Gender parity: the cocktail we need to keep shaking

The following is comment by AAT CEO Sarah Beale for Accountancy Daily first published in November 2024.

The Chancellor delivered her first Budget recently, but what does her appointment tell us about gender parity in the finance sector? Without doubt female business owners face greater challenges accessing investment, so it is important to focus on how to retain women at senior levels and how to help SMEs continue to grow.

Rachel Reeves has been making headlines since she was appointed as Chancellor. Firstly, the focus centred around her appointment marking the first time in our country’s history that we had a female in the role, and, more recently, the focus has been on the autumn Budget.

Both are important to address; in terms of gender equality within the finance sector and the impact the budget will have on SMEs, many of which are led by women who already face increased financial hurdles compared to male counterparts.

Of course it’s positive progress to have our first female Chancellor, but given we are in 2024 it is slightly depressing that her gender has played a role in the headlines.

The finance sector has come a long way from where it was. Until 1919, women were barred from joining accounting professional bodies. It took until 1974 for women to be able to get a credit card in their own name.

Since then, there has been a growing number of women stepping into the sector. 2023 celebrated 50 years of female traders on the London Stock Exchange and, as the first accountancy professional body signed up to the Women in Finance Charter, it is worth noting that 57% of our AAT members are women and we met our internal target to reach 40% women in senior management by March 2022 two and half years early, in September 2019. As of September 2023, we have 50% female.

Equality has not been reached

However, the truth is, despite rising numbers of women in finance and things moving in the right direction, equality has not been reached. Last year, just 11% of FTSE 100 companies had a female CEO. There is still a gender pay gap which we saw when we looked at the average fee takings our licenced members collect from clients.

This disparity is also reflected among female business owners. According to Pitchbook, women-founded startups accounted for just 2% of venture capital funding invested in Europe and the US in 2023.

This is not just hampering growth for women, but for the economy as a whole - the Rose Review of Female Entrepreneurship found that female entrepreneurs could add £250bn to the UK economy if they started and scaled business at the same rate as men.

It is not just at the startup stage; the Rose Review also noted that at every stage of the entrepreneurial journey, female-led businesses secure less funding than those of men.

Access to funding is so often a lifeline for thousands of entrepreneurs and SMEs, who are working with lean budgets; and without this many face the reality they may have to fold, despite their often innovative concepts. Recent official figures revealed that the number of registered company insolvencies in England and Wales was 2% higher in September than it was in August.

Added to this, although the Chancellor protected the UK’s smallest businesses from the most challenging tax rises in the Budget, SMEs who employ others will need to adjust to the increase to employer National Insurance contributions and a decrease to the threshold from £9,100 to £5,000.

Many of our members who provide accountancy support for SMEs have shared that some of their clients have paused plans to recruit more team members and to roll out previously budgeted staff pay rises, as they are no longer certain they can afford the increased costs. This is a prime example of how SME growth is being stifled, as opposed to encouraged to thrive.

I would also argue that although the Chancellor has said she is protecting ‘working people’ by not increasing employee National Insurance contributions or income tax, many small business owners would class themselves as those very ‘working people’.

Unlike leaders of global businesses, small business owners are often people who have grafted hard, worked with limited financial resources, have taken a leap of faith to start up their own enterprise and have managed to offer employment opportunities to other people.

For many female owners, they will have done this amid a backdrop of taking time away to start, and then juggle, the demands of a young family alongside growing their business. Many of them may be left scratching their heads as to why, as a result of their hard work, they are not counted as ‘working people’ by the government.

As a finance sector, we need to use our skills, empathy and power to help balance gender equality within the profession and support our SME community.

For employers, the issue is not in attracting women in as students or in the early stages of their career, it is growing and retaining them at senior levels.

We all know that women are still far more likely to take career breaks than men. We need to look at how more career-returners can be encouraged back and inspire them to bridge the gap created by a career break, or career change, and get back on an equal footing with their peers. Not give a free pass, but the opportunity and support.

Diverse teams make business sense. A report from McKinsey showed that companies in the top quartile for gender diversity on executive teams were 25% more likely to be above-average profitability than companies in the fourth quartile.

And to accountants, we are a vital support for small businesses, which simply do not have the same financial buffers as larger businesses or easy access to funding.

All SMEs – not just female-owned – need guidance and support in managing their finances and adapting to the changes outlined in the Budget. Accountants need to lead on these conversations, and make it clear, in simple language, the impact on SMEs and what they need to do to mitigate the changes.