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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.
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 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 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 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 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.
We could begin by encouraging more negotiation as opposed to litigation. A number of high-profile cases in recent years have seen unions trying to come to agreements with employers and then finding themselves sued by claimants—disgruntled women who believe that the settlements are unfair. Obviously, that has had a chilling effect on the actions of many trade unions. Given that it is a risk, but we do need to ensure that there are more settlements, it seems to me that we need to take into account the limited financial resources of many employers. We also need to understand that they need to balance the sometimes competing interests of back pay for claimants with pay protection for existing male employees. A new equal pay Act should include codes of practice, which should have legal standing. Therefore, if a trade union and an employer came to an agreement, and that agreement complied with the code of practice attached to the new equal pay Act—a code requiring the parties to make sure that there was proper job evaluation that would result in a settlement—both the employer and the trade union, prima facie, should have a defence and should not be able to be sued. That in turn, hopefully, would release them to get back on the front foot and start negotiating some fairness and some equality in the workplace.
Let me now deal with the tribunals themselves. When we introduced the Equal Pay Act, there was a period of bedding in, and we should have the same with a new equal pay Act. I think that the whole Act should be jump-started with a period of five years during which there should not be fees for tribunals for equal pay claims. Also, we should consider carefully whether, if an equal pay claim is successful, there should be six years’ back pay, as there is under the current law, or whether we should change that back to two years, which was in the original Equal Pay Act.
I know that the European Court of Justice has said that, given that our old Equal Pay Act is based on contract law, we should give contract law remedies, which is six years, but I think that we have a very strong argument to make. If challenged, we could go back to the European Court of Justice and say, “This is a matter of public policy. We in Britain are doing something about ensuring that we get equal pay in our country, so during this five-year period, we wish to be able to bring in some more carrots and sticks and actually get some action.” We all know where we want to go. We need to make sure that we have a plan that works and will get us there.
It seems to me that that could reverse some of the damage that has been done. Let’s face it, employers fight absolutely everything, and one can understand why. The loss for them is so huge if they lose a case—they have to pay six years’ back pay, and if it is a collective action, that is a huge amount of money—but that is not to say that they should not be doing something. We have to find a compromise, a practical and pragmatic way through this. I suggest scrapping fees not for ever, but for five years, and there are other things that we should do.
I have no understanding of why the Government got rid of the short form questionnaire. Before an action began, employers had to fill in a questionnaire for a woman who wanted to make an equal pay claim, which would give some facts for the woman so that she could take out her case. The Government scrapped that, saying that it was red tape. That is clearly counter-productive, because if the individual woman employee does know the circumstances in which she is employed, sometimes she will have some grist to her mill—she will have some evidence enabling her to take her case to the tribunal properly—but quite often, surely, it will have the opposite effect and she will realise that actually she is not being discriminated against. What is the problem with transparency? Why should we not have people with equality of arms—equality of arms as best we can—going before a tribunal where we all know what we are talking about in advance of it happening?
A new equal pay Act needs to bring back a questionnaire. Two pages—it does not have to be 50, 100 or 200 pages —with some basic information, so that the woman knows where she stands. That seems to me to be very important. The questionnaire should include questions such as “Have actions been taken out against you in the past?” and “Have you had to pay compensation in the past?” That questionnaire would be a minimal burden on employers and a vital tool for women who are trying to embark on a challenge. We ought to be supporting those women, who in the end are our whistleblowers. In the recent equal opportunities review, Professor Bob Hepple wrote a case that, in my view, is unanswerable, saying how important it is to have a questionnaire brought back into law.
We should go further in streamlining the process. We should also bring in senior judges. Employment tribunals, if they are dealing with a large and complex case, should be able to bring in extra firepower—perhaps a High Court judge—who will manage the more complex cases and ensure that they move through the courts and do not get bogged down. It is extraordinary to hear it, but there is at the moment a case that is still trundling through the employment tribunal and is still going through preliminary issues—they have not even got to trial yet—and it is five years on. This is not Barbara Castle’s vision. We are so far away from it, and we need to look again.
I have been clear about my views on the inadequacy of the existing system of individual tribunal claims. We will still need to have a system in which individual claims can be brought, but much more support needs to be given to individual claimants and we need to streamline the process.
I have touched on the ridiculous loopholes. A new Act would need to clear away the fog that existing laws have created around questions about whom claimants can identify as valid comparators. It should simply state that comparators can be based on all operations of a single employer. There have been cases in which a woman has said, “I don’t get paid the same as the guy in the building around the corner,” and a serious argument has been put up, “Well, you’re not in the same building, so it isn’t a comparator.” That is just not right and we have to do something about it. It is not a realistic excuse for inequitable pay.
While we are at it, our new law should provide much greater clarity on the issue of succession. We should certainly get rid of the idea that a man succeeding a woman and getting more pay is not prima facie evidence that she has been discriminated against.
We also need to look at outsourcing. Oxford law professor Sandra Fredman has written that, under current legislation, a woman doing equal work at the same establishment as a better paid male comparator has no claim if she is employed by an agency or outside contractor. Given the massive rise in the use of outsourcing over the years, it is time that we gave statutory protection to victims of discrimination whose employers hide behind that anomaly. We should require that public bodies reach binding agreements with contractors, setting out and guaranteeing the terms and conditions for transferred employees. I have a number of ideas about how we can deal with other issues of fractured employment—for example, bogus self-employment. You may be pleased to hear, Mr Weir, that I do not intend to go into the details now, but I will publish them on my website for those who are keen to know more.
I do not suggest that my proposals will wipe away the lingering effects of centuries of discrimination and eliminate the wage gap completely and immediately. There are other things that we need to do, such as looking at flexible working. Some of the changes made by the Government have been good, but it is a curate’s egg: some of them have made life more difficult. If my mum falls over and goes to hospital, I will need to look after her while she is there and work out what support she will have when she comes out. If I ask my employer for flexible working and he says, “I’ll have a look at it, Emily, but I can’t get back to you for three months,” that is not flexible working, and it makes life very difficult indeed. We need to look at practical solutions for women’s real lives.
We need to tackle the continued problem of the clustering of women in low-paid occupations, which are related to traditional gender stereotypes. Two thirds of women are in 12 occupational groups, including catering, cleaning and personal care. Women may, as Annie Lennox and Aretha Franklin sang, be coming out of the kitchen, but unfortunately they have not got very far, and we need to make sure that they have the ability or the choice to go further. Even if they choose not to do so, we need to make sure that women’s work is properly valued.
We need better careers advice at the earliest possible stage in a girl’s education. We need to address the chronic shortage of women who take up STEM subjects. Some of the ideas that I have read from the CBI on that aspect of equality policy are welcome, but we need to do more. We should make efforts to increase the number of women who take up careers in those growth industries, but our work is not solely about putting more money in women’s pockets, important though that is. A much more fundamental principle is at stake: if, as a society, we do not make use of the extraordinary range of women’s talents, we are a poorer society in every sense of the word. Since the Government came into office in 2010, the wage gap has continued to shrink, but only by an average of 0.35% a year. By my calculation, if we continue on that trajectory, it will be another 55 years before the gap is finally closed. I hope hon. Members agree that women have been waiting quite long enough. We are no longer content to wait. We need to legislate, and we need to be bold. Let’s get radical. Let’s pass ourselves a new equal pay Act.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
It is a particular pleasure to serve under your chairmanship, Mr Weir. I congratulate the hon. Member for Islington South and Finsbury (Emily Thornberry) not only on securing the debate but on setting out the case so clearly and persuasively for reform of the Equal Pay Act 1970. I support, in principle, the call for the 1970 Act to be brought up to date and into line with the needs of our society, our economy and our labour market in the 21st century. I am disappointed that only women MPs have shown up for today’s debate. Is it not shocking that there is not a single Government Back Bencher here for such an economically and structurally important debate? The subject of our debate impacts on all our lives and on the lives of men, because they also have to deal with the consequences of unequal pay.
The Equal Pay Act 1970 was introduced the year after I was born. Although women’s participation in the labour market has been transformed in the intervening 45 years, the pay gap remains stubbornly entrenched. Progress has been painfully slow, and even women of my generation, who expected to be the second generation of women to experience equal pay, still find that, on average, our pay falls significantly behind that of our male counterparts.
I want to say a few words about Scotland. Although compared with other parts of the UK, we have had higher rates of women’s participation in the labour market, consistently lower women’s unemployment and higher women’s employment over the past few years, our pay gap appears to be slightly wider. There are different ways of measuring that gap, but according to the Close the Gap campaign, provisional figures for 2014 indicate an 11.5% pay gap in the hourly rate for full-time workers, and a massive 32.4% pay gap between the hourly rate of women working part time and men working full time. Women working part time are earning almost a third less. Given that 78% of part-time workers in Scotland are women, the gap will have a long-term impact on women during their working lives and in retirement, when they are likely to have far lower pensions than men and to be far more susceptible to poverty in old age.
I take this opportunity to pay tribute to the Close the Gap campaign, which is doing much to lobby on equal pay in Scotland. I also pay tribute to Engender and the Scottish Women’s Budget Group, which provide a lot of research and analysis that informs not only the raising of awareness but action to tackle the problems caused by unequal pay. At the moment, on average, a woman in 21st-century Scotland earns £95.60 a week less than a man. As we know, a significant part of the problem is occupational segregation. Women are over-represented in jobs that tend to be low paid, as the hon. Lady has said, such as cleaning, caring, clerical work, catering and retail jobs. It is also significant that in Scotland, according to Close the Gap, 48% of women work in public administration, education and health.
Women represent more than half of workers in only six of the 20 standardised industry classifications, whereas men tend to be more evenly spread across industry groups. Some 80% of administrative and secretarial workers and those in personal service jobs are women. Women are more likely to work in the public sector: 67% of local government workers and 81% of NHS workers, but only a third of chief executives, are women. We know that 97% of child care and early years education staff are women, and 98% of classroom assistants. By contrast, less than 3% of chartered civil engineers in Scotland are women. I have been working hard with my local college and schools to try to change that, and some of the local companies that recruit people with STEM qualifications are keen to encourage such change. We are making progress with getting girls into engineering, but it is a long-term challenge.
The hon. Lady has alluded to the fact that the vertical distribution of pay in organisations often betrays a gendered division of labour. Higher-paid jobs are predominantly done by men, and lower-paid ones tend to be done by women. It is disappointing that efforts to encourage companies voluntarily to audit their pay structures by gender have had such derisorily poor uptake, especially when companies that have done so have changed their policies and practices as a result and become a lot more aware of their own institutional biases.
The hon. Lady made the point at length that it has become much more difficult for women to seek redress if they believe that they are being discriminated against in the workplace. A core underlying factor in the pay gap is the fact that caring for young children and frail, elderly, sick or disabled relatives still falls predominantly to women. It is often perceived to be a woman’s duty to step up at times of family crisis or illness. Consequently, too many women—mothers and unpaid carers—take jobs that they can juggle around their caring responsibilities. Too often, that means part-time, low-paid, insecure and low-skilled work, sometimes on zero-hours contracts, even when those women have the skills, experience and qualifications to take on much higher levels of responsibility. That is a huge waste of human and economic potential, and it costs our economy dear.
I do not mean in any way to undervalue the choices that people make to prioritise their family; I am merely reflecting the lack of choice and flexibility that women have when they are trying to establish a balance between their working lives and their home lives. Our workplaces and our legislation—indeed, our legislative system, although I will not say too much about the House of Commons today—have not kept up with changes in our society and with the aspirations of both women and men to earn a living and have a life. We need to take much more account of the impact of care in our economic models.
A step change in access to child care is as important as other legislative measures to tackle unequal pay. The cost of child care is simply prohibitive for far too many people, especially when it is combined with the cost of commuting to and from work. It acts as a huge disincentive to mothers who are keen to be in the workplace, and who want to work and use their skills and qualifications, but who cannot do so because they cannot earn enough to pay for child care and commuting. That problem gets even worse during school holidays, when many parents find that they are effectively working for nothing because they have to pay for very expensive child care over the holiday period. Sometimes, they have difficulty arranging any suitable child care at all during the summer months. That is helping to entrench occupational segregation, and it is driving the casualisation of employment.
Many things can be said about this issue, and I do not intend to make a long contribution, but introducing free access to child care and increasing the hours of child care to which parents are entitled goes much further than simply introducing tax breaks on child care, which tend to help women in higher-paid occupations, but which do nothing for the millions of women who top up their low pay with tax credits and who are already struggling to make ends meet.
In recent times, we have seen evidence that the pay gap is closing for younger women. Obviously, that is to be welcomed, but we should not be too congratulatory or pretend that the problem has been solved, because such developments are not really a sustainable solution. We need to think much more long term about how those women will fare in later years. If the only way for women to close the gender pay gap is not to have, or to delay having, children, that is simply not sustainable in terms of our demographics.
We therefore need to look at flexible working and at protecting women’s rights in the workplace. I absolutely agree with the hon. Lady that we need to bring the Equal Pay Act 1970 into the 21st century.
Emily Thornberry
Has the hon. Lady, like me, met young women beginning their careers who believe they will always be paid equally with men? When I point out that they would face an increasing gap with their contemporaries if they had children and tried to go back into work, they look at me as if I had two heads. They simply do not believe that that can happen, but we all know it does.
Dr Whiteford
It is interesting, and I have seen it in my own generation. When I was young and fresh-faced, I came out of university keen to build a career. If anybody had told me then that I would be disadvantaged in the labour market, I would probably have laughed at them. However, women find out the truth very quickly; indeed, that happens when they are first appointed to their jobs—in my day, there was still a big gap in starting salaries. There is also the issue of how they negotiate pay increases as they go through their careers. It is therefore difficult for young women to keep pace with their peer group.
It does not matter how hard they work, how committed they are or whether they have children; the pay gap persists for women who do not have children, as well as for those who do. This is not just as simple as whether a woman has a family. The layers of discrimination are often very subtle, and they have to do with the cultural dynamics in organisations and the vertical integration the hon. Lady and I have talked about.
Audits within organisations are therefore important, because they can expose to personnel departments their unconscious biases in offering different starting salaries to men and women and in looking at people’s investment in their careers and career progression. The hon. Lady therefore makes a good point, and I would absolutely encourage young women to be assertive in the workplace and to chase the careers they want. As a society, however, we cannot let that happen at the expense of the work-life balance, and it must be possible for women to pursue careers in a sustainable way, without burning the candle at both ends, and then some. At the same time, it cannot just be women who take responsibility for work-life balance. However, I was just winding up when the hon. Lady intervened, so I will do so now and hand the floor to other contributors.
Yasmin Qureshi (Bolton South East) (Lab)
It is a pleasure to speak under your chairmanship, Mr Weir. I congratulate my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) on securing this important debate. It is important because we are coming to the end of this Parliament, and who knows what will happen after the election? It is also important because, irrespective of what people think, there is a fundamental principle that those who do the same job should be paid the same amount. It is well documented and accepted that, on the whole, women in the job market do worse than men in terms of pay.
I want to place on record my thanks to the Dagenham machinists who took action over equal pay, leading to the 1970 Act. However, 40 years later, women are still being paid less than men, which means they effectively stop earning, relative to men, on 4 November in any year, which is why that is equal pay day. On average, a woman earns £5,000 less than a man, whether they are in a part-time or full-time job.
There are many reasons for that. One is the motherhood penalty—the impact of having children—which affects women’s careers and earnings. There is also the fact that many women were employed in public sector jobs and are now having to go into the private sector, where the pay gap is often big and where no one knows what somebody may be earning. Since 2008, almost 1 million women have moved to low-paid jobs, zero-hours contracts and temporary jobs. Where women have become self-employed, the pay gap with men is 40%. Women are also still the primary carers for their children, elderly parents and other relatives, and we know how much pressure the growth in the elderly population is putting on the family and particularly women.
The good news is that more women are in upper management in different industries, but research from the Chartered Management Institute last year found that female managers aged 40 or above took home 35% less on average than their male counterparts. There is also a difference in bonuses. The average female director gets £41,956, but the average male director gets £53,010.
Some of what I am saying is in the public arena, but many people are still surprised by it. As has been alluded to, some young women probably think they will be paid equally with someone else because they will be doing a similar job, but they will find that the reality is very different. There is also still gender segregation, in that there are jobs that women do not tend to do. There are not many opportunities for women in those areas, whereas there are for men, who can earn quite a decent income.
I do not want to repeat everything that has been said, but my hon. Friend the Member for Islington South and Finsbury put forward some practical steps Governments can take to deal with these issues, and those should be taken on board. In that respect, I was disappointed earlier in this Parliament when the Government changed the rules on employment tribunals, effectively making them even harder to access and inevitably imposing a financial penalty on people. The mind just boggles.
As a barrister, I did not practise much in employment law, but I did a lot of voluntary work, and I went to employment tribunal appeals on behalf of claimants—many were women, some were disabled and some were from the ethnic minorities. It is not an easy thing for people to go to the tribunal system, as the Government suggested when they made their changes. Someone who is dismissed does not simply say, “Right, the first thing we are going to do is go to a tribunal, because that’s the way to deal with this.” The tribunal system was the last resort for many people. Although many people were discriminated against and unfairly dismissed, only a tiny percentage ever made it to an employment tribunal. At that point, however, there were at least judges and others who could independently evaluate the case.
The current financial penalties did not exist then. Putting such restrictions in place means that people can now rarely go to a tribunal. Constituents have come to me in my constituency about work-related issues. They want to go to an industrial tribunal about the way they have been treated, but they are unable to, because they are blocked from doing so. The changes the Government have brought in are punishing people. At least previously people had recourse to a tribunal, to which they could get access without too much difficulty. Now that is not possible, so will the Minister reconsider the tribunal issue and a return to the previous system? It worked fine, and was not being misused. Before a hearing, there would always be a case management hearing in which the tribunal judge would sit with the parties for discussion of the evidence, to learn what the contentious issues were. The tribunal would concentrate on the narrow issues that were the subject of dispute, and not spend time unnecessarily on issues that everyone agreed about.
I am sorry to say that the present Government’s ideology and rhetoric are anti-employee and anti-trade union. They comment all the time in Parliament on the fact that some Labour MPs have union funding, and make it sound as if it is really bad. Guess what? The unions are made up of working people who choose to give the union their subscription. If the union donates money to a political party, that is because the Labour party is the one that has always pushed for equal pay and workers’ rights and campaigned on discrimination. It created tribunals as useful bodies for people whose rights were being taken away. Now the majority of people cannot get access to a tribunal. There is an ideological dislike of the working person, and we should get rid of that mentality. There is a lot of bullying, intimidation and discrimination in the workplace. Women—and other groups as well—are suffering discrimination. That is not good enough. I ask for the question of tribunals to be reconsidered.
My hon. Friend the Member for Rotherham (Sarah Champion) argued for pay to be published. That is important—it is only right and fair. We believe in transparency and think that everyone should know what is going on. We believe in fairness; but where is the fairness in not telling someone what the person next to them earns, especially if they do the same job? The civil service and public sector are open about pay and grading, and what salary goes with what grade. What is wrong with the private sector doing the same? What does it have to hide? It hides the information because that allows it to discriminate without anyone being able to tell. It allows managers to pick favourites and to discriminate in secret, knowing that no one will jump on them for that. If we believe in an equal, fair and transparent society, that should be one of the first things we should deal with. The Government have been asked to do it, and have not.
Primary legislation would not even be needed, because regulations to require pay to be published can already be passed under section 78 of the Equality Act 2010, before the next election. It is not difficult, and it is important, because it would help women and would discourage employers from the practices in question. If they knew that what they were doing would be in the public domain, they would stop doing it. It would be a concrete step, and not a very complicated one, to help women to argue for fair pay. It would effectively stop private employers discriminating against women and getting away with it. It is not too much to ask for; it is a simple thing in a fair and equal society, and I ask the Minister to consider it.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Weir, for what might be my last ever outing in Westminster Hall—that might be true of all of us here for today’s debate.
I congratulate my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) on securing this timely and important debate and on the work she has done on the issue over the years. Like her and the other hon. Members taking part in the debate, I am passionate about the topic. My hon. Friend’s research and insights are a testament to her dedication to the cause. What she has proposed and the things she has highlighted show why we can never take a back seat and hope for the best. I am proud, as I am sure she is, that the Labour party and Labour movement have always been true to that belief and are committed to continuing that tradition long into the future.
I am pleased that my hon. Friend the Member for Rotherham (Sarah Champion) was able to attend part of the debate, because she introduced an excellent ten-minute rule Bill a few weeks ago on the section 78 transparency clause. I am pleased that that eventually spurred the Government to act on the matter, after five years of sitting on it, and I am pleased to say it went through in the House of Lords last week.
In government, Labour was a strong advocate of gender equality in all sectors of society. We closed the gender pay gap by a third when we were last in office, oversaw a rise in the number of young women going into higher education—when they overtook boys for the first time in history—legislated to protect women from abuse at home and in the workplace, and, in one of the last acts of a Labour Government, in 2010 we passed legislation that would have made huge strides in tackling the gender pay gap by making large companies publish their hourly pay rates by gender. We were also the party that 45 years ago passed the very Equal Pay Act that we are discussing today. Decades have come and gone since the Act became law, but the problem it attempted to solve is still, sadly, very much with us, and today’s debate is a timely reminder of that.
On average women earn 81p for every pound a man earns, and recent figures cited by the Equality and Human Rights Commission show that women in full-time employment in 2014 earned almost a full 10% less than their male equivalents. That is truly shocking. Things are even worse for women in part-time work, where they earned just under 38% less than male full-time employees. The overall gender pay gap for all employees was 19.1%. It seems ridiculous to think that after 45 years of work and 15 years into the 21st century women are still not on equal terms with their male counterparts.
Last year, thanks to the debate led by my hon. Friend the Member for Rotherham, I was fortunate enough to meet some ladies who worked at the Ford plant in Dagenham. The Minister was also present—as was my hon. Friend the Member for Islington South and Finsbury. Anyone who cares about this issue was there. Those women famously went on strike to fight for equal pay, and their actions went a long way to bringing about the first Equal Pay Act, in 1970. Speaking to them it was fantastic to see women still so passionate, committed and hopeful of success, but it was also tragic that after so many years have gone by the imbalance has only been decreased, never destroyed.
Last week, my colleague, Baroness Thornton, highlighted contemporary examples during the debate in the House of Lords on gender and pay, such as the woman working in advertising whose end-of-year bonus was a £100 Liberty voucher, while her male counterpart received £2,000 cash; or the lawyer who was asked to take a pay cut to avoid redundancy, only to find out that none of her male colleagues had been asked to do the same; or the woman who worked in the media and, overhearing two male colleagues boasting about their salaries, realised that both were being paid an average of £10,000 more than she was, despite the fact that she had the same experience. Such gross inequalities are commonplace and things need to change.
Over the years women have had to contend not only with lower pay, but with the problems of glass ceilings, sexual discrimination and a tendency to be penalised in the work force for having children. We have made progress in those fields over the past decades, but too many women are still caught in a culture in which they are told that they have to choose between being carers or having a career, or they have had it drummed into them that they cannot achieve the same things as a man. That mentality holds back our society and all women. We know that companies with more women on their board routinely outperform their rivals, so any glass ceiling that limits a woman’s rise to the top also limits a company’s performance. Glass ceilings should be shattered for the good of everyone. As well as championing equal pay, Labour is committed to opening more boardrooms to women and will legislate to do that if companies do not understand the enormous benefits of doing it themselves. All those problems are linked, and none of them can be solved overnight. Only through dedicated and consistent hard work and pressure can we achieve meaningful and long-lasting success, so it is disappointing that over the past five years we have seen the cause slide down or, more accurately, slide off the political agenda, and it is no wonder that more problems have been caused as a consequence.
As I briefly alluded to, the Government’s record comes up extremely short on addressing inequality. Their record on the gender pay gap in particular can be described only as woeful. The coalition inherited a section of the Equality Act 2010 that would have made all large companies—companies with more than 250 employees—publish their hourly gender pay rates in their annual reports. That requirement was designed to build on existing equalities legislation, thereby boosting transparency and shining much needed light on the issue, which would have forced companies to look at themselves, see the extent of the problem and work towards addressing it. Sadly, the huge value of that section was either completely ignored or totally lost on the coalition Government, who refused to enact it. However, as I am sure all hon. Members present are aware, with two weeks to go before Dissolution, and facing a likely defeat in the House of Lords on Labour’s push for the enactment of section 78, the Government performed another policy U-turn and finally saw the light. I hate to question what may have been a truly Damascene experience for the coalition, but I fear it was a victory for political pragmatism more than for the ideals and values of gender equality. Although the outcome is extremely welcome, the last-gasp way in which it was achieved is sadly symptomatic of a Government who place no priority on equality legislation.
During the past five years, we have seen consistent inaction in the face of repeated calls from the Opposition to do more, or indeed to do anything. One has to wonder how much more we could have achieved on equality if that time had not been totally wasted by the Government. The recent victory only brings us back to where we were in 2010 and, sadly, we have regressed in some areas. The overall gender pay gap fell by a third under Labour, but that rate has slowed dramatically under this Government. The gap actually increased in 2013, partly because the so-called economic recovery saw a rise in low-paid jobs in sectors dominated by women, such as care, and a rise in insecure zero-hours jobs in which women also outnumber men.
Since 2010, the number of equal pay claims brought against employers has fallen from just over 37,000 a year to around 17,000, with the most dramatic fall happening since the coalition’s introduction of tribunal fees. That fall came as no surprise to many Opposition Members, who predicted that it would happen. We were not scaremongering, as we were accused, but it was utterly shocking, none the less. Women are now being put off fighting for equal pay, and the message that the introduction of tribunal fees sends out to women across the country is extremely damaging for the cause. I am interested in the proposals to address the situation suggested by my hon. Friend the Member for Islington South and Finsbury. As she knows, Labour fought against the introduction of tribunal fees and, when we are back in government, we will introduce reforms to ensure that cost is never a barrier to justice.
Equal pay should not have been something for which we had to fight for so long. In truth, more should have been done in the 45 years since the 1970 Act was passed to keep it fresh and doing what it needs to do. My hon. Friend expertly raised a number of issues, and they all need to be addressed. I am sure none of us believes that the Act cannot be improved to meet the new challenges of modern Britain. In her proposals, she made many points and cited many examples with which it is hard to disagree, and I would welcome a much deeper look at those issues. That is why I am pleased that Labour supports a review of the Equal Pay Act to see which areas are working, which areas need improvement and which areas are either redundant or need entirely new provisions to make them fit for our modern world.
The goal of the Equal Pay Act to deliver the promise of equal pay has not changed since 1970. We need to establish whether that means amending the Act or introducing something new, and we believe a comprehensive review is the best way to do that. The Equality and Human Rights Commission recently announced that it is also in favour of such a review, and the commission’s experience makes it perfectly placed to ascertain where best to take the Act from here. I am sure the commission will want to see my hon. Friend’s work when it undertakes that process.
Sadly, this debate is as necessary today as it was in the 1970s. The more momentum we can build for reaching the goal of equal pay, the better for every single person in our society. We may have lost five years to complacency and inaction, but we now have a chance to push on and complete the work for this generation and for generations yet to come. Labour is committed to that fight, and I look forward to a time when such debates are consigned to the realm of history, not politics.
The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
It is a pleasure to serve under your chairmanship, Mr Weir. I emphasise the word “man,” because you are the sole male MP in the Chamber. The hon. Member for Banff and Buchan (Dr Whiteford) made a good point that men, as well as women, have an important role in fighting for equality. Such debates answer the question whether having more women MPs makes a difference.
I congratulate the hon. Member for Islington South and Finsbury (Emily Thornberry) on securing this debate and on putting forward an interesting set of proposals into which she has clearly put a great deal of thought. I recognise that equal pay will not be addressed in the next 10 days, but she has started the debate now on what needs to be a careful consideration of equal pay laws and whether they are delivering the outcome that we all want. She wrote an article about equal pay for the New Statesman, and she spoke about it in the international women’s day debate a couple of weeks ago. Her contribution is excellent and welcome, particularly because of her legal expertise. It is good that we have diversity in this place, with some Members having legal expertise and some Members not having legal expertise. As a non-lawyer, I found her speech interesting.
In the hon. Lady’s powerful speech, I particularly loved the example of the fight for equal pay beginning with church choirboys and girls, and quite right, too. She ended her remarks by saying, “Let’s get radical,” and I am open to radical ideas for proceeding on these issues. The legislation, which was of its time, may need to be revisited and addressed. Indeed, this is a particularly timely point to do that because, although the Equal Pay Act was passed in 1970, the provisions were rolled into the Equality Act 2010. The Government are undertaking a thorough five-year review of that Act, which will include the equal pay and sex discrimination provisions, with a view to reporting to Parliament later this year. This is a topical and timely point at which to have this wider debate.
The hon. Lady set out the history of the Equal Pay Act, which came from the battle of the ladies of Dagenham —I agree with the hon. Member for Washington and Sunderland West (Mrs Hodgson) that it was a great privilege to meet them—and addressed blatant pay discrimination. It is important to recognise the difference between the pay gap and pay discrimination because it is easy to muddle the two terms. A casual observer might think they are the same thing, but outright pay discrimination is different from the pay gap itself, which is caused by discrimination, yes, but is also caused by other factors. About a third of the gender pay gap is due to occupational segregation. Typically, an engineer will be paid more than somebody working behind the till in a retail establishment. Women tend to be more concentrated in such sectors and in roles that are less well paid. Roughly about a third of the pay gap is because of time taken out of the labour market, largely because child care responsibilities still tend to fall disproportionately on women rather than men, but it is not solely about child care. There is also caring for elderly relatives and other reasons for time out of the labour market.
Other factors contribute to the pay gap, including pay discrimination and other issues that have been discussed today such as unconscious bias and perhaps the social conditioning of girls and boys. We still live in a very gendered world. A man might negotiate a pay rise in a different way from a woman, and that can lead to problems with the pay gap.
The Government’s record in tackling some of the issues has been positive, although I absolutely accept there is still a long way to go. On occupational segregation, there is a dearth of women in the STEM sectors: fewer than 10% of engineers are women, for example. We have the Eurolife initiative. We have recently published new careers advice aimed at parents, called “Your Daughter’s Future”. Although careers advice in schools is important, it is also sometimes about the messages that girls get at home.
I recently visited some apprentices in the construction industry in my constituency. Only one of the apprentices is a girl. I chatted to some of the young men who are doing their apprenticeships there. I said, “Why did you come to do an apprenticeship in construction?”, and one of the young men said, “My family encouraged me to do this.” He said that he had a sister, so I said, “Did they encourage her to go into construction as well?”, and he said, “No, they encouraged her to do a beauty course.” So the family environment matters. We live in a society with a lot of stereotyping generally, so that guide for parents might break down some of the stereotypes that people have in their minds. They have an image of what engineering is. They imagine someone in oily overalls working in a dirty factory environment, but high-tech modern engineering is a million miles from that. Sometimes people’s ideas about what certain careers entail are stuck in another time.
We have also worked with the Institute of Physics and the Royal Academy of Engineering to get role models into schools. STEMNET ambassadors, 40% of whom are women, do a fantastic job in encouraging girls to aspire and to get involved and interested in the issues. Part of the problem is also the wider cultural issue of stereotypes that start to take root at an early age, before children even start school. Certainly, the Government have a role to play in some of that, but, more widely in society, there is cultural campaigning, and the feminist movement is particularly valuable in addressing that.
We touched on time out of the labour market and the pay gap in the international women’s day debate. The 19% pay gap gives us a part of the picture, but while the pay gap is almost eliminated for women in full-time jobs under the age of 40, there is the massive problem that at that stage in women’s lives pay diverges hugely. A big part of that—not the only part—is about child rearing and the fact that such responsibilities are still shared unequally. That is why I am so passionate about the new shared parental leave laws, which I introduced. For babies due from 5 April this year—some might be born already—their mums and dads will be able to choose how to share the leave. I believe that that will drive radical change, and I want to do everything possible to break down some of the cultural barriers that will stop men taking it up. In year one, a certain number of people will take it up. In year five, it will be more, and in year 10 it will be even more, because this cultural change is happening. It is part of men generally being much more involved in their role as fathers.
In the 1950s, it was very unusual for men—a tiny percentage—to be present at the birth of their child, but that is now commonplace. Men used not to take paternity leave, but now most men take some time off after their baby has been born. I think this tide is going in the right direction, but we need to do everything we can to hurry it along.
Emily Thornberry
The Minister is making a very good speech. There is very little that I disagree with, but there is an additional element. Although we should welcome the fact that younger men are prepared to be more actively involved in their role as fathers, they still leave two thirds of the unpaid work in the home to women. Are they hoovering? Are they ironing shirts? Is there anything that can be done to encourage them to do that?
Jo Swinson
Shared shirt ironing would certainly be a winning policy for half the population. The hon. Lady is absolutely right. There are the wider domestic responsibilities, too, which are harder to legislate for, but there is interesting research on the harmony of relationships in which domestic chores are spread more equally.
Flexible working delivers two things. If men are more involved in caring responsibilities, it makes it easier for their partners as mums to combine their roles at work with their mothering responsibilities, but it also means that the workplace starts to change, because it is not only women who want something different. Dads are involved in that as well. That means we can start to reduce the parenting penalty. Flexible working becomes more commonplace and much more normal. That is why the extension of the right to request flexible working to all employees is so vital. Although parents already had it, it is about making it something that is not stigmatised and is just a modern, agile way of working.
The issue is not only about children. The hon. Lady mentioned flexible working in relation to carers. We have changed the legislation so that requests have to be considered in a reasonable manner. In the case of an urgent request for a specific issue, it would not be reasonable to wait three months for a decision. We are piloting a wider piece of work on how to get more carers into employment. Many carers want to stay in employment, and there are different ways in which they might be able to be supported to do so. So we will get the results of those pilots in different parts of the country and perhaps move forward.
I agree with the point about unconscious bias and discrimination. The hon. Member for Rotherham (Sarah Champion) said that it should not be the woman’s burden to find out what people are being paid and then take up the fight. I absolutely agree. The pay gap is not the fault of women, but equipping women with the confidence and skills to negotiate hard for a pay rise is also a sensible thing for us to do. So I welcome the guide by the Everywoman organisation that we were able to publish, which sets out basic things that women might consider when they go into pay negotiations and how they might argue for a pay rise. We should encourage women as well as men to develop such skills. The Women’s Business Council will shortly be publishing a guide for business, called “Mending the Talent Gap”, which looks at why, from an employer’s perspective, dealing with the pay gap is important. It looks at what it is and what they can do about it.
On the specific issue about whether all women in the employ of a particular business should be awarded equal pay, it is currently possible for a tribunal judgment to be read across. Certainly, the risk of future pay claims is one that would encourage most employers to do so. What the hon. Member for Islington South and Finsbury said about comparators was fascinating. She raised the point about whether the comparator had to be employed at the same time. During the 2010 discussions on the Equality Act 2010, the Government agreed to Lord Lester’s amendment that comparators are not limited to people working at the same time as the claimant, which is in section 64(2) of the Act.
The hon. Lady also mentioned delays, which relate to the issue about comparators. One of the reasons for a delay is that the reporting and working out of what the comparators are can be a process that takes months on end. Part of that is inherent in trying to deal with 45 years of case law that has built up, but perhaps that is something that highlights the importance of looking again at whether this can be made simpler.
Emily Thornberry
The Minister has just made a point about someone taking over someone else’s job and whether a person can say they are being discriminated against if the other is paid more. There is a problem with the Equal Pay Act 1970 and it is in the notes of guidance. Perhaps we can discuss this outside Westminster Hall. I appreciate that if Labour is carrying out a review and the Government are also carrying out a review, and we have highlighted this issue enough, presumably the right people will look at this matter.
Jo Swinson
I certainly hope that that will be the case.
The hon. Lady also asked how far back the backdating goes, as the six years is quite a perverse disincentive to companies to get on and deal with this matter. As she rightly said, the potential issue is about a legal issue, in terms of the European Court of Justice ruling. However, it is worth exploring this matter in the review process to see whether anything can be done on it.
As for bogus self-employment, clearly the employment status review that is under way at the moment will look at a range of issues, because bogus self-employment is a problem not only in terms of equal pay but much more widely.
Regarding the pay audits that are in place where a tribunal has found that companies have been found not to have paid men and women correctly, there is redress. The order that was passed in Parliament provides for a £5,000 fine to be imposed for failure to produce an audit, and the audit must be published. The Equality and Human Rights Commission is in a position to monitor these cases and therefore it can pursue an employer further if it suspects that it has not complied properly with what is required of them.
On the particular issue about the exemption if the disadvantages of pay audits would outweigh the advantages, I understand the concern that the hon. Lady raised. Perhaps, however, I can provide some reassurance about the intention behind it. It was primarily put in to avoid the risk that would arise if an employer was close to insolvency, and was told that it had to undertake an audit, the cost of which would tip it into receivership and therefore end up jeopardising the jobs of employees. So it was there for very specific circumstances and not for general circumstances. I hope that she agrees that in the kind of specific circumstance I have just described, the overriding responsibility is to try to safeguard jobs in a business that could still be rescued and that could continue as a going concern. There may be some limited circumstances where that would be the case, but the exemption was certainly not envisaged as a wide exemption.
Pay transparency is hugely important. The hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) raised it, as did others. As for section 78 of the Equality Act 2010, I will put something straight about its chronology, because I fear that history is being slightly rewritten in this debate. In the debates in 2010 during the passage of the Act, it was my right hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone) who made the case for pay transparency. The Labour Government at the time were ultimately forced to take a power in the Act to be able to introduce that. However, the Labour Government at the time said very clearly that they wanted to adopt the voluntary approach first; in fact, they gave an undertaking that they would do so for at least three years before bringing anything else forward. In negotiations within government subsequently, that made it much harder to win an argument to go for pay transparency at an earlier stage. I want that to be clearly on the record and I am absolutely delighted that we are bringing forward the proposal to activate section 78 of the Act, because it is a vital tool to shine a light on the problem.
One reason why some people have not liked that idea is that it will make quite uncomfortable reading for some organisations. That is a very good thing, because they should be uncomfortable about a pay gap, and all credit to the five companies that have gone forward and already published information about their pay gaps. However, when I spoke to some of the people who argued for that action within those organisations, they told me how difficult it was to get it through their own legal departments because they were so worried about the outcome.
One important thing to bear in mind is that a difference in pay does not automatically mean that an employer is discriminating, because there are a range of reasons why that difference could exist. Nevertheless, the point is that having that transparency means that questions can be asked, and that if there are particular reasons why there is a difference in pay they can be set out by the employer. It also means that the employer has to ask questions of itself, so that it can provide answers to those questions, whether to employees, to the media or to customers who may be interested. That consciousness about what is going on is hugely important.
Think, Act, Report is the Government’s initiative, and 2.5 million employees are covered by the 270 companies that have signed up to it. It is worth putting on the record that while it has not delivered significant pay transparency, about half the companies who have signed up are conducting pay audits, and so on; they were just not publishing those audits. Also, the initiative was very much designed to be about things wider than pay. Pay is a hugely important issue, but the initiative is also about recruitment of women, retention and promotion within the workplace—all those different strands of gender equality. While legislation has been needed to force the issue of pay transparency, none the less the initiative is valuable, because companies can share best practice and learn from one another about how to promote gender equality.
All those other elements are important if we are going to solve the issue about the executive pipeline—how we get women into more senior roles and how we address these different issues. Organisations may have problems at the recruitment stage. For some sectors and some companies, that is exactly where their problem lies; their intake of new staff out of education is not equal. However, other companies have an entirely different set of issues. They may have a 50:50 gender divide of their intake, but they suddenly lose lots of women part way through their careers. Last night, I was at the everywoman in Technology awards, where a scary statistic that was given was that 41% of the women who go into work in technology leave after 10 years. So, not enough women are going into that industry—only about 15% of jobs in technology are held by women—and there is also a real problem in retaining women. We need to look at all those different elements of gender equality.
Other issues have been raised today. The hon. Member for Banff and Buchan (Dr Whiteford) rightly identified the cost of child care as a key issue. This Government have taken steps to help to address that issue, which I am very proud of. In particular, we have extended free early years education to 15 hours a week for three and four-year-olds, and indeed to 260,000 of the most disadvantaged two-year-olds, which is 40% of two-year-olds. That is really positive, although I hope we can go further in future; that is certainly what I want to see. I also hope that the Scottish Government can be encouraged to follow suit, because their extension of free early years education to two-year-olds currently reaches only 15% of two-year-olds, so there is a more lot more that we can do on both sides of the border.
Dr Whiteford
Of course, the Scottish Government have not over-promised more than we can deliver. That is why we have set those targets. Other parts of the UK have set very ambitious targets but have not been able to meet them. Surely, however, the bigger ambition is to get all children under the age of five into as much child care as their parents need to be able to do a job and fulfil their economic aspirations as well as their child care responsibilities.
Jo Swinson
There are two reasons why early-years education is important. One of them is that, regardless of whether parents are working, once children are over the age of two, and certainly once they are over the age of three, there are real developmental advantages to them having some quality early-years education. The second is related to the point that the hon. Lady raises about the child care element; child care can make the difference to whether it works economically for a family for the parents to be in work, and it is important to provide that choice. One of the big issues is the gap that exists at the moment, because if someone has to wait until their child is two before it makes economic sense to go back to work, and if they are going to have more than one child, that situation can suddenly lead to there being four, five, six years out of the labour market, which can have a really negative impact on someone’s career. If someone had wanted to go back to work, perhaps in between having their children, it is a shame if they are not being enabled to do so. That is another issue that the future Government should look at.
The hon. Member for Bolton South East (Yasmin Qureshi) raised a particular issue about employment tribunal fees, and other Members raised it, too. We are absolutely aware of the drop in equal pay claims. In my role as both a Minister at the Department for Business, Innovation and Skills, and the Minister for Women and Equalities, I absolutely understand the concerns that have been expressed. The Government are committed to a review, including on the equality impacts of this policy of having fees and the level of those fees, and on the impact that those factors have on access to justice.
As Members will know, that policy sits with the Ministry of Justice, which has full access to all the data. I am looking forward to that review. From a BIS perspective, we are very keen to be helpful and BIS officials are already looking at the evidence that is available, which has been published by a range of bodies; those officials are analysing the data they can analyse. Of course, when the MOJ launches its review, at least some of the necessary analysis and work will already have been done. As I say, I understand the concerns that have been raised about this issue.
In conclusion, we have had a positive debate this afternoon. Equal pay is an important issue for us to make progress on, and to continue to make progress on. There is a whole lot of food for thought, in terms of how the shape of equal pay law might be fit for the next 45 years.