Like most people I have been deeply worried by the growing evidence about the disproportionate impact of Covid-19 on our Black and ethnic minority communities. The latest ONS data shows BAME communities are suffering twice the death rate of white communities. The poorest communities are also dying at twice the rate than the richest communities are dying. I cannot be alone in thinking that there are clear links between these two tragic statistics.
Our pre-existing inequalities have made our country particularly vulnerable to this pandemic. Unfortunately, the economic response so far risks entrenching the inequalities that have already weakened us.
Twenty per cent of the UK’s social enterprises, businesses which trade to deliver their social or environmental mission, are based in our most deprived areas. One in eight are led by BAME chief executives and directors, compared to one in twenty traditional SMEs. Yet these businesses are falling through the gaps, unable to get access to grants or finance that meets their needs. British cooperative businesses have also been left out of government thinking, despite being concentrated in the Midlands and the north which are the core of the Prime Minister’s “levelling up” agenda. Coops and social enterprises report that one million jobs are at risk unless the government takes action.
If we let these businesses that work in our toughest communities go to the wall, we will be counting the cost in years to come.
We have just lived through one of the slowest and most painful economic recoveries in British history. We relied on business as usual to get us back on track and it did not work. Growth has been anaemic. Productivity is on the floor. Wages took ten years to get back to their pre-crisis peak.
The prime minister’s election victory was based on a repudiation of the previous economic strategy. He recognised then, as we all do, that we have to do things differently. We need to target support at those places that have been left behind. We need to reduce inequalities which undermine our resilience and deprive us of talents that can power our economy forward.
There are three quick things that government can do to push us towards a better economic model. Firstly, we need to back businesses working on the frontline in our poorest communities and with vulnerable people. Let’s target any support at those that most deserve it rather than treating everyone equally. The truth is that some businesses are working harder to support the national recovery than others. We should recognise that in our tax system as well as how we award contracts to businesses in the future. Secondly, we need to reform our public services to reduce inequalities. This means breaking down silos between public bodies and using different models of delivery, such as social enterprises and charities, which have a track record of success. Finally, we need to reinvest in our civil society, not just our traditional cultural institutions but also charities, voluntary organisations and community centres.
Social and cultural capital is critical to strengthening communities and boosting economic performance. Richest areas do not have more charities and voluntary associations because they are rich, they are rich because they have access to the social and cultural capital that these organisations provide. The fact that nine out of ten small BAME voluntary organisations are at risk of running out of cash in the next three months is deeply worrying and an example of how without action we could make our current inequalities worse. Renewing and expanding the cash grants programme into local community resilience, whether that is through backing social enterprises or charity should be seen as important as bricks and mortar. Investing in our social infrastructure over the coming weeks is as important as investing in our long-term physical infrastructure.
An inclusive economic agenda must not be lost in the midst of crisis. Falling back on tired and failed methods will only lead to the same poor results.
If we get our immediate economic response wrong, we risk entrenching inequalities that will cost us down the line as we have seen during this crisis. We must break the cycle. Closing the gap between our communities is not just a moral good, but an economic necessity.
Lord Victor Adebowale CBE is chair of SEUK, the national body representing the UK’s 100,000 social enterprises