Baroness Thornton
To ask Her Majesty’s Government what plans they have to increase the number of women on boards.
Baroness Northover
My Lords, the Government are supporting the voluntary, business-led strategy of the noble Lord, Lord Davies, to increase the number of women in UK boardrooms. At the time of the noble Lord’s latest report of April 2013, women had secured 34% of all FTSE 100 board appointments in the previous year. The UK corporate governance code now requires boards to report on their diversity policy. Headhunters have pledged to ensure that women make up 30% of longlists and, from October 2013, quoted companies will be required to disclose the gender balance at various levels within their organisation.
Baroness Thornton
My Lords, this is not what the Cranfield review of women on boards says, which is that that in the past six months, progress in the number of female non-executive directors in FTSE 100 companies has reached a plateau; it is flatlining and stuck at between 26% and 30%. It also says that there has been a lack of progress at the executive-director level of FTSE 100 companies. A rise from 5.5% to 5.8% since 2010 is not impressive. What will the Government do next? It seems that they have got the low-hanging fruit on this issue. If they have set their face against quotas, what does the Minister suggest doing about the abysmal lack of gender diversity, about ageism and about the lack of ethnic diversity in the country’s boardrooms?
Baroness Northover
I start by paying tribute to the noble Lord, Lord Davies, the noble Baroness’s colleague, for all that he has done to flag up this issue, and for the way in which he has driven it forward. He in turn has thanked the media for what they have done to make sure that this moves forward. He is absolutely right that we need to continue to make progress. There was an indication of plateauing. The situation now seems to be improving again. Business needs to show that it is making progress—as the noble Lord, Lord Davies, says—so that the Government can say that no quotas are needed. However, they are there as a back-stop.
Baroness Kramer
My Lords, my understanding is that the Government put a sword of Damocles over the industry by saying that if voluntary approaches—which I think we would all prefer—were not successful, they would look again at quotas. I believe that that was confirmed by both the Home Secretary and the Prime Minister. Will the Minister give assurances that the sword of Damocles is still in place and that the Government will be willing to let it fall if need be?
Baroness Northover
We are indeed pleased at the progress that is being made but the noble Baroness is absolutely right, as is the previous noble Baroness, that progress needs to continue. The Prime Minister said in February 2012 that further action has to be considered as a back-stop and Vince Cable said in April 2013 that the Government would, if necessary, adopt tougher measures. The warning is there. If there is continued progress, that is great. If not, there are sticks.
Baroness Pitkeathley
Does the noble Baroness agree that one of the problems is that the boards are not sufficiently flexible in what they see as the requisite experience for serving on boards? For example, many women who hold senior positions in the voluntary and charitable sector are never considered because their experience is not considered relevant.
Baroness Northover
The noble Baroness is right, and boards need to take a wider view in terms of the experience and expertise that are there. I should like to quote one of the remaining FTSE 100 companies, Melrose, which still has an all-male board. It is,
“a leading British-based investment company specialising in the acquisition and performance improvement of underperforming businesses”.
There are no women on its board. How is it to ensure that companies are geared to the 21st century if it is so outdated in its own approach?
Baroness Howe of Idlicote
My Lords, is the Minister satisfied that enough attention is being given to encourage companies to allow flexible working for both sexes, so that women and men can continue their careers to board level and spend time with their families?
Baroness Northover
The noble Baroness is right that flexible working both for women and men is something that companies need to look at to make sure that they do not lose the talent that they have brought forward. Businesses need to encourage all talent to join them and then they need to make sure that they continue to support people right the way through their careers and on to board level at the end.
Baroness Wheatcroft
Does my noble friend the Minister agree that it is the job of Government to encourage the sort of changes on boards that we are talking about but that it is not the job of Government to dictate? It is the shareholders who own the business who should decide who sits on the board.
Baroness Northover
My noble friend is quite right that the Government, and indeed wider society, should encourage businesses to look at this and to recognise their own self-interest in the 21st century.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
My Lords, I think there is time for both if we have the noble Lord, Lord Pearson, very quickly and then Labour.
Lord Pearson of Rannoch
My Lords, as a supporter of women on boards, I have to ask whether we really need the edict from Brussels which—
Lord Pearson of Rannoch
Noble Lords may not be aware of it, but it would make them mandatory. Can the noble Baroness tell us how the so-called “yellow card” issued by your Lordships’ House and seven other EU Houses of Parliament against that edict is progressing? Is subsidiarity winning or losing as usual on this one?
Baroness Northover
The directive that is potentially coming from the EU is a useful discipline. We need British business to demonstrate that it does not need to be applied in the United Kingdom because we have already made sufficient progress.
Baroness Gould of Potternewton
My Lords, I appreciate that the Government are very keen to get as many women as they can on to company boards but does exactly the same position apply to the appointment to public boards for which the Government are responsible? Perhaps she could tell us what is the Government’s strategy to get more women on to public boards?
Baroness Northover
The noble Baroness is quite right. We have an aspiration, as she probably knows, that 50% of appointments to public boards should be women by 2015. I have seen the figures that are just being finalised for the current state of affairs, and it is looking encouraging that we are moving in the right direction, but we are not complacent.
Lord Brooke of Sutton Mandeville
My Lords, Damocles was a man. Will the Government consider a female sword?
Baroness Scotland of Asthal
My Lords, how long will the Government wait to decide whether the sword needs to be used?
Baroness Northover
That is a very interesting question and I expect to have many more opportunities to discuss it.