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I thank my noble friend Lord Goodhart for his support. We talked a little about the cost of this debate, but when you listen to my noble friend’s speech I have to say that it is worth £100,000 of anyone's money. I also thank the noble Lord, Lord Lipsey. All I can say after that speech is that I wish he were the Minister.
My noble friend Lord Teverson made a powerful speech. I very much liked his view about the tax we pay being a membership fee to the nation. We do not want any country Members in this House.
The noble Lord, Lord Trefgarne, like the noble Lord, Lord Hunt, is against piecemeal reform, but to my regret and that of many of my colleagues, it will be several years before comprehensive reform comes about. Surely, whatever one's views on reform and the right shape of the elected Chamber, this is a problem that could be rectified now. Whether Members are elected or appointed, the principle is just the same.
In her intervention, the noble Baroness, Lady Gardner of Parkes, rightly made the point about a £30,000 limit, but such a limit would be a flea bite for a multimillionaire. Not that he will be a Member of this House, but for Mr Abramovich that would be a round of drinks at Stamford Bridge. A £30,000 limit does not affect the basic point. I imagine for some Members of this House who are non-domiciled, a £30,000 limit would also make little difference.
I thank my noble friend Lord Wallace of Saltaire for his very powerful speech.
Lord Forsyth of Drumlean: My Lords, is the noble Lord not missing something? Although the Mr Abramoviches of this world do not pay income tax, they do pay other taxes such as VAT and make an enormous contribution to the Exchequer. It is hard to see how Chelsea Football Club would survive without Mr Abramovich.
Lord Oakeshott of Seagrove Bay: My Lords, we are drifting slightly off the point. I do not know how up to date the noble Lord, Lord Forsyth, is, but Chelsea
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Turning to the speech of the noble Lord, Lord Strathclyde, I am bound to say that from the previous time I introduced the Bill in this form and from the encouragement I received, we have moved to a more sceptical position. He and other noble Lords said that it did not find favour last time round. It is not a question of that; it ran out of time. There was only one vote on it, which we won, so that was not a fair comment. We are now trying to proceed with the Bill and have started much earlier in the Session. The noble Lord teased me about my voting record. I am not at the top of the Liberal Democrat list. He might say that I would be in relegation trouble, but if I were a Conservative Peer, I would be right up in the Premier League with that voting record.
The key words I heard in the speech of the noble Lord, Lord Strathclyde, were that if you were a Peer, you should pay British tax. He did not say you should pay all British taxes; he said that you should pay British tax. That could mean pennies, or a bit of VAT. Whether or not it means all British tax is a very important issue. I invite the noble Lord, if he does not agree, to stand up.
Lord Strathclyde: My Lords, if that is going to be the standard of debate that we will have in Committee, then bring it on.
Lord Oakeshott of Seagrove Bay: My Lords, I reiterate: would he care to insert the words “full British taxes” into what he just said? No. We shall see; it is a very important issue. “Tax” is quite different from full British taxes on the basis that you are fully resident and domiciled in this country. That is extremely significant.
Lord Selsdon: My Lords, we must look at double taxation agreements.
Lord Oakeshott of Seagrove Bay: My Lords, as far as I am concerned, Members of this House should pay full British taxes and that is an end to it.
This is a Second Reading debate, and we have had a good discussion of the principles. I have tried to keep it on principles and not personalities and there is an important issue here. I am disappointed by the Government’s reaction. They may not like the Bill—and I can understand that and that they might want to amend it—but I am disappointed that we are still hearing the argument that, because the Budget two years ago said that there would be no substantial change in the position of non-doms, that somehow stops a long overdue reform of this House, which would be minor in terms of the overall number of non-doms here and is almost a self-regulatory issue. I cannot see that that is a sensible excuse to hide behind, so I am disappointed. If the Government do believe in making these changes, I wish that they would get on with it. I would be happy to work with them, but I am disappointed at the tone, which seems to suggest kicking this into the long grass. I hope that as the Bill progresses we will move forward.
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Lord Hunt of Kings Heath: My Lords, the noble Lord said that this was a marginal issue compared with the general principles. However, today’s debate has shown that it is unwise to deal with taxation matters simply in the way that the noble Lord suggests without understanding the wider implications for taxation policy, which has clearly been demonstrated. On the question of kicking the issue into the long grass, does the noble Lord not recognise that the danger of these incremental approaches to Lords reform is that they will inhibit the move towards fundamental reform? I will take the same view about the Bill proposed by the noble Lord, Lord Steel, for the same reason.
Lord Oakeshott of Seagrove Bay: My Lords, I do not wish to fall out with the Minister on that because in general terms I agree about the major changes. But the point about the change in this Bill is that it is effective, important and urgent, whatever one's views about the wider issue of Lords reform. With that, I thank the many speakers who have been supportive and ask the House to give my Bill a Second Reading.
Bill read a second time and committed to a Committee of the Whole House.
Equal Pay and Flexible Working Bill [HL]
Second Reading
11.40 am
Moved By Baroness Morris of Bolton
Baroness Morris of Bolton: My Lords, it gives me enormous pleasure to have the opportunity and privilege to introduce this Bill today. Equal treatment, equal pay and family-friendly working practices are issues that I care passionately about, as they are to all noble Lords taking part in today's debate. I am enormously grateful that so many of your Lordships, with a wealth of experience and often a lifetime of dedication to these causes, are speaking.
At its heart this is an issue of social justice. Equal pay is not just for high-flying women in the City, in law or industry, who are often earning hundreds of thousands of pounds a year. It is just as much about ensuring proper protection for women at the bottom of the pay scale who are working hard to provide for their families, day and night, and who do not have the voice or the confidence to fight for fairness.
The Bill was born from the excellent work carried out by the Conservative Women's Policy Group, which outlines the opportunities and challenges that women face today. It spent months of hard work travelling around the country, speaking to many women and tackling some difficult and disturbing issues. It was left in no doubt that, by all measures, the gender pay gap, its existence and extent, is beyond doubt. They suggested as a remedy the measures included in the Bill.
My right honourable friend Theresa May wrote to Harriet Harman to say that these are such important issues that we would be happy for them to be included in the forthcoming equalities Bill. Although the
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The purpose of the Bill is twofold. First, it would strengthen existing pay legislation to make it more effective in the face of unfair treatment. It would do so in two ways. First, it would change the “material factor” defence to include a test of reasonableness. The Equal Pay Act currently provides for the “material factor” defence for cases where the variation is genuinely due to a material factor which is not the difference of sex. However, tribunals are not presently required to agree that such a material factor is reasonable, only that it was the cause of the pay difference and that it was not discriminatory. For example, an employer could say that it was reasonable to pay a woman working in Manchester less than a man doing an equivalent job in Leeds, without having to prove that the cost of living in Leeds was greater than in Manchester.
Clause 1(2) introduces such a reasonableness test for the “material factor” defence, which would make it easier to identify cases where pay discrimination is indirect and not just direct. Employers do not currently have to give a justifiable reason for pay inequalities. While I acknowledge that this can be a complicated area, and employers have every right to pay different amounts where a woman genuinely wishes to vary her contract, there is clearly room for abuse and the Bill would close that loophole.
I must apologise for a drafting error. Those who have worked with me on Bills will know that I could never aspire to be a parliamentary draftsman. In my defence, however, this was looked at by a number of people. I am most grateful to the noble Lord, Lord Lester, whose eagle eyes spotted the mistake. Clause 1(2) should read, “In Section 1(3) ... before paragraph (a)”. This will be amended at a later stage of the Bill.
Clause 1(3) of this Bill covers equal pay audits, the use of which must be strengthened to make them more effective. At the moment, if an employee takes their employer to a tribunal and that employer is found guilty of discrimination, the appropriate action is taken and the case ends there. If another employee suspects that they are also a victim of such discrimination they would have to bring their own action, effectively starting the whole process from scratch. Subsection (3) would introduce the requirement that employers found guilty at tribunal would have to undertake an equal pay audit, thereby benefiting all other employees and identifying and rectifying any further abuse.
Pay audits are costly, time consuming and demand that organisations publish their findings. That is why I agree with the CBI that it would not be sensible to overburden business or for all employers to undertake a pay audit, although my proposed change would go a long way to deter discriminatory practices in the first place. However, companies and organisations that have undertaken voluntary pay audits, such as the Inland
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The thinking behind subsections (2) and (3) in Clause 1 is to promote good practice and encourage employers to adopt a fair and sensible approach to rewarding their staff. The majority of this country’s employers are good and caring, and are exemplary in this regard. Apart from a small number of bad employers, I genuinely believe that the others have not set out intentionally to discriminate, but have drifted there unknowingly. Over the years, they have paid a little more here and there, especially when bonuses are taken into account. However, unintentional action is no defence.
The second purpose of the Bill is to extend the right to request flexible working to all parents with children under the age of 18. Clause 2 amends the Employment Rights Act 1986 to this effect by removing the legislation that currently limits the right to request flexible working to parents with children aged six and under and carers, which came in with the Work and Families Act.
I think it is legitimate to ask why I am introducing the Bill now, in a period of such economic uncertainty and turmoil. I agree that the last thing that we should be doing at this time is subjecting businesses to more red tape and regulation, but this is not an extra regulation. Many companies operate flexible working practices already, with enormous success. Many companies strive to pay all their employees fairly and according to their talent and experience rather than their gender. The Bill therefore imposes absolutely no extra burden on them.
However, pay inequality is not acceptable whatever the economic times are. We must ensure a culture of equality and fairness in the workplace, to motivate women, who will play a crucial part as the economy recovers. I am sure that noble Lords around the Chamber will share my dismay that, in the 21st century, women are still paid on average 17 per cent less than men. That figure rises to 36.3 per cent for part-time work, and 45 per cent of women who work in the UK do so on a part-time basis.
These are often women who are supporting children, elderly parents or, in the current climate, unemployed partners. They deserve to be treated fairly and to be protected by the law. The Government have made some admirable pledges in this area but, unfortunately, to little avail. The pay gap actually widened last year. That is why I am bringing this legislation before your Lordships’ House today, in this time of financial uncertainty for so many British women, so that we can give them the help and support they need now.
A report from the TUC last summer made a direct link between low levels of women’s pay and child poverty. I ask your Lordships to consider these proposals in that light. Half of all children living in poverty are being raised in households where one or both parents work. If the working mother is trapped in a low-paid job, or one which affords her precious little quality time with her family, that will have a direct effect on the welfare of her children.
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The issue of flexible working goes hand in hand with this. In order to balance family commitments, women often return to work, after having their children, to lower paid and lower level jobs than they previously held, as that is the only employment available to them. If flexible working were available to all parents—crucially, that means fathers as well—the burden of childcare could be shared and work could fit more easily around family commitments.
Flexible working does not have to be a burden on business. Working Families says that,
In fact, many companies operate flexible working practices already, some without even realising it. Flexible work does not necessarily mean part-time work but can incorporate a variety of working practices, including flexi-time, home working or job sharing. It has been proven to increase staff commitment, productivity and retention. It can save on office costs, rehiring and retraining and enables companies to build a viable, committed team who feel immense loyalty towards their employer for respecting their right to family and other commitments outside work.
I am very pleased that the noble Baroness, Lady Vadera, will respond to the debate on behalf of the Government and very much look forward to hearing her comments. I am sure that, as a former banker, many of the issues I have raised will have particular meaning for her. Personally, I am in favour of extending the right to request flexible working as widely as possible, although I hesitated to go so far as to say that the right should be extended to all workers under the Bill because I care about not overburdening businesses, especially small businesses, and a total right would need careful and detailed discussion. But the companies that have made it a general policy have reported greater productivity, better staff retention levels and an ability to adapt to the 24-hour culture that the modern business world demands.
At the end of last year I had the privilege of attending a gathering at Manchester Town Hall organised by the Lord Lieutenant of Greater Manchester for all the women of Greater Manchester who had served so valiantly in the Land Army and Timber Corps during the Second World War. We had a great afternoon. We had a thanksgiving service, sang all the old wartime songs and then had tea. One of these remarkable women, to whom we owe so much, told me how back-breakingly hard the work had been and how the women had to do the same work as the men. “Mind you”, she said, “we didn’t get paid as much”. I beg to move.
11.52 am
Lord Morris of Handsworth: My Lords, the aim of the Bill is straightforward, succinct and, indeed, necessary. I thank the noble Baroness, Lady Morris of Bolton, for bringing it forward. As we have just heard, the Bill has three clear aims. First, it establishes a new test of reasonableness as a defence in an equal pay claim. Secondly, it provides for a compulsory pay audit where employers are found guilty of gender pay discrimination. Thirdly, it extends the right to request flexible working to parents of children up to 17.
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I want to say a few words about these principles before I offer a general comment on the social and economic case for supporting the Bill. Currently, all that an employer has to prove is that the difference in pay between a man and a woman is not caused by direct or unjustifiable indirect sex discrimination. Under the Bill, any difference in pay between a man and a woman in equivalent jobs must be objectively justified and reasonable. My worry here is that “justification” could become a legal paradise in which lawyers play. Under the Bill, where employers are found not to be meeting the statutory requirements of the Equal Pay Act, they will be obliged to institute a pay audit, as we have heard. As the pay audit will be a statutory requirement, we should be told what form it will take, its methodology and who will carry it out. Will the results be published and, if so, where and by whom?
While I welcome the Bill, I can already hear the echoes of the backwoodsmen from the CBI and every other employers’ organisation in the land asking how anyone can promote these measures at a time like this, and saying, “You will bring the economy to its knees”. For good measure, they will think of a number, double it and claim the result as the number of jobs that will be lost if the Bill becomes law. I only hope that this time they will not have the support of the party opposite, as we saw in the debate on the minimum wage a few years ago.
Let me look at the evidence on why the Bill is needed. We have heard the noble Baroness, Lady Morris, mention some of the figures, which are substantiated. The evidence shows a 17 per cent pay gap between a man and a woman doing the same full-time work: for every pound that a man earns, a woman earns only 83p. In the private sector that gap widens: a woman earns 78p—a 38 per cent gap. It is no wonder that last year 44,000 equal pay claims were brought before the courts, which means that all of us as taxpayers are meeting the cost of pay discrimination.
Throughout history the women of this country have always had to fight to get pay justice, from the match girls in the East End of London to the gallant sewing machinists at Ford in Dagenham in 1968, who discovered that they were being paid 15 per cent less than their male colleagues for doing exactly the same job. After three weeks on strike, with the mediation of the late Barbara Castle, the Ford sewing machinists took a giant step towards pay justice, which established the case for the Equal Pay Act 1970.
On the last leg of this Bill on the right to flexible working, history does not guide me. However, I will say this: in the busy world of today’s labour market, flexible working can be a liberating experience in balancing the demands of home and work. Ironically, at a time of economic recession, flexible working is exactly what the economy needs. One thing is clear—as the social order within families is rebalanced, the essential ingredients of work will be when we work, how long we work and how we balance working time and family time. The Bill is an idea whose time has really come. It is morally right and socially just and on that basis I wish it well.
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11.59 am
Baroness Howe of Idlicote: My Lords, I warmly congratulate the noble Baroness, Lady Morris of Bolton, on introducing the Bill. I also congratulate all her Conservative female companions who did all the footwork in gathering the statistics to back it.
The Bill may not be perfect—indeed the noble Baroness admitted as much—but, above all, it keeps the issue of equal pay for men and women, and flexible working, firmly in the public eye. Certainly there is a need for all employers, not least at this time of critical economic uncertainty, to keep both issues high on their priority agenda.
Progress towards equal pay for work of equal value for full-time employees has undoubtedly been appallingly slow, given that the Equal Pay Act was passed nearly 40 years ago in 1970. The 2008 figures show that the gap has increased slightly this year—we have already heard that from the noble Baroness. However, given that the UK was among the first nations to introduce equal opportunity laws, it would be interesting to know where we stand in the world league table on progress towards equal pay. Perhaps the Minister can answer that.
However, even more worrying is the pay gap for part-time workers, which stands at as high as 36.3 per cent. As noble Lords will know, the majority of part-time workers are women, mainly due to family responsibilities. Today, no fewer than 45 per cent of all women employees work part-time, despite the fact that more fathers are beginning to take some share of family responsibilities.
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