Wealth & assets

A gap that won’t close

The distribution of wealth between ethnic groups in Great Britain

George Bangham
George Bangham

The coronavirus pandemic has shone a harsh light on wealth inequality in Britain, with wealth playing an important role shaping families’ experience of the crisis. This briefing examines the gaps in the wealth held by different ethnic groups, and how and why they have evolved over time, finding that very significant ethnicity wealth gaps remain. Unlike ethnic inequalities in education, pay and job prospects, differences in wealth between people of different ethnic groups have changed very little in recent years, and require significant policy reforms if they are to narrow in the future.

Key findings

  • People of Bangladeshi ethnicity held the second-lowest median (£31,000, in 2019-20 prices) and the lowest mean (£88,000) family net wealth per adult, less than a quarter of the median White British person’s family (the highest of any ethnic group, at £197,000 per adult), and less than a sixth of the White British mean (£377,000 per adult).
  • Between 2006-08 and 2016-18, the wealth gaps between the ethnic groups with the highest and lowest median household wealth (Indian households and Black African households) have grown both in relative and absolute terms.
  • At least half of people of Black African, Bangladeshi and Black Caribbean ethnicity had less than £1,000 in family savings to act as a buffer in the case of income shocks.
  • Ethnicity wealth gaps are not likely to narrow in the future, despite improvements in other dimensions of ethnic inequality: wealth inequality is much more difficult to tackle than other inequalities.

Recommendations

  • Where possible, policy makers should seek to narrow ethnicity wealth gaps through a combination of tax reform and transfer policies. Examples might include help for first-time buyers that is more progressively targeted than recent schemes, more generous tax pension tax relief for lower earners, and matched savings schemes that build on the example of Help to Save.
  • But action is also needed to lessen the consequences of persistent wealth gaps. Examples might include further reforms to tenancy law to limit rent rises and improve tenant security, support for matched savings or ways to offer higher rates of return for low-wealth savers, and the extension of business loan support to new business ventures in the pandemic recovery period.

Further reading

Ineffective Savings Accounts
·
Molly Broome
In too deep?
The impact of the cost of living crisis on household debt
·
Felicia Odamtten, Simon Pittaway
Precautionary tales
Tackling the problem of low saving among UK households
·
Molly Broome, Ian Mulheirn, Simon Pittaway
George Bangham
George Bangham