Equalities review recommends public service contracts should be awarded on basis of diversity

Multi-million pound contracts could soon be won or lost on the diversity of a company's workforce.

The government-commissioned Equalities Review last week recommended that diversity policy should be a key factor when awarding public sector contracts. It said the law should be changed to place greater responsibilities on public bodies, including "a specific requirement to use procurement as a tool for achieving greater equality".

Panel member Sir Robert Kerslake told Personnel Today that private firms bidding for public service contracts should be made to provide details of their workforce make-up, and an outline of the steps they are taking to improve diversity.

"This can and should be an important factor in the decision to award contracts," said Kerslake, chief executive of Sheffield City Council. "It is a duty of the public body to actively take into account equality of employment."

Communities secretary Ruth Kelly signalled the government's willingness to act on the report, commissioned by prime minister Tony Blair in 2005. "This review makes clear that further progress will not happen without government action," she said. "We must remain prepared to take tough decisions."

A formal response is expected by the autumn, but the CBI insisted that public service contracts should be awarded on the basis of value for money, rather than the diversity of a workforce. It said employers should not be subjected to additional bureaucracy or legal risk.

The Equalities Review was led by Commission for Equality and Human Rights chairman Trevor Phillips. He warned that unless drastic action was taken, inequality in the UK would remain at an "intolerable level". At the current rate of change, it would take nearly 100 years for the ethnic employment gap to be closed.

10 steps to equality

• Defining equality
• Building a consensus on equality
• Measuring progress towards equality
• Transparency about progress
• Targeted action on persistent inequalities
• A simpler legal framework
• More accountability for delivering equality
• Using procurement and commissioning positively
• Enabling and supporting organisations in all sectors
• A more sophisticated enforcement regime

Barometer question

Should diversity be a factor when awarding public service contracts? Vote online.