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Equality Bill

My Lords, we have retabled our amendments from Committee because we feel that it is important to emphasise our concerns about the Government’s proposals, which will not produce workable or effective solutions to the problem of the gender pay gap. We wish also to facilitate a debate on the metrics of the pay audit, which were unfortunately not available in Committee. We have therefore tabled amendments which would remove Clause 78 and insert our new provision applying a mandatory pay audit to any company found guilty at a tribunal. I shall listen with interest to the Liberal Democrat amendments, but I am sure that they will not be too surprised if we disagree with them. We are at one with the Government and most people in the wider world who wish to reduce the gender pay gap. This is a shared ambition. The difference is in the method and how we approach it. It is shameful in the 21st century that, as of 12 November 2009, the Office for National Statistics was showing that the mean pay gap between men’s and women’s average hourly wage for full-time work was still 12.2 per cent. All are in agreement that this situation must change. We on these Benches feel, however, that the Government’s proposals will not achieve this, but, more worryingly, will place onerous burdens on businesses at a time when many are already struggling to stay afloat. The difficulties of producing the relevant data and the resources that will be required to do it place an unfair burden on many employers. Moreover, it is inappropriate for the burden to be shouldered equally by good employers. Under the Government’s proposals, fair employers will suffer just as much as unfair ones. This does not seem just. Moreover, I am not sure that I understand the reasoning behind the Government’s limiting the proposals to companies which employ more than 250 people, or, as we will hear proposed in the amendment tabled in the name of the noble Lord, Lord Lester, limiting it to 100 employees. If, as we all agree, this measure is important to women, surely it must be a policy for all women. A workable solution must therefore apply to all companies and not just to those larger ones. That the EHRC took such an unaccountably long time to come up with the metrics underlines the fact that this is not as simple an audit as has been suggested. This surely illustrates to the Government that the burden will be greater than anticipated, and that the exercise will be more complicated to complete than might first have been imagined. The very process of creating the metrics also managed to alienate business groups which were involved in the process. We heard that an agreement was almost reached when, suddenly, an amended draft of the report was sent out in January, with changes that forced business groups to reject it. The Government had therefore lost the consensual engagement of these crucial business organisations. After all, consensus is exactly what is needed in order to achieve the result we are all seeking. Can the Leader of the House tell us what has been done to ensure that business communities and employers are satisfied with the proposals? As they are representative of groups which will be carrying out the audits, it is presumably vital that their input is considered fully and that their agreement is found. I would like to raise two major problems that we see with the metrics. First, they concentrate almost solely on pay. Obviously they are about equal pay, and while a focus on pay is important, do the Government also accept that a real culture change is required if any progress is to be made? For this reason, there may be other metrics which are important indicators, such as the percentage of women who return after maternity leave, or the amount of available flexible working time that a company provides. There is also the option of a voluntary narrative of causes of the pay gap. This, however, would only be done in addition to the quantitative measures, as an added extra rather than as one of the main metrics. We therefore believe that Clause 78 will not achieve a narrowing in the gender pay gap. Secondly, it was suggested that there would be a menu of indicators which would allow companies to choose the ones most appropriate to them. Instead, here we see one narrative approach, and three quantitative measures. That is hardly indicative of a menu of choice, and it will not allow companies the flexibility to choose the metrics which will be most appropriate for them. Does the Leader of the House concede that there is a danger that the legislation may do the exact opposite of what is intended and encourage companies to chase the best figures or manipulate them to their best advantage? This would be most disappointing. Nevertheless, there is a risk that these figures can be massaged to show the company in a better light. Not only would this not help to solve the gender pay gap, it would also serve to drive it deeper underground, where it is then harder to solve. The CBI gave us some examples: in one company, you could have as many figures as you cared to have. It looked at salaries, and it came up with a mean annual salary of 11.3 per cent. However, if you looked at this figure with a bonus, then the mean was 12.2 per cent, and the median was 7.1 per cent. If the same salary was scaled up for full-time equivalent, then the pay gap was 6.4 per cent. The mean pay gap with a bonus would be 7.6 per cent. Most shockingly of all, playing around with these statistics would mean that they could appear brilliant, because the median would be 0.9 per cent. These are boggling figures, but by looking at the figures in different ways, that is exactly what one company was able to do. This would render the figures absolutely meaningless, and could serve to hide the problem. We therefore believe that a different approach must be taken, and I look forward to the Minister’s response. I beg to move.