Britain’s ethnic wealth gap needs to be closed
As the UK tries to tackle ethnic inequality, one salient point deserves more attention: the wealth gap. The average black household in the Caribbean was worth £ 89,000 Middle of the last decade compared to £ 282,000 for a white British household and £ 266,000 for an Indian household which is mainly housing and private pensions. Black African and Bangladeshi households had the lowest value of just £ 24,000 and £ 22,000, respectively. Those numbers are even more shocking given that roughly three-fifths of black Britons live in London, which is home to some of the world’s most expensive real estate.
In part, the gap reflects age. Indian households in the UK are on average older than Bangladeshi or African households: older workers have more time to amass wealth. Meanwhile, those who bought homes prior to the early 1990s have enjoyed a windfall thanks to the price hikes that have continued since then. The numbers also do not reflect the social housing and state pension entitlements: Black British are most likely live in social housing.
First and foremost, the gap reflects historical discrimination – wealth inequalities that have worsened over time. This applies in particular to access to good jobs: lower incomes mean fewer opportunities to save. On average, black workers earn around 9 percent less and Bangladeshi workers 20 percent less than British white workers. Black students are the least likely to get three good high school graduates – in part a reflection on wealth inequality as houses near good schools are more expensive. Housing requirements – which require those on social housing waiting lists to have lived in an area – as well as racism made it possible It is more difficult for black families and ethnic minority families to qualify for social housing in the 1970s. This, in turn, had an impact on home ownership after the introduction of the right-to-buy policy in the 1980s. In 2018, around 20 percent of black Africans owned their own home and 46 percent of Bangladeshis compared to 68 percent of white British.
Many Black Britons distrust the financial industry. The Windrush generation founded the UK’s first credit union in response to the racism they faced from traditional banks, and many Afro-Caribbean women still prefer community-run savings banks to mainstream banks. Black entrepreneurs report that it is more difficult to raise funds. A study by the Warwick Business School found that they were charged higher interest rates. Other reports found no evidence of explicit discrimination, but the higher rates reflected lower savings; Supposedly neutral credit decisions, including those made by algorithms, can increase bias.
The financial sector cannot restructure society, but it can be more aware of the ongoing injustice: British banks do not routinely collect ethnicity data for loan and mortgage applications; that should change. Regulators could be more proactive in investigating borrower discrimination. The financial industry could also work better with and learn from community-run groups such as credit unions.
Ultimately, the impetus must come from government policy. Color-blind egalitarianism, like the New Labor Children’s Trust, which gave parents of every child a £ 250 savings voucher at birth – first 18-year-olds will have access this week – can disproportionately help the most disadvantaged groups. The UK tax system should also be reviewed, for example the treatment of residences. Unfortunately, there is no magic solution to ending ethnic inequality: it can only be eliminated as it has been created over decades and in collaboration with society as a whole.