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Rachel Reeves.
Rachel Reeves, the chair of a committee investigation into equal pay, says it will examine reasons behind ‘wildly differing’ pay gaps.

Photograph: Christopher Thomond/The Guardian
Rachel Reeves, the chair of a committee investigation into equal pay, says it will examine reasons behind ‘wildly differing’ pay gaps.

Photograph: Christopher Thomond/The Guardian

MPs to investigate gender pay gap amid fears scheme falls short

This article is more than 6 years old

Committee will assess new government scheme, amid fears it is not showing true picture

MPs are to investigate the difference in average pay for men and women, amid fears the government’s new scheme to highlight the gender pay gap is not telling the true story.

Executive pay and bonuses will also come under the spotlight in a business, energy and industrial strategy (BEIS) select committee investigation which kicks off next month.

The hearings will come nearly a fortnight after the final deadline for gender pay gap reporting, under a new government initiative that has shed light on radically lower average pay for women than men at UK companies.

All companies with more than 250 staff have to report on the difference in the average pay for all male and female employees by 4 April, however less than 4,000 of the 9,000 expected total had reported by Friday.

Airlines, banks and oil companies have reported some of the worst pay gaps so far as men dominate the best-paid roles. But many companies are holding back on reporting their gender pay gap until the last minute.

Rachel Reeves, the chair of the BEIS select committee, said: “Transparency on gender pay is only the beginning. We need to examine why these pay gaps persist, why within the same sector there may be companies with wildly differing pay-gaps, and what remedies are needed to tackle them.”

She said excessive executive pay was “at root an issue of fairness”. She said the committee would also look at whether the new reporting scheme was properly capturing the salaries of staff, and what steps companies were taking to address the pay gap.

“Pay awards for top bosses which vastly outstrip worker pay and which owe little to building genuine long-term value in a company are impossible to justify and damage the social contract between business and the public. Unjustified executive pay awards are the most corrosive influence on public trust in business and businesses must face up to their responsibilities and tackle this problem. If businesses don’t step up on executive pay, government will need to step in.”

Companies which do not report by midnight on 4 April will face sanctions administered by the Equality and Human Rights Commission. Ultimately, they could face an unlimited fine.

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