HL Deb 12 February 2003 vol 644 cc667-9

2.49 p.m.

Baroness Thomas of Walliswood asked Her Majesty's Government:

What action they propose to take in response to the low numbers of women who are directors of British public limited companies.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, we have welcomed Derek Higgs's proposals on how to widen the pool from which non-executive directors are drawn, which could bring more women into the boardroom. Derek Higgs made proposals for a more rigorous, fair and open appointment process. Subject to consultation on the detailed wording, the Financial Reporting Council intends to put the changes to the combined code into effect on 1st July. A small group of business leaders and others, led by Professor Laura Tyson of the London Business School, is also being set up to bring to greater prominence candidates, including women, from the non-commercial sector.

Baroness Thomas of Walliswood

My Lords, I thank the Minister for that Answer. I admire the Government's efforts in this respect. The total of 38 per cent of women appointed to public bodies in the past year is highly gratifying when compared to the 6 per cent of non-executive directors and the low number of directors of FTSE leading companies. However, does the Minister agree that a policy of collaboration, mutual discussion, instructions as to methodology and so on, has not gone very far in convincing the private sector that it needs to pull its socks up in respect of equal treatment of employees? Are the Government considering legislation to provide a general duty on employers for fair treatment of all their employees?

Lord Sainsbury of Turville

My Lords, what is taking place is more substantial than the noble Baroness implies. Written into the proposed combined code is a clear procedure for the appointment of non-executives, which will put it on a much more meritocratic basis and therefore bring in many more women.

Baroness Lockwood

My Lords, does my noble friend agree that the appointment of women directors comes within the scope of the positive provisions of the Sex Discrimination Act 1986? Could a statutory code of practice be introduced to provide methods by which women, and members of other groups who are discriminated against, might be dealt with in the whole area of promotion?

Lord Sainsbury of Turville

My Lords, the question of how the Sex Discrimination Act 1986 applies to directors is complicated, due to the fact that they are office holders, which creates certain difficulties. However, the combined code has a strong implication that requires companies to report if they do not follow the lines laid out.

Baroness Gardner of Parkes

My Lords, given that many women have to take some years off to bring up children, will the experience gained during that time be taken into account? Many women are disadvantaged in qualifying to be non-executive directors if that period is ignored, or if it is not taken into account as it should be—that is, favourably.

Lord Sainsbury of Turville

My Lords, the Higgs report made clear that the skills required of non-executive directors should be considered carefully. That would probably lead to a wider range of experience than hitherto when appointments have been made on the basis of personal contacts, reinforcing the tendency that the people selected have the same background as those making the appointment. Having that fair process and a clear specification of requirements will open up the range of people who can take on those appointments.

Baroness Howe of Idlicote

My Lords, I welcome the news that a group of business leaders is to be set up to consider the required skills, perhaps mainly from the non-commercial sector. Has the Minister noticed a particular disparity in the fact that only 6 per cent of main board directors of the FTSE 100 are women, although the proportion of women managers in the sector is five times as high, at 30 per cent? Do the Government have plans to publicise the large pool of neglected talent, which could, if properly used, enormously improve the diversity and mix of experience among non-executive directors?

Lord Sainsbury of Turville

My Lords, the whole purpose of Professor Laura Tyson's exercise is to bring to the attention of directors people who could fill the positions but who come from the non-commercial sector where there is a much higher proportion of senior women.

Baroness Miller of Hendon

My Lords, I declare an interest as a founder chairman of the Women into Public Life campaign, from which no one can assume that I am in any way less than helpful to women. I am. Does the Minister agree that political correctness, if taken to an extreme in this sort of area, is not right? Businesses and large companies, in a competitive world, need the very best experience and expertise on their boards. The idea that gender is one of the things that a director will automatically consider is not good. I accept all that the Minister said about the report, but does he agree that in small and medium-sized businesses many more women are achieving managerial status? Indeed, they are often developing their own businesses into large businesses. Would that not be the proper pool, with the right experience, for those concerned to consider?

Lord Sainsbury of Turville

My Lords, it is not a question of political correctness but of having a proper procedure for a board that opens it up, on a meritocratic basis, to those most suitable to do the job. That will bring in a large number of women, because there is a large pool of women in the non-commercial and commercial sectors who could do the job well and be of great value to the board.

Lord Oakeshott of Seagrove Bay

My Lords, I agree with the Minister that this is a matter not of political correctness but of commercial prudence. Is he aware that there has never been a woman executive director of any of the big five British clearing banks? They have tens of millions of women customers, over 100,000 women employees and 36 male executive directors. Does the Minister, with his considerable commercial experience, believe that that is good commercial practice on their part? Does he agree that it resembles not so much a glass ceiling as a door permanently padlocked against women?

Lord Sainsbury of Turville

My Lords, as the Higgs report pointed out, there are good reasons for having diversity on the board. It has importance in terms of meritocracy throughout the company. The composition of the board sends important signals throughout the company about values and commitment to diversity and equal opportunities. Those principles apply as much to banks as to any other companies.

Baroness Carnegy of Lour

My Lords, I am of course absolutely behind what the Government are trying to achieve. However, have they figures to show how many women have been invited to be non-executive directors of public companies but have refused because they did not want to do it? Those figures might be quite enlightening.

Lord Sainsbury of Turville

My Lords, I am absolutely certain we have not got them, and I cannot see any conceivable way of collecting such information. Going around asking people whether they have been approached and have turned down a job is not an easy thing to do.

Lord Boston of Faversham

My Lords, does the Minister agree that all that public limited companies need to do to improve proportions is to follow the splendid example set over many years by your Lordships' House? The system for which your Lordships voted overwhelmingly last week provides a simple way to further enhance the position of women, to the benefit of your Lordships' House, Parliament and the nation?

Lord Sainsbury of Turville

My Lords, I am not absolutely convinced that any of the permutations would necessarily produce the results for which we are aiming in the boardrooms of companies.