Household wealth data reveals ‘ethnic wealth chasm’

Figures from the Office for National Statistics highlight worrying inequalities when it comes to wealth.

New statistics on household wealth by ethnicity in Great Britain in April 2016 to March 2018 unveiled today by the Office for National Statistics reveal worrying ethnic inequalities when it comes to wealth.

Myron Jobson, Personal Finance Campaigner at interactive investor, says: “The statistics illustrate the desperate need to shine a light on the ethnicity chasm – not gap – in wealth - just as it has been done to expose gender inequalities. The fact that there were statistically significant differences in wealth by ethnicity of the household head, even after adjustment for a range of household characteristics including age and household composition shows the extent of the issue.

“The resurgence of the Black Lives Matter movement following the death of George Floyd in police custody in the US in May has reawakened conversations about inequalities that persist in society. It is important that financial inequality is not left out of the broader conversation. 

“Last month, the Financial Conduct Authority released a survey, which revealed that the economic impact of Covid-19 has disproportionately affected the income of those in Black, Asian and Minority Ethnic (BAME) communities. The issue is not explored in great detail in the City watchdog’s survey, but the results were published during Black History Month, which aims to challenge inequalities in all areas, including finance. We need more research into this.

“Conversations about racial inequality can be uncomfortable, but the finance industry needs to be courageous and ask what needs to be done as part of efforts towards financial inclusion – a key enabler in reducing poverty and boosting prosperity.

“It is important to remember that everyone has their own unique viewpoint, experiences and outlook on life. The sooner you accept that everyone is different, the easier it becomes to understand and embrace cultural difference. Celebrating our differences, as well as our common interests, helps to unite and educate us.

“The challenge for the finance industry is to appreciate differences and adapt to ensure that no one is left behind.”

Becky O’Connor, Head of Pensions and Savings at interactive investor, said: “The term ‘household head’ is used repeatedly by the ONS which feels plain wrong – especially when talking about equality. It would be better to talk about combined earnings rather than household heads from now on.”

“The median private pension value is £80,000 for White British groups but less than a meagre £5,000 for Bangladeshi, Black African, Chinese and Any other ethnic groups.

“This stark difference in retirement outlook reflects what happens earlier in working life, including differences in employment rates and pay. But the ONS also points to a pensions knowledge gap and the likelihood of participating in available schemes being lower among some ethnic minority groups.

“This suggests that targeted education and guidance could be effective. Although given that pension pots are built up over many decades, it’s likely to take a couple of generations at least before the impact of such efforts to close the ethnicity pension gaps are seen.”

Key findings:

• Median total wealth for all households in Great Britain was £286,600 between April 2016 and March 2018, with medians ranging from £34,000 among those with a household head from the Black African group to £314,000 for the White British group.
• There were statistically significant differences in wealth by ethnicity of the household head, even after adjustment for a range of household characteristics including age and household composition, with the largest differences estimated between the White British reference group and the Pakistani and Black African groups.
• Households with a White British head were approximately nine times as likely to be in the top quintile of total wealth (wealth above £865,400) as those of Black African ethnicity and 18 times as likely as those of Bangladeshi ethnicity.
• The percentage of households with financial debts that exceed their financial assets was highest for the Black African and Other Asian groups (both 44%) and was twice as likely for these households compared with the White British group.