ASSETnet: Assets and ethnicity network

1. ASSETnet: Assets and ethnicity network Dr Omar Khan, Head of Policy Research

2. About Runnymede • The Runnymede Trust is an independent policy research organisation fighting for racial justice through: • High quality research and analysis • Engaging communities • Influencing policy

3. About ASSETnet Aim is to spread awareness and raise interest • About asset-building policies among race equality and other organisations • About ethnicity among those already committed to asset-building Three elements • Social media site (please join!) • National workshops/events (UK, Germany, Hungary, Spain, Belgium) • Policy conference in Brussels (February 2012)

4. Why Assets Matter: Evidence Assets are far more unevenly distributed in the UK than income • Anywhere from 10–20% of people have no assets at all • Wealthiest 1% owned approximately a fifth of the UK’s marketable wealth... Half the population shared only 7% of total wealth • Two-thirds of British households in Britain have less than £3000 in non-housing savings and assets. • Housing: • 40% of the total wealth in the UK, or £6875 billion, is held in housing. • In 2003, half the UK population owned only 1% of non-housing assets. • Consequences: less choices, social mobility, ability to provide for children, and social cohesion

5. Why Assets Matter: Ethnicity • 60% of Asian and Black British people have no savings at all, twice the rate for white people. Less diverse too.

6. Why Assets Matter: Arguments • Social mobility: fair life chances as well as efficient markets require more people to have assets • Behavioural: ‘while income feeds people’s stomachs, assets change their minds’ (Sherraden, 1991) • Freedom: Expands choices • Citizenship; people hold a ‘stake’ in their society. Integration/Cohesion Different arguments for asset-building lead to different policies

7. Why Assets Matter: Policies Policies in UK focused on savings and behavioural arguments (start habit). Not redistributive, citizenship or freedom. • Child Trust Fund, Saving Gateway: scrapped • NEST: auto-enrolled pensions scheme for low-income. Growth and security • Housing: shared ownership, other schemes • Asset inequality and taxation: • No asset-based tax policies for low-income people; tax incentives on ISAs and pensions as asset-based policies for upper income quintiles • Inheritance tax and wealth tax? • Council tax or property tax? Revenue used to provide assets for all? • Shared or collective ownership: a variety of policies for everyone to own in (part-)publicly owned institutions or in public goods. Details important.

8. Ethnicity and asset-holding in the UK • Evidence that 60% have no savings • Bangladeshi and African with less than one tenth White British asset-holding • Following slides explain labour market experience • However, might expect migrants to have less • No intergenerational inheritance • Labour market access: social networks, qualifications, (perceived) language • But evidence that British-born BME men more likely to be unemployed than foreign born fathers (Heath and Li)

9. Low income and ethnicity Income poverty rate by ethnicity, 2002-5 • Bangladeshi (65%), Pakistani (55%), White British (20%) • Reflects unemployment but also poor quality work

10. Proportion of working population in self-employment by ethnicity, 2007 Self-employment (%) 0 5 10 15 20 25 30 White All BME Pakistani Bangladeshi Chinese Mixed Indian Other Black Black African Self-employment and ethnicity • Pakistani and Bangladeshi with highest rates • Most British-born groups lower than migrants, except above • Discrimination as cause? In recruitment(DWP survey), and progression (RfO research)

11. Ethnicity and self-employment by sector Chinese (72%) and Bangladeshi (63%) much more likely to be in Catering. Pakistani (36%) and Black African (17%) much more likely to work in Transport . Higher income volatility, greater chance of business failure, and no employer pensions contribution or other benefits Industry of self-employment by ethnicity (males), 2001 0% 20% 40% 60% 80% 100% Chinese Bangladeshi Indian Pakistani White Black Caribbean Black African DistHotelCater Manufacturing Transport Construction Finance Other 11

12. Conclusion: Questions for microfinance • Do we want ‘repeat’ customers? Danger is that lose best clients as they build up savings or improve credit score or business skills to get ‘mainstream’ loan. • Why people need microfinance: in part because they have no savings or assets • Can microfinance institutions develop alternative policies, including short-term AND long-term savings? • Should all assets be ‘leveraged’ • If focus on self-employment and entrepreneurship, how ensure social protection and rights, in particular pensions? • Are we reaching migrants and ethnic minorities, or are they being channeled into particular sectors?

13. Contact us • To discuss our research and work, please contact • Omar Khan • omar@runnymedetrust.org • 020 7377 9222

14. BME people and pensioner poverty • Risk of pensioner poverty by ethnicity, 2007-8 • All (18%), Black Caribbean (30%), Pakistani & Bangladeshi (49%)

15. Why are BME people poor when older? • Less likely to have pensions… (2005-6) • Less able to compensate with other assets – • Savings • Home ownership (2005)