The Summer Budget and ethnicity: the question is ‘why?’

28 July 2015

The Guardian’s splash yesterday – “Black Britons ‘are worse off’ after budget” – will have caught the eye of policymakers. The article, based on a study by the Runnymede Trust, stated:

“The Conservative budget risks widening Britain’s racial divide by making millions of minority ethnic people poorer at a faster rate than their white counterparts, a study has found.”

The implication from this quote is that the welfare reforms announced by the Chancellor last month will impact black and minority ethnic (BME) families differently to white families.

There is no questioning that the Summer Budget hit millions of low income families. The fundamental question for policymakers is why certain people are more likely to be in low income in the first place. In 2014 the unemployment rate amongst Bangladeshi and Pakistani people was just under three times that of White people, and the employment rate for Black men was 18 per cent below that of White men. The inactivity rates for Pakistani and Bangladeshi women were just over 60 per cent. For Black women the rate was 30.4 per cent and for White women 25.6 per cent. Analysis by The Work Foundation found that underemployment was particularly marked for Black youth. These differences will in part account for the disparity in incomes: the median weekly disposable income for a Bangladeshi household during 2010-11 to 2012-13 was £284, for a Black household it was £372, and for a White household it was £455.

There are multiple issues that are likely to be driving these differences. A 2011 qualitative study that looked at impediments to employment for Bangladeshi women in Tower Hamlets cited a lack of relevant skills, caring responsibilities and cultural barriers, as well as the availability of work. The Runnymede Trust paper highlights discrimination as a key factor in the higher rates of unemployment and underemployment amongst certain ethnicities.

This is the “racial divide” that policymakers and commentators should be shouting about. It not only impacts the wellbeing of those individuals and their families, but means the UK economy is missing out on a sizeable pool of labour.

Clearly, any policy decision taken by government should be based on a robust understanding of its impact and, put simply, the Summer Budget will hit families currently reliant on the benefits that are being cut. An impact assessment would tell us what we already know – that a disproportionate number of BME families are reliant on these benefits. It is the pressing need to tackle this inequality that should be making the headlines.

Charlotte Pickles, Senior Research Director, Reform

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