Thirty eight years after the Equal Pay Act was passed, Harriet Harman, Labour's deputy leader, will today set out plans to force companies that bid for contracts with the Government to disclose the difference in pay between men and women.

The Government, which believes that most employers treat the Act as if it were a voluntary code from which they can opt out, will also outlaw gagging clauses inserted into employment contracts in a move seen as an attack on large City bonuses.

Ms Harman is particularly concerned about the pay gap in the Square Mile, where women receive on average 45 per cent less than men.

Although the majority of companies will not initially be compelled to disclose the pay gap, Ms Harman has made clear that she will be prepared to legislate if they resist.

Times Archive, 1970: the Equal Pay Act

"This is designed not only to end injustice, but to stimulate efficiency. There has been no incentive to put women's work and abilities to the best use."

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Times Archive, 1946: Equal pay

Existing wage differences go well beyond anything that can be explained by differences in the overall efficiency of men and women as workers

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The first step will be to force groups that compete for the £160 billion of public sector contracts to separate out the average pay of men and women before they can bid.

But the CBI said that Ms Harman would face opposition. John Cridland, deputy director-general, said: “There is no way the CBI is going to support symbolic figures which are out of context and confuse people.” He said that, while the Government as a customer was entitled to ask for certain standards, raw figures were meaningless.

But a spokesman for the TUC said: “We welcome any move to close the pay gap because it is clear that the voluntary approach has not worked.”

Ms Harman will use powers already in the Companies Act to force through the change and hopes this will start to change the culture of the private sector.

In a second significant initiative, the Government is to outlaw gagging clauses preventing employees talking about salaries. Currently, 25 per cent of contracts contain such a clause, according to ministers. However, the issue is likely to be hotly debated in the City, where open discussion of an annual bonus award is a sackable offence at many banks.

But Mr Cridland said the Government should appreciate the wealth generated by high-earning individuals. He said: “It's a bit like the non-domiciles. Ultimately you have to decide whether you want these people in our society with the tax that they pay.”

Ministers believe that forcing companies to publish data on pay will lead to the compiling of league tables, allowing some employers to be named and shamed. This is being compared with the approach Labour has taken in forcing hospitals and schools to publish information that is then used to grade their performance publicly.

— The tax burden on the poorest households in Britain has risen 11 times faster than among the rest of the population, according to official figures published yesterday. This, along with slower growth in benefits, has resulted in a rise in income inequality for the third year in a row.

The poorest fifth paid an average of 38.6 per cent of their income on direct and indirect taxes last year, up from 36.4 per cent the previous year, but the tax burden for the rest of the population has risen by just 0.2 percentage points over the year to 35.3 per cent.

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