Government plans ‘make a nonsense’ of tackling gender pay gap, says senior MP

Louis Ashworth
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Rachel Reeves, chair of the Beis Select Committee, criticised the government for not adopting the group’s recommendations (Source: Getty)

The government has been accused of dragging its feet over the gender pay gap after refusing to adopt MPs’ recommendations for tackling unequal pay.

Rachel Reeves, chair of the influential Business, Energy and Industrial Strategy (Beis) Select Committee, said the government’s stance on reporting pay disparities would “make a nonsense” of efforts to close the gap.

The Beis committee issued its report into the gender pay gap in August. It found median pay across the country was 18 per cent in favour of men. The report called for organisations to be required to publish explanations for their gender pay gaps, and to outline how they planned to close the gap, alongside existing reporting requirements.

Under current rules, all UK companies with over 250 employees have to declare their gender pay gap by 4 April.

The Financial Conduct Authority today revealed it pays its male staff a fifth more than its female staff, with a median gender pay gap of 21.2 last year – risen from 20.9 in 2017.

The government’s response to the Beis committee’s recommendations was published today. Presented by Penny Mordaunt – who is minister for women and equalities alongside her position as secretary of state for international development – it argued against forcing companies to produce an “action plan” and narrative reports on how they were tackling pay gaps.

“While the Government urges all employers to produce an action plan alongside their figures, we were aware that including it as a mandatory requirement might result in a prescriptive format with limited value to employers and employees,” said Mordaunt.

“By not making them mandatory, we have given employers the freedom to produce an action plan that is relevant to their individual situation which they can truly commit to and embrace.”

Responding to Mordaunt, Reeves said: “The Government’s refusal to extend gender pay gap reporting requirements to partners is disappointing and continues to make a nonsense of efforts to understand the true scale of, and the reasons behind, the gender pay gap in some companies.

“Failing to accept our report’s recommendation to require businesses to publish an action plan for closing the gap, against which they must report progress each year, suggests the Government are timid in holding businesses to account for their efforts in driving the change needed”.

Roger Barker, head of corporate governance at the Institute of Directors, told City A.M. companies needed longer to adjust to reporting rules.

“The extent of reporting requirements on companies has significantly increased during the last year,” he said. “Alongside gender pay gap reporting, many companies are being asked to report on their governance frameworks and chief executive pay ratios for the first time. It is reasonable for the government to allow time for these new requirements to bed in before introducing a raft of new mandatory disclosures.”