How procurement could be affected by the Equality Bill ?

Legislation on equal opportunities in business, going through the House of Lords next week could increase procurers’ – especially in the public sector — powers and obligations to demand diversity strategies from suppliers.

The UK legislation over the past 40 years, designed to tackle discrimination has created a confusing legal landscape but, more importantly, there is evidence that this legislation is simply not working.

Discrimination remains a significant problem and people from some disadvantaged groups still find it harder to find employment:

- Despite progress since 1997 to reduce the gender pay gap, women still earn, on average, 22.6 per cent less per hour than men, if the current trend continues, the pay gap between men and women will not close until 2085,
- The gap between the employment rate of disabled people and the overall employment rate has decreased from 34.5 per cent to 26.3 per cent since 1998, but disabled people are still more than twice as likely to be out of work than non-disabled people,
- If you are from an ethnic minority, you were 17.9 per cent less likely to find work in 1997 than a white person. The difference is still 13 per cent

This data has been taken from the UK Parliament website.

The new single Equality Bill tackles these issues by bringing together a number of requirements under a single act. It is intended to strengthen the current legislation by:

1. Introducing a new public sector duty to consider reducing socioeconomic inequalities.
2. Putting a new Equality Duty on public bodies.
3. Using public procurement to improve equality.
4. Banning age discrimination outside the workplace.
5. Introducing gender pay and equality reports.
6. Extending the scope to use positive action.
7. Strengthening the powers of employment tribunals.
8. Protecting carers from discrimination.
9. Protecting breastfeeding mothers.
10. Banning discrimination in private members’ clubs.
11. Strengthening protection from discrimination for disabled people.

There will be a specific requirement for public bodies to promote equalities and diversity through their procurement. There are already some examples of good practice in this area from Transport for London and the London 2012 project, both of whom expect their suppliers to have diversity action plans to support their work for the client. LOCOG, the Games operator, requires all suppliers to take part in the Diversity Works for London scheme.

In future, public purchasers will be able to insist their suppliers take positive action to address inequalities in their workforce and supply chain. For example, in the construction industry, where women are traditionally under-represented, specific action can be taken to provide training in order to upskill a minority group to provide the appropriate skills.

It is early days for this new legislation in terms of the impact it may have on businesses but it could be profound. Businesses will need to move away from a passive “equal opportunities” approach to a more pro-active strategy to equalities, from a requirement to regularly review gender pay differences and publish the results, to ensuring that suppliers have pro-active strategies to deal with diversity as part of a pre-qualification process and working with long term suppliers to improve their approach to diversity, using schemes like Diversity Works for London.

Although the legislation is new, this type of approach is not new for many companies, in 2000, I instigated BAA’s action to target minority businesses around Heathrow to participate in the supply chain. There was no question of positive discrimination, suppliers had to be competitive to win business. The subsequent significant increase in diverse suppliers winning business represents a more competitive supply chain, saving costs.

It is important to create the right organisational culture where people are prepared to be open about their minority status. People are usually willing to declare their ethnic origin but few are prepared to declare themselves as disabled or lesbian, gay, bisexual or transgendered. Managements must create an environment where people can declare their minority status without fear of discrimination.

For businesses, failure to be positive about minorities is to miss an opportunity to attract talented people or competitive suppliers, this legislation should not be seen as a burden, good businesses should embrace it as a reason to increase the relentless search for talent and competitive suppliers.

Written by Shaun McCarthy