UK Business Secretary Opposes Equality Quotas for Large Businesses

UK Business Secretary opposes FCA's diversity quotas, citing concerns over higher costs and damaged economic growth. The debate highlights tensions between promoting inclusion and regulatory burdens.

Bijay Laxmi
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UK Business Secretary Opposes Equality Quotas for Large Businesses

UK Business Secretary Opposes Equality Quotas for Large Businesses | Credit: Reuters

Kemi Badenoch, the UK Business Secretary, has expressed opposition to plans by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to impose equality quotas on large businesses. Badenoch cited concerns over higher costs and damaged economic growth as the reasons for her stance against the proposed measures.

The FCA and PRA had put forward guidance for financial firms to address sexual harassment and bullying, along with new requirements for large banks and insurers to establish targets aimed at improving diversity and inclusion. However, Badenoch, who also serves as the minister for women and equalities, has written to the regulators cautioning them against the proposed mandate on equality quotas, arguing that such a requirement is not legally necessary and could prove counterproductive.

In her letter to the FCA's CEO, Nikhil Rathi, Badenoch expressed concerns about "regulatory overreach" and stated that the proposed requirements would distract firms from priorities such as delivering economic growth and improving consumer services. She criticized the growing compliance culture in the City of London, contending that it is hindering the UK's "wealth generation".

The specific plans, minister put forward by the FCA and PRA would require companies with more than 251 employees to disclose demographic data and set "stretching" diversity targets. Badenoch believes these measures are a "bad idea" and go beyond the requirements outlined in the Equality Act. She has conveyed to the financial regulators her desire to "kill off" the proposals.

Why this matters: The debate over imposing equality quotas on large businesses highlights the tension between promoting diversity and inclusion and concerns over regulatory burdens and economic growth. The outcome of this disagreement could have significant implications for how businesses approach diversity and inclusion efforts in the future.

The Labour party has criticized Badenoch's comments, asserting that business leaders are not seeking a watering down of workers' rights but rather policy certainty and action on issues such as business rates and late payments. The Treasury Select Committee has also recommended that regulators should focus on ensuring that the boards and senior leadership of firms take greater responsibility for improving diversity and inclusion, rather than imposing prescriptive data reporting and target-setting requirements.

Key Takeaways

  • UK minister opposes FCA/PRA plans for diversity quotas, citing higher costs and growth concerns.
  • Badenoch argues quotas are unnecessary and could distract firms from economic priorities.
  • Proposed rules would require large firms to disclose data and set diversity targets.
  • Labour and Treasury Select Committee criticize Badenoch's stance, favoring board-level responsibility.
  • Debate highlights tension between diversity goals and regulatory burdens on businesses.