am not by any means blaming the authors of the 1970 Act for flaws that have bogged the legislation down in the intervening years. They were pioneers in the fight for equality and I applaud them. My point is simply that they were addressing the circumstances of their time and what has become increasingly clear to me and others who have studied this issue is that if we truly want to eradicate unequal pay once and for all, we need to follow their example and craft a new law that is fit to meet the new challenges of our time.

Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): I congratulate my hon. Friend on securing this important debate. When the Equality Act 2006 was passed, it was believed that voluntary pay audits would help to solve the

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problem. They have not, but she is illustrating how they are not the answer in any case. Does she agree that we need to take a whole new look at the law on equal pay?

Emily Thornberry: I agree completely. While I am pleased that, at last, the Government have now said that they will introduce that section of the Act, we have wasted a large amount of time on arguing over this matter. That minimal change could and should have been implemented much earlier than it will be. However, progress is progress and that should be recognised. I think that leaving it to the good will of companies to do audits led to only five of them doing them. Clearly that is not anything like sufficient.

To go back to Second Reading of the 1970 Act, Barbara Castle was prescient in asking, “What, then, of evasion?” She knew that there were circumstances—foreseen or unforeseen—that could allow the spirit of the law to be undermined. At the time, she said:

“I have no doubt that some employers will try it on…undoubtedly, pockets of discrimination will remain—unless women organise to put a stop to it.”—[Official Report, 9 February 1970; Vol. 795, c. 928.]

A number of women have followed on from Barbara Castle. Her fighting spirit has lived on through the generations of Labour women who succeeded her and in such a debate it is only right that I recognise them. My right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), who joined Parliament when it was 97% male in 1982, has led the way in fighting for many changes that we take for granted today, such as a national minimum wage; longer maternity leave; higher maternity pay; the Equality Act, as has been referred to; and measures to promote pay transparency, which are a vital tool in tackling pay inequality.

Transparency must be the bedrock of a renewed effort to close the wage gap. As my hon. Friend the Member for Rotherham (Sarah Champion) said when making the case for her Equal Pay (Transparency) Bill:

“Pay transparency would push companies to focus on why the pay gap still exists”.

Further, she said that it

“places the responsibility on employers to be actively conscious of the law on equal pay, and to have policies to address the gap.”—[Official Report, 16 December 2014; Vol. 589, c. 1301.]

She is absolutely right. Perhaps it is a call to action.

Sarah Champion (Rotherham) (Lab): I apologise for being late, and I am really grateful that the hon. Lady has secured this debate, because we need to challenge this situation all the time. Was my hon. Friend surprised, as I was, by just how big the pay gap is? Before researching it, I expected it to be 2% or 3%, but I find the fact that it is nearly 20% genuinely shocking.

Emily Thornberry: Perhaps I am not as much of an optimist as my hon. Friend. I was not at all surprised. Although the landscape is more complex, the effect is essentially the same: women and women’s work are still systematically undervalued in our country, and we have to be on our toes and be prepared to be imaginative and think laterally to tackle that. We have learnt, as was highlighted in the debate on my hon. Friend’s Bill, that we simply cannot leave it to good will; we need to be

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radical and brave and be prepared to tackle the situation head on. The change that the Government have agreed to, pushed for by my hon. Friend and many others, is a good start, but we need to go further. As I said, it is a shame that Ministers have dragged their feet, but I will not go any further than that. There is a lot that I could say, but I will be more generous.

As my noble Friend Baroness Thornton pointed out last week, of the 7,000 companies employing more than 250 people, just 270 have signed up to Think, Act, Report, but of those—this is what matters—only five have opted to publish data on their employees’ pay. It is clear, as she put it, that

“a voluntary approach on its own will not deliver the transparency needed to achieve a change in companies’ behaviour”.—[Official Report, House of Lords, 11 March 2015; Vol. 760, c. 668.]

It will seem like an obvious point to make, but when only five out of 7,000 companies—that is 0.07%—opt for transparency, we have to change the law. It took the Government some time to drop their opposition to the idea, but nevertheless, things have moved to a certain extent. However, now we have that, we have to look at what we are going to get in detail, because pay transparency and pay audits are good as slogans, but we need to know what they really mean. We should be celebrating the victory, but we need to go further and get rid of some of the more ridiculous loopholes that I have pointed out.

The law has moved since the 1970s in many ways, including the fact that instead of it being reactive—in other words: “If you don’t do this, you will get sued or taken to court”—Acts of Parliament have taken a more proactive role, beginning with the Human Rights Act 1998. I will not spend time going on about it, but that Act is a living, breathing legal document that puts obligations on organisations to comply with it, and to see their obligations under it and act accordingly. It seems an entirely different type of legislation from the type we have had in the past—and an entirely good one.

We can read across from that to the Bribery Act 2010, which said that if an individual in a company bribed officials, either abroad or at home, unless that company could show that it had systems in place to manage those employees, and therefore the employee was acting wholly outside the way in which the company expected their employees to behave, the company could be liable. We could read across from that to doing the same thing in relation to fraud; so if an individual behaved dishonestly for the benefit of a company, then unless the company could show that it had good management structures in place, the company should be liable.

What has happened with bribery has been really interesting. Experts have been going into organisations and making sure that those organisations have the correct management structures in place and are behaving in a proper way. To use a quote from the leader of my party, it is “responsible capitalism” in action. We can have legislation that brings in responsible capitalism and says to companies, “We expect you to behave in this way. Use your initiative, and get on with it. Stop being complacent and stop saying, ‘Well, it’s not against the law,’ or ‘You can’t take us to a tribunal,’ or ‘You can’t take us to court as things currently stand, so we are not doing anything about it.’”

We could do the same with an equal pay Act, which we should begin with a positive obligation on us all to ensure that equal pay is brought in over the next few

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years. Women have been waiting for long enough; the obligation should not just be on individual women taking their individual complaints to a tribunal and chipping away at the system one by one, piecemeal by piecemeal. We should all be obliged to ensure that if these women take their cases to a tribunal, they are treated like whistleblowers. If they take a case to a tribunal and they can show that on the face of things, they are a whistleblower, and that, in fact, there is systemic discrimination in that company, action should be triggered by that case. We should then have a more proactive law to ensure that the tribunal can say, “We want a pay audit.”

I know that the Government have changed the law, so that at the end of a tribunal there could be a pay audit, but what does the pay audit mean? It is not sufficient for a pay audit simply to be: “We’ve got 15 women doing the typing, and we’ve got 10 women doing administration, and we’ve got six directors and they happen to be men, and we’re publishing that.” We do not want that. What we want—what I want—is a skills audit to be done under that, so that we look at what skills the women have, in what way they are doing those jobs and what skills they are using. We compare jobs and do a proper jobs and skills audit, so we get under the skin of the box-ticking and look at how there may be a difference between the way in which men and women are paid in organisations.

A tribunal could trigger that after an individual woman has taken out a case. It could be done at the end of a hearing as part of the tribunal’s decision making, or—perhaps even better—at the beginning, when legal action is contemplated. At that point, as part of pre-litigation negotiations, a company or organisation might say, “Yes, we’ll do a proper, profound skills audit.”

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): My hon. Friend is making a characteristically superb speech on the extremely important issue she has brought before Parliament today. What is her opinion on what we should do about tribunal fees? As she will be aware, they have had such a detrimental effect on the number of cases coming forward across all discrimination tribunals.

Emily Thornberry: If I may, I will answer that later—I have quite a lot to get through, but I will come to that in my speech. I want to pray in aid some more quotes from my hon. Friend the Member for Rotherham, who said—so I know I have a friend in this—

“Why should the burden be on women to investigate pay inequality and to ask their colleagues how much they earn?”

She went on say:

“We should not have to wait for whistleblowers”.—[Official Report, 16 December 2014; Vol. 589, c. 1301.]

That is absolutely right. It is not a rhetorical question, but is very apt in highlighting the unfairness of a system that puts the entire burden on individual women to root out discrimination. They are the victims; we should assist them, and our system should make sure that they are given proper assistance.

We need an equal pay Act that enshrines in law the principle that tackling the wage gap is a collective responsibility. Therefore, a company found guilty of discrimination should be ordered to do a proper, profound pay audit. One of the problems with the changes the Government have made so that a tribunal may have a pay audit done is, first, it is not profound enough, and

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secondly, it is silent on the issue of how it will be enforced, what the plan will be and how it will work. It is important that we have it as a complete package. It is not sufficient to pass legislation by way of gesture—although I am sure that that was not necessarily the entire motivation. We have to look at the situation carefully and see what is going to work. Without that basis, it will not be enough and it will not work.

Under the regulations, there are no guidelines on what constitutes an acceptable plan and the regulations are silent on enforcement and monitoring. What is more, tribunals are not obliged to order a full audit in all circumstances and may opt out of doing so if it is believed that—and listen to this, Mr Weir—

“the disadvantages of an audit would outweigh its benefits.”

So there we are: the audits may be too superficial, they may not be enforced, there may not be a plan, and in any event they can get out of it if the disadvantages outweigh the benefits. That is hardly the radical stuff that we need in the 21st century.

Given that the Government’s actions have demonstrated the inadequacies of a voluntary approach to tackling the pay gap, we need a new law that requires not only stringent monitoring but vigorous enforcement. In my view, audits should be overseen by the Equality and Human Rights Commission and carried out by experts. I am very pleased to have read the paper, which I believe is circulating today, from the EHRC. Although the commission might not agree with all my suggestions with huge enthusiasm, it seems to agree with at least some of them, so I believe that I am making progress. The resulting action plans should be subject to EHRC approval and continued monitoring, with the threat of referral back to the tribunal for non-compliance.

That is the stick, but I am not talking just about sticks. I am also talking about carrots, and the carrot is that we should actively encourage all companies to carry out regular pay audits and eliminate disparities wherever they arise, even if they are not ordered to do so by a tribunal. A voluntary profound audit and evidence of compliance with the recommendations of an approved plan would virtually insulate companies from any equal pay claims. Prima facie, if a company had done these voluntary audits, had a plan and was implementing it, that would be a defence to any claim of unfair pay. It seems to me that that would be a catalyst for a culture change that shifts the onus of rooting out pay inequality from the victims to the employers themselves.

As the changes took root, we could hope for a greatly reduced need for women to pursue claims against their employers via the traditional route set out in the 1970 Act, but inevitably it would be some time before the changes took effect, so, to answer the question asked by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), we would need measures to streamline procedures within the tribunals to make them more efficient.