If the hon. Lady will just have an iota of patience, I will come to the empirical evidence for that in a moment.
I want to cite some empirical research from Kenneth Ahern and Amy Dittmar of the business school of the university of Michigan, which examined the introduction of mandatory quotas in Norway from 2003. Looking assiduously at the impact on the boards, they found
that the quotas damaged equity, asset and shareholder values in the companies affected. The report also found
“significant decreases in operating performance and higher costs as a result of the imposition of the quota.”
I would be happy to debate this afterwards with the hon. Member for Feltham and Heston (Seema Malhotra) if she wants to quibble with the empirical evidence of this study, but let me cite its findings correctly:
“These results are consistent with boards of directors that lack sufficient experience to act as capable advisors.”
The point is that if we have tokenism of this kind, we get inexperienced people on the boards and it damages shareholder value. Equality and diversity policy must be about widening the talent pool. On that we all agree, and it is through that that we strengthen business competitiveness. Tokenism is utterly counter-productive.
Equally, high-flying women would see minimal benefits from this directive because it focuses only on non-executive directorships. In that sense, I agree with some of the comments of Opposition Members. That, of course, encourages tokenism. If we look again at the Norwegian example—it is the one place in Europe where mandatory quotas were introduced—research in 2011 by Dr Hakim of the London School of Economics showed that Norway, the pioneer of gender quotas, had no female executive directors at all. That is why this measure—to me and, I think, to many outside the cloistered politically correct Westminster village—feels like a political elite debating an issue that is relevant pretty much solely to a business elite. It is largely irrelevant to the challenges of the millions of working women who live in the real world.
Of course, to come back to the point made by the hon. Member for Streatham (Mr Umunna), there are still outdated attitudes in the City. There is a problem of “group think” among those from similar backgrounds. I worked in the City before I went into the Foreign Office, and I saw that all the time. It is true in many professions, including—and it would be useful to see more acknowledgement of the fact—some of the politically correct institutions such as the Government Equalities Office and the Equality and Human Rights Commission, which have an appalling imbalance in the gender composition of their staff. If anyone bothered to look at it, they would find it deeply hypocritical that these bodies are constantly lecturing others on the subject.
In terms of the City, which is what the directive is about, raw competitive forces are ensuring that companies look far more carefully at their boardroom composition to maximise their breadth of experience. It is taken far more seriously as a strategic business issue. McKinsey and various other firms have been cited with that in mind. I am confident, given the rates that we are seeing, that a rising flow of talented women into more senior positions will continue to break through the glass ceiling, which I do not deny we residually have.
We need to be careful, however, not to give succour to the very stereotypes of which we want to rid ourselves. The deputy leader of the Labour party notoriously suggested that we might not have suffered the financial crisis if we had had “Lehman Sisters” rather than Lehman Brothers. That sort of progressive prejudice, for want of a better term, is scarcely more subtle or savoury than the conventional kind. It is also—this is
the interesting point for those who care to look at the evidence—positively refuted by the available empirical material. Research for the Bundesbank—hardly an institution regarded as lacking in rigour—that reviewed German boards between 1994 and 2010 found female board members tended to increase, not decrease, risk taking. The report attributes that to a public policy drive for more female directors, which resulted in the recruitment of less experienced women, as we discussed before. The issue was really about experience, not about gender. A similar review of Swedish boards found exactly the same. This kind of evidence punctures the prejudice promoted by people such as the right hon. and learned Member for Camberwell and Peckham (Ms Harman) that men are somehow innately more reckless than women. Of course it depends on the individual and their personal character, not on crude gender stereotypes, which too often inform this debate and have too often informed this sort of proposal.
I welcome the Government’s reasoned opinion arguing that that the directive does not comply with the principle of subsidiarity, but let us be careful not to give the impression that we are making process points here. This directive is corrosive of a meritocratic vision of our society where we are gender blind and what matters is who people are and of what they are capable. If we really care about maximising opportunities for working women, we should be talking about such things as transferable parental leave and other family-friendly policies, which this coalition are adopting. We should be addressing the exorbitant costs of child care—