Race in the Workplace: The McGregor-Smith Review - Question for Short Debate

Part of the debate – in the House of Lords at 6:00 pm on 24th April 2017.

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Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education) 6:00 pm, 24th April 2017

My Lords, I congratulate the noble Baroness, Lady McGregor-Smith, on her report, which, as my noble friend Lady McDonagh said, is both practical and implementable, which make it a very welcome read. It is easy to see how she could arrive at that arrangement. I mean no disrespect to say this, and I hope the noble Baroness will not take it the wrong way, but the fact that it comes from the Conservative Benches and is written in a very level-headed and logical way makes its impact all the more powerful. We on these Benches, and other colleagues, have raised issues that she raises over a number of years but have not got the sort of response that I have heard today around the Chamber to the recommendations that have been made. I hope it bears also on the Minister when he comes to respond that this is a very well-considered report, which has come from a very interesting area in the political spectrum and has received support all round the House. As many people have picked up, it needs a lot more of a response from the Government than we have seen so far. I hope that when the Minister responds, he can fill in some of the gaps in the Government’s response to this excellent report.

We have had some very good responses from those who have spoken in the debate. I particularly liked the illustrations used by my noble friend—I can call her that, as she was once my Minister—Lady Bottomley and by my noble friend Lord Griffiths. I sympathise with his feeling that he was in the right place on all these matters because he was in an area that seemed to suggest that, as a jolly good chap, he could implement changes—but then discovered to his horror how difficult it was to actually make the transition. I have been there too. The noble Lord, Lord Kirkham, with his direct experience of trying to serve a wide and disparate consumer base, also picked up the point that there are some very obvious lessons to be learned by just looking around us at what we do. For example, looking at the Box to my right, it is very surprising to see a group so representative of the ethnicities in this country, and yet to not make that an issue at all. This is just how it is now in many parts of the Civil Service, and I congratulate it on what it has achieved in that.

It is worth reflecting on the key findings, because they are so startling. One in eight of the working-age population is from a BME background, but only 10% of the workforce and 6% of top management are. The employment rate for ethnic minorities is only 62.8%, compared with 75.6% for white workers. The gap is worse for some ethnic groups; for instance, for those of a Pakistani or Bangladeshi background, the rate drops to something like 54.9%. People from a BME background have an underemployment rate of 15.3%, compared with 11.5% for white workers, and many of them would like to work more hours than they currently do. I found this finding particularly interesting: all BME groups are more likely to be overqualified than white ethnic groups, but white employees are more likely to be promoted than those from all other groups. The potential benefit to the UK economy, which many noble Lords picked up on, from full representation of BME individuals is estimated to be an improvement to our GDP of £24 billion a year—1.3%. It does not take much to feel anger about that.

A lot of people have also suggested that that will lead to the agenda of change that one would like to see, but what we get from the Government is, I think, a very poor response indeed. As somebody has said, this is largely a voluntary arrangement: the report deals with the private sector and the Government can affect only the public sector. But this leaves completely untouched the areas in which the Government have both a stake and an opportunity to make real change. The points made by the noble Baroness, Lady Berridge, were very salient in this area: if it is true for health and safety, and for other aspects of public life, why is it not true for employment rights, for which the benefits are so clear and the attitude so obvious?

Looking in more detail at the government response, the response from the Minister, Margot James, is good in the sense that it picks up and reflects back to the report’s author the value that is in the report. We should all accept that it is indeed very valuable. The response says:

“It is clear from your report that you have examined the issues around race in the workplace … The findings are stark … it is clear that more has to be done”— so the rhetoric is good so far. The recommendations are then dealt with, but it is quite clear that the Government have taken the strategic view that the only impact this can have is on employment in the Civil Service. They completely ignore the points made by my noble friend Lady Royall and others about the impact that the Government’s procurement system could have in changing the whole way in which people regard race, gender and other aspects relating to ethnic minority issues in relation to the world that we have to inhabit—and I suspect it will get worse after Brexit.

Under the heading “Supporting business”, the Government’s response is basically, “Not us, guv”:

“Businesses are best placed to know what support they need to improve diversity and inclusion and so we will work with them to ensure they have the resources they need to fully embed change within their organisations”.

I will be interested to hear what the Minister has to say about that. As far as I can see, that rather bombastic statement appears to apply only to,

“developing a guide on discussing race in the workplace as well as having a single portal where useful case studies and unconscious bias training packages can be sourced”.

That is pathetic, given the scale of the issue we are talking about. In any case, the Government do far more in making sure that training happens and ensuring that apprenticeships are going to be of a high standard—they will be specifying in future legislation and regulations all sorts of things to do with the quality and content of apprenticeships—so why do they not say in this report, “We will use the opportunities coming up with the Technical and Further Education Bill to ensure that these issues are taught properly and that people understand their responsibilities and the implications of what they do in the workplace”?

The next heading is “Improve transparency”. As people have said, daylight is often the best disinfectant, and we should never neglect that—it is often the first response and a good one—but it will never be sufficient to get to where I think the author of this report wishes to go. On this one, again, the Government seem to be incredibly limp, saying,

“we believe that in the first instance, the best method is a business-led, voluntary approach and not legislation as a way of bringing about lasting change”.

Ministers are always taught when they first step into their department that legislation is probably the last resort. I am sure the noble Lord, Lord Prior, will have had that lesson when he first stepped into the Department of Health, his first appointment when he appeared in front of this House. He will have been told, “You can do far more by changing culture and attitudes”. At the end of the day, though, legislation is necessary. I am sure that the noble Baroness, Lady Berridge, would be able to exemplify what she said about the way in which the courts dealing with employment and other things have really changed how the culture operates because there is a standard to which employers will be judged.

I want to pick up issues relating to supply chains, which have also been picked up by other noble Lords. It is the case that organisations, particularly in the public sector but not only there, have been able to change attitudes and approaches all through their supply chains by specifying in contractual terms what they will and will not tolerate. Why is it so obvious in the Government’s response that they do not see this as an opportunity? We have found in other areas of government policy over the past few years examples of where the Government could use their power to effect change. I am thinking particularly of a debate that I had with the Minister only recently about how to improve payment practices for small businesses, where the exemplary, voluntary approach does not work, with something like £64 billion worth of outstanding cash sitting around in big companies’ pockets that should be paid over to small companies but there is no power that can get that to happen. This has a devastating effect on the economy, on small companies and on the whole process. The Government could do something to sort that out but have chosen not to do so, simply providing someone who will be a postbox for those who wish to complain about it.

The previous Labour Government required that all major projects should make sure that they had a supply of apprenticeships in all the contracts that were signed. Crossrail, which this Government have used a lot as an exemplar of where they want to get to, employs apprenticeships at a high level, and has been very successful in doing so, because the contract specified that those who had benefited from the monies that were being paid for Crossrail should employ apprentices. It can work, and I do not understand why the Government do not do that.

I could go on, but I will not. I will end with some questions for the Minister. The review concluded, in a wonderful phrase:

“There is discrimination and bias at every stage of an individual’s career”.

The figures that I cited reinforced that. The noble Baroness, Lady McGregor-Smith, asked businesses and the Government to act on her recommendations, as the consequences of not doing so would be damaging to the economy and the aspirations of so many, but the Government have decided not to do so. Can they explain why they think a voluntary approach is the right way to do this? As I have tried to exemplify, there are so many ways in which action could be taken, but a simple one, picked up by others earlier in the debate, is that a duty to publish figures in relation to gender pay has been imposed by this Government on all companies of a significant size. Why not extend that to ensure that we get the information necessary for companies to publish data on BME staff?

During the review, as I think was mentioned in the opening address, only 74 FTSE 100 companies replied to the call for data, and only half of those were able to share any meaningful information. Does not more need to be done here? Can the Minister give us an example of how he will put pressure on companies to ensure that at least the information required by one of their own who asks for it should be available? Again, this should be published.

The review highlights the importance of work experience opportunities that companies provide and reiterates a view that we on this side of the House have expressed that unpaid internships can act as a barrier to those without financial support to undertake them. What is the Government’s response to that observation in the review, and what action will they be taking to address the barriers of unpaid internships?

One of the review’s key recommendations is for the Government to assess the extent to which its recommendations have been implemented and take necessary action when required. Will the Government commit to doing that within the suggested timetable of a year and, if so, can the Minister explain how that will happen?

Finally, the Government’s response indicated that they will be setting out to all companies and institutional investors the value of employing a diverse workforce. How do they plan to do that and when will we see it?

The noble Baroness, Lady Bottomley, said, picking up on a point made originally by the noble Baroness, Lady McGregor-Smith, that we have had enough reports in this area. We know what the problem is. It is time now for action. I do hope that the Government will get on with it.