I welcome this debate and thank you, Mr Deputy Speaker, for the opportunity to speak. We know that this is a vital debate, on which we need to make faster progress, not just for women but for our economy.
This debate is about non-executive directors on listed companies, which in one way is convenient, as progress has been made in that area. We know that the gender balance in executive roles has remained at approximately 5%, which is woefully low. This is also an important debate for our economy. A McKinsey study in 2010 on listed firms in six European countries and the BRIC countries found a correlation between the proportion of women on a company’s board and its performance. Indeed, across all sectors, companies with the most women on their boards of directors significantly outperform those with no female representation—by 41% in return on equity and by 56% in operating results. Diversity does indeed unlock growth. More recently, that important study has helped to fuel a growing body of work and a consensus that the current pace of change is not nearly
fast enough. However, there is a risk that even recent progress might not necessarily be a predictor of the future. A reduction in more recent months of the number of women FTSE 100 chief executive officers, down to two, is one indicator of that, and it should be a cause for concern about the pipeline of talent among women going into senior positions.
For years, including before becoming a Member of this House, I have worked in a number of ways to support the progress of women and other under-represented groups—ethnic minorities and people with disabilities—in reaching senior levels in our public life, whether on public boards or the boards of business. This is a passion and an interest that I have taken forward not only in my professional work on leadership and increasing diversity on public bodies, but in a voluntary capacity, through the leadership and mentoring programme run by the Fabian women’s network. As several Members have discussed and mentioned, better diversity in decision making aids better outcomes. To quote Peninah Thomson, the author of “A Woman’s Place is in the Boardroom”, the customer is queen. Women influence the majority of purchases for themselves and their families. A much better understanding of consumer and customer needs through a better reflection of women’s lives at the top of business can only be good for our British companies.
Over the past 20 years, Labour has taken decisive action to ensure that women are better represented in Parliament and in politics, and we know that outcomes can take a generation to deliver. As a result of that drive, we have more women MPs than all the other parties combined, but we still have a long way to go before women are equally represented in politics and before a culture of gender balance pervades political debate and discussion in seminars and in the media. I hope that we will also see an end to all-male panels, to ensure a gender balance at all levels of debate.
It is unfortunate that such progress has not been made at the same pace in all the parties. The World Economic Forum’s annual global gender gap report published in October 2012 showed that the UK had slipped down the international gender gap index from 16th to 18th place. The report states that that was mainly the result of a decrease in the percentage of women in ministerial positions from 23% to 17%.
This debate must not be positioned simplistically in terms of representation versus merit. It is about the outcomes that we want to see, and we must take a stand on the progress that we want to make while taking responsibility for the outcomes. I am not the only one who wants Britain to lead the way in this area, rather than just catching up. It is important that we reserve the right to take more prescriptive measures, beyond the voluntary ones, to enforce faster and greater change at a later stage if necessary. If we are to continue with a business-led, voluntary approach, we expect to see greater progress towards parity, and we must not favour ideology over evidence when it comes to policy. We must consider encouraging greater positive action.
With regard to the reasoned opinion that is the subject of the motion, there might be arguments against the action envisaged in the draft directive, for the reasonable reasons that the Committee cites, but I remain concerned that the reasoned opinion says nothing about how the Government will take a lead in the debate, if not through the directive as currently constructed but in other ways,
to advance these matters with our European partners. Business does not stop at geographical boundaries, and with Europe as one of our main trading blocs, we should have a voice in ensuring greater representation of women at the top of businesses across Europe.
It is also a matter of concern that the report of the European Scrutiny Committee and the draft reasoned opinion were published only on Christmas eve. Members have had no opportunity to table amendments to ensure that the UK is at the forefront of moves to achieve greater equality in society here and across the EU. Instead, there is a danger that the motion will leave the impression that the Government are dragging their feet on issues of equality, diversity and representation. The message must be that Britain wants to be at the forefront of positive change for all groups that are under-represented on grounds of gender, ethnicity or disability.
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