Equal Pay and Flexible Working Bill [HL]

My Lords, I start by declaring an interest as the chair of the Women’s National Commission, which is currently discussing these issues at great length. Although I have reservations about the proposals in the Bill, I have no reservations about the principles of the noble Baroness or the intent behind the Bill to eliminate inequalities in the workplace and provide greater support for working families. It is that latter point on which I wish to start my comments. Supporting families in balancing work and home has been a key plank of the Government’s employment policies since the establishment of the Work and Parents Task Force in 2001, followed by the Employment Act, which, I regret to say, at that time the Opposition opposed, the extension to carers in 2007 and the Walsh review in 2008. The aim of all those actions has been to support families in finding working hours to match their caring responsibilities, whether for children or for adults in need of care or, all too often, for both. Families must have genuine choices about how they balance work and caring responsibilities, which are now more complex with the many changes in family structures and the development of more intricate family arrangements, which have shaped income, living standards and working patterns. Alongside supporting families, it has been important to enable businesses to plan and manage their workforces effectively, and there is no question that employers have benefited. As the noble Baroness rightly said, employers who have adopted flexible working have benefited not only from lower levels of sickness and absenteeism but from improved retention performance. There is clear evidence of a positive relationship between flexible working and individual performance—a view that is endorsed by the British Chambers of Commerce in its briefing on the Bill, although at the same time it opposes the detailed proposals before us. However, more needs to be done to raise awareness of the right to request flexible working among employees and employers. The Government’s regulatory impact assessment, which accompanied the recent Walsh review, showed that extending flexible working to parents of older children could lead to savings for employers. As the noble Baroness, Lady Howe, said, the annual cost to employers of making adjustments to working patterns stood at £69 million, compared with the benefit from higher productivity, lower turnover and reduced absenteeism of £91 million. Therefore, I think that the argument for extending this right to parents of older children is made. The in-depth Walsh review, after consultation with a wide range of stakeholders, recommended that parents with children up to the age of 16 should be able to apply for flexible working, a view which the Government accepted and which is due for implementation in April this year. The amendment before us was considered by Imelda Walsh but rejected on the grounds that over the age of 16 a child is a young adult and is therefore of an age to take personal responsibility and show a good measure of independence. I also think it is not appropriate to suggest a further change at this time, when employers have been adjusting their working patterns to implement the Walsh recommendations. Again, as the CBI said, consideration of a further extension so quickly seems premature. The British Chambers of Commerce put it more strongly, saying that it would damage business and send the wrong message to businesses at this time. On the question of equal pay, while there has been a reduction in the median overall gender pay gap since 1997 from 27.5 per cent to 22.6 per cent in 2008, in accord with other speakers, I am stating the obvious by saying that progress has been slow. There are many factors in the continuing pay gap which have to be overcome. The gender pay gap is complex and encompasses many factors besides pay discrimination: differences in men’s and women’s labour market experiences; skills and education; occupational segregation; lack of quality of part-time work; historical culture; and gender stereotyping. An analysis by the Women and Work Commission, chaired by my noble friend Lady Prosser, suggested that, if more women moved into higher-skilled, higher-paid occupations and if more moved into the labour force or increased their hours, the potential benefits for the UK economy could be worth £15 billion to £23 billion or 1.3 to 2 per cent of GDP. That shows that no country can afford to ignore the skills and talents of half its population. So, clearly, this historic inequality has to be tackled. The Conservative policy document, Women in the World Today, says that these amendments to the Equal Pay Act would tighten the law by introducing a ““reasonableness test”” into the Act, but all the evidence from those who work on the ground on these issues suggests that in reality that would not be the case. A ““reasonableness test”” implies a subjective test, with courts required to view the justification of the factor giving rise to the pay gap from the perspective of the employer—for example, knowing what the employer knew and how it operated in those particular circumstances—and it could be considered reasonable to use that factor as a determinant of pay, regardless of the discriminatory effect it has on women. It is also difficult to decipher what an ““objectively justified as reasonable”” test means, as it becomes jumbled up with ““objective justification””, which is the standard defence for indirect discrimination. That might add further to the already complex and labyrinthine case law, lead to further confusion in the tribunals and courts and delay further the already very slow process of equal pay claims. That is certainly not what women with equal pay claims need. Therefore, it is helpful that the Government intend to simplify equal pay legislation in the equality Bill. The amendment might also give the impression that a weaker standard of justification was required than was actually the case under EU law. The TUC and others, such as the Fawcett Society, have campaigned for many years for mandatory equal pay audits, and the Equality and Human Rights Commission, in its briefing on the equality Bill, states that equal pay audits can be a useful mechanism in testing how organisations approach equal pay issues. Equal pay audits were also recommended in the code of practice on equal pay, which received parliamentary approval in 2002. However, views are divided on the value of pay audits, and no doubt there will be considerable further discussion on the issue. I have doubts about the particular conclusion that is suggested in the Bill. I doubt that it is the responsibility of the courts or the industrial tribunals in the manner suggested in this Bill. It is clear, however, that we cannot tackle inequality if it is hidden. If you cannot see the problem, you cannot solve it. I appreciate that, if equal pay audits are to be taken forward in the equality Bill, they will only resolve part of the problem, but it is an important part. They will have to be combined with sensible transitional arrangements, taking into account the cost of the process. If pay audits are not pursued, other measures will need to be put in place to increase transparency of pay and remove this long-term discrimination against women. For instance, procurement offers significant potential as a way of promoting equality and good equal pay practice. It is therefore encouraging that the Government have signalled that they intend to use procurement positively to promote equality. This follows the positive approach to procurement in Northern Ireland under the Northern Ireland equality of opportunity contract condition, and by the GLA in respect of the Olympics. Other measures might include strengthening the role of equality representatives and allowing hypothetical comparators, rather than the current requirement for actual comparators. Equal pay is the only area of discrimination law where claimants have to identify an actual comparator in the same employment who is treated differently from them. These and other preventive, positive and pragmatic reforms will make a much-needed shift in approach to gender pay. Recent polling by UNISON and the Fawcett Society showed that 83 per cent of women and 74 per cent of men maintained that pay difference must be closed regardless of the credit crunch. I support the noble Baroness: even in difficult economic times equality should not be put on the back burner. We need a positive pay policy, and we need radical measures that will eradicate pay discrimination and illegal pay practices and, ultimately, prevent pay discrimination in the first place. I am afraid—I regret to say this to the noble Baroness—that I do not believe that this Bill will achieve that aim.