Businesses will not be required to publish the pay gap between male and female employees, despite the clause in the Equality Act which makes this possible, the government has said.

The Equality Act, passed under the previous Labour administration, contained an enabling clause that if firms did not reduce the gender pay gap by voluntary means, then mandatory equal pay reporting could be introduced in 2013.
However, equalities minister Lynne Featherstone yesterday confirmed that this would not happen and that the coalition government were committed to a voluntary approach.

Speaking at the launch of the 2010 Female FTSE-100 report, drawn up by the Cranfield School of Management, Featherstone said: “We want to move away from the arrogant notion that government knows best, to one where government empowers individuals, businesses and communities to make change happen."

The announcement is a climbdown for Liberal Democrat Featherstone, who in opposition had championed mandatory pay audits. But in an interview in the Guardian newspaper, she explained: “Right at this moment of financial peril to the nation is perhaps not the moment to introduce mandatory pay audits.

“It was a different world two years ago - financially and in terms of pressures on business. We are in a completely new landscape now. Much more of partnership working, no longer government dictates, this is absolutely the time to make voluntary pay reporting work."

Featherstone said that companies will be expected to reduce the gender pay gap by voluntary means and that the government would check annually that progress was being made. The move is one element of a new equality strategy, which will see the Government Equalities Office lose its independence and become part of the Home Office.

Equality campaigners were dismayed at the announcement.

Ceri Goddard, chief executive of the Fawcett Society, said: "The persistent gap in pay between men and women is one of the starkest examples of inequality in the UK today. Women in the UK are still paid, on average, a sixth less than men.

"The government's decision not to bring into force Section 78 is a huge disappointment, and means this injustice will continue for a long time to come. The government has today consigned another generation of women to lower pay.

"Their proposal to rely only on voluntary business action on pay isn't just naive, it sends a dangerous signal that tackling discrimination against women is a choice not a requirement.”

But Dawn Nicholson, HR services partner at PricewaterhouseCoopers (PwC), commented: "Regardless of whether gender pay audits are voluntary or compulsory, the momentum behind greater disclosure around pay is irresistible. Companies need to get their house in order and remove any pay disparities that cannot be justified, because they are going to have to reveal their pay gap data either under the voluntary or mandatory regime. A recent poll PwC commissioned of 1,148 workers revealed that 49 per cent would ask for a pay rise or look for a new job if they found out for certain that colleagues at the same level were paid more. This highlights the potential fallout if disparities are not addressed.”