Cameron backs gender pay audits for firms

Forcing large firms to reveal the difference between the average earnings of male and female staff will “pressure” them to improve women’s wages, David Cameron said.

A consultation on the measure is being launched as the Government announces that a target of getting women into at least a quarter of boardroom seats at the UK’s biggest firms has been met.

More than 10 million workers across the country will be covered by the new rules affecting outfits with more than 250 employees, which were a concession to the Liberal Democrats by the Conservatives in the final month of the coalition government.

Confirming that the new Tory administration would press ahead with the measure, Mr Cameron will say it will “cast sunlight on the discrepancies and create the pressure we need for change, driving women’s wages up”.

At present the gender pay gap stands at 19.1% – meaning a woman, on average, earns around 80p for every £1 earned by a man.

Writing in the Times ahead of a speech to business leaders, Mr Cameron said he aimed to close the gap within a generation and said the compulsory National Living Wage for over 25s unveiled in last week’s Budget would play an important part.

“This goes back to what we announced at the Budget last week. Our aim is to fundamentally rebalance our economy – to transform Britain from a high-welfare, high-tax, low-pay economy into a lower-welfare, lower-tax, higher-pay society.

“Higher pay is something we want for everyone. That is why the Chancellor announced the National Living Wage, which starts next April at £7.20 and will reach over £9 by 2020. This will primarily help women, who tend to be in lower paid jobs. It will help close the gender pay gap.

“But we need to go further, and that’s why introducing gender pay audits is so important.”

The consultation will examine exactly what, where and when firms will have to publish and when the disclosure rules – due to be on the statute book within 12 months – will come into force.

Minister for Women and Equalities Nicky Morgan said she was “delighted” that the 25% target for female board membership – set in 2011 – had been met.

“But while I am proud of the progress made, there can be no room for complacency when it comes to securing equality for women.

“That is why today, we are committing to eliminating the gender pay gap in a generation. This is not just the right thing to do, it makes good business sense: supporting women to fulfil their potential could increase the size of our economy by 35%.

“To achieve gender equality we need to continue to inspire young women and girls so that they can compete with the best in the world for the top jobs – and see that their hard work will pay off.”

Lingerie tycoon Michelle Mone, the founder of the Ultimo underwear company, said the pay disclosure requirement was “absolutely fantastic.

“Women should rightly have the same expectation of good pay and progression as men, wherever they choose to work,” she said.

“Today’s announcement will highlight those companies where the pay gap is persisting. I hope this will empower women to challenge this state of affairs and ask why.

“It is great progress that a quarter of people on FTSE 100 boards are women, and that’s without legislation or quotas. I hope that many other talented women will follow in their footsteps.”

John Allan, national chairman for the Federation of Small Businesses, said: “Our research shows growing numbers of women are choosing to start-up in business, and there are more women directors than ever before.

“To help support this trend we need to keep up the momentum and break down the remaining barriers that prevent women progressing in the workplace and the boardroom, and so we welcome, and look forward to taking part in, the Government’s gender pay gap consultation.

“In the past, low wages have been one such barrier, discouraging many women from applying for roles.”

Lloyds Banking Group chief executive Antonio Horta Osorio said it looked forward to making sure “the views of British business are taken into consideration when implementing this policy”.

Labour equality spokeswoman Gloria De Piero said: “It’s good news that the Government have finally embraced pay transparency after shelving the Labour legislation for five years.

“But for pay transparency to make a real difference, we need to have an annual equal pay check which measures progress and recommends what action needs to be taken – a move the Government voted against earlier this month.”

Lib Dem former equalities minister Jo Swinson said: “Yet again the Prime Minister fails to recognise the urgency of tackling the gender pay gap.

“It is more than 40 years since the Equal Pay Act, so saying we can afford to wait for another generation to close it is, to put it mildly, unambitious. The UK economy is currently missing out on the talents of too many women.

“In government, my Lib Dem colleagues and I fought tooth and nail with the Conservatives to get them to agree to even minimal changes to help close the gender pay gap.

“They refused to introduce these exact plans for five years, only relenting in March after huge pressure from the Liberal Democrats in government.

“For them to now try and pretend this is a new announcement and that they have championed this cause all along is an insult to people who have campaigned for equal gender pay for decades.”

Confederation of British Industry (CBI) deputy director-general Katja Hall, said: “Lord Davies’ successful voluntary approach demonstrates the value of encouragement as opposed to using the law.

“Businesses recognise the value of having a diverse board that reflects society and their customers. That is why we have reached this important milestone on time.

“But we must not let our guard drop. Progress has relied on making sure new appointments are diverse, and this must continue as women appointed since the Davies report begin to end their terms on boards and replacements are sought.

“Addressing the gender pay gap is the right priority – and we should set a target for reducing it. While we believe publishing pay gap data could be misleading, we will work with the Government to ensure that rules on what is published are flexible enough to be relevant to each company.

“To see real progress, however, we need to challenge occupational stereotypes by encouraging more women into male-dominated industries and investing in careers advice.”
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