Significant wealth gaps between different ethnic groups in the UK are likely to continue without changes to wealth taxes and more targeted support for first-time house buys from poorer backgrounds, according to a new report.
The Resolution Foundation found that people of black African ethnicity typically hold the lowest wealth at just £24,000 family wealth per adult – less than one eighth of the typical wealth held by a white British household.
Someone of white British ethnicity has £197,000 family wealth per adult on average, the report “A Gap Which Won’t Close” found, meaning the gap between the ethnic groups with highest and lowest median household wealth has grown to £173,000.
Those of Bangladeshi ethnicity typically hold just £31,000 family wealth per adult on average, whilst those with mixed white and black Caribbean ethnicity typically hold £41,800, the report added.
Looking at how wealth has changed over the past decade, from between 2006-08 to between 2016-18, the report finds that relative wealth gaps have fallen slightly.
The Foundation’s analysis also shows that on the eve of the pandemic at least half black African, Bangladeshi and black Caribbean ethnicity households in the UK had less than £1,000 in family savings to act as a buffer in case of a fall in their income.
Researchers are calling on the Government to offer specialised support to close the gap, including wealth tax reform and help for first-time home buyers that is better targeted.
The Resolution Foundation said the Help to Buy scheme for first-time buyers tended to benefit people who already had access to family wealth and said more generous tax pension tax relief for lower earners was needed.
George Bangham, economist at the Resolution Foundation, said: “There are stark gaps in the amount of wealth held by different ethnic groups in Britain.
“These wealth gaps are having a serious impact on the resilience of different households in the face of income shocks during the Covid-19 crisis, and on the life choices of current and future generations.
“Despite significant progress in closing education and employment gaps between different ethnic groups, these wealth gaps are likely to persist.
“Even high earners will struggle to save their way to being high-wealth, while white British people are much more likely to inherit significant sums than those of other ethnic groups.
“Policy makers need to recognise that wealth gaps may be much harder to close than other differences between ethnic groups, particularly as they are often hardly discussed.
“There is no silver bullet to tackling persistent wealth inequalities but wealth tax reform and better targeting of support for people to access home ownership or save for a pension would help.”