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Our Response to the Treasury Committee Inquiry into an Equal Recovery 

 

 

Inquiry

Our Response to the Treasury Committee Inquiry into an Equal Recovery 

Details

Title of call for evidence: An Equal Recovery Inquiry

Source of call for evidence: Treasury Select Committee

Date: 20 July 2021

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Equality and Human Rights Commission
Arndale House, The Arndale Centre, Manchester, M4 3AQ

 

 

 

Contents

Background

Our response

Overarching theme

What are recent trends in income and wealth inequality in the face of the pandemic?

As we recover, how do we combat the inequalities that have been exacerbated as a result of the pandemic?

Disability, gender, and race

How has the economic impact of the crisis affected disability, gender, and race inequality?

How effectively is the Treasury taking disability, gender and race into account when formulating policies and making decisions on departmental spending allocations?

How can the Treasury better reflect the impact of its policies by disability, gender, and race in its impact assessments?

Regional imbalances

How has the crisis impacted on regional inequality?

How can the Government address regional imbalances and mitigate the impact of scarring in regions?

Background

  1. The Equality and Human Rights Commission (the Commission) is a statutory body established under the Equality Act 2006. We operate independently to encourage equality and diversity, eliminate unlawful discrimination, and protect and promote human rights. The Commission is the equality body for Great Britain, with a statutory mandate to advise Government and Parliament on matters relating to equality and human rights.
  2. We welcome this inquiry’s focus on how best to ensure that the post-pandemic recovery is fair and equal. Although some of the questions in the call for evidence lie outside the Commission’s remit and expertise, we have responded to others that are within the scope of our recent work and priorities.
  3. We have drawn in particular from research we published in October 2020 highlighting the impact of the pandemic on equality and human rights and where possible we have included updated evidence from more recent sources in this submission. [1] The Committee may also wish to look further at the following key sources:
  1. The Committee’s inquiry highlights a number of issues which the Government should prioritise in the context of the post-pandemic recovery, including when developing its ‘levelling up’ agenda through the anticipated white paper. The Public Sector Equality Duty (PSED) requires Government and other public bodies, when exercising their functions, to have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations. Government should therefore ensure that its levelling up strategy is informed by evidence of disparities in income and opportunity, including geographical variations, and where these intersect with evidence of varying outcomes for people with different protected characteristics.
  2. We have worked recently with Government departments to ensure that equality considerations are built into decision-making. This includes using our enforcement powers under section 31 of the Equality Act 2006 to assess whether the Home Office had complied with the PSED in its ‘hostile environment’ immigration policies.[4] We have worked with a range of departments (including recently Cabinet Office, Home Office and BEIS) to improve their work to comply with the PSED, and with HM Treasury to share our expertise on methodologies for conducting cumulative impact assessments.

Our response

Overarching theme

What are recent trends in income and wealth inequality in the face of the pandemic?

  1. Everyone in Britain has been affected by the restrictions imposed in response to Coronavirus. But our research shows that the negative impact has been more severe for some groups of people, and that many of these inequalities are linked to underlying economic factors.[5]
  2. One of the most significant issues that has emerged during the pandemic is the impact on household income caused by job losses, reduced hours and being furloughed. This has driven the likely increase in relative poverty in some groups. Both have strong geographic and demographic links. Further data will be needed to understand the impact of these labour market changes after the end of the furlough period and as the post-crisis recovery progresses.
  3. Underemployment and major shifts in the labour market disproportionately decreased earnings in the lowest-income households in Britain.[6] The number of households unable to pay essential bills increased during the pandemic,[7] even after provision of support such as universal credit or from the Coronavirus Job Retention Scheme.[8]
  4. Research has found that women, young people, disabled people and many ethnic minority groups, particularly Bangladeshi and Pakistani people, are the most likely to have experienced a reduction in earnings caused by redundancy, a reduction in hours or being furloughed from a job in a shut-down-sector.[9] A recent report also found that older workers who lose their jobs tend to take longer to return to work.[10]
  5. Another key trend is predicted changes to relative poverty, defined as the percentage of adults and children living in households below 60% of the contemporary median income after housing costs. Prior to the pandemic, some groups, including disabled people and some ethnic minorities, were already more likely to be in relative poverty.[11]
  6. While at the time of publication of our research (October 2020) it was too early to observe actual changes in relative poverty, various models  predicted an increase.[12] Furthermore, analysis showed that people already in poverty were more likely to have been negatively affected by changes in the labour market,[13] potentially exacerbating increases amongst groups already more likely to experience poverty.
  7. Evidence has also identified low levels of resilience to loss of earnings and additional costs amongst certain groups. Women, young people, disabled people and some ethnic minority groups were more likely to have fallen further behind on essential bills.[14] For example, one analysis shows that in July 2020 19.5% of disabled people in Britain had struggled to pay their bills, and 21.3% had to borrow money or rely on credit in the last seven days, compared to 13.4% and 18.2% of non-disabled people respectively.[15] Carers and low-income households with children have also struggled financially.[16] 
  8. These groups tend to have fewer options than higher-income households to mitigate loss of earnings, meaning that many have turned to consumer borrowing and have been carrying increased debt into a period of financial insecurity.[17]

As we recover, how do we combat the inequalities that have been exacerbated as a result of the pandemic?

  1. The Commission has a statutory duty to report independently on the progress of equality and human rights in Britain,[18] which we do through our Is Britain Fairer?’ programme.[19] We have developed systematic methodology, outlined in our Measurement Framework,[20] to synthesise the available research and analysis and combine it with 48 statistical indicators to examine the outcomes for individuals and report on changes over time. 
  2. When assessing outcomes this approach also looks at any disparities that exist, by all nine protected characteristics, socio-economic classification, and geographical differences, as well as examining the impact on some groups at particular risk of disadvantage or discrimination.
  3. Recommendation: The UK Government, including HM Treasury, should build upon the Commission’s expertise in developing the Is Britain Fairer? Programme and Measurement Framework to structure its approach to identifying inequalities arising from the pandemic and to informing its policy-making. As recommended by the Industrial Strategy Council, it should also look beyond ‘traditional’ drivers of economic growth in measuring the success of its levelling up agenda.[21]
  4. Government should take steps to address the inequalities exacerbated by the pandemic when developing strategies and policies to ‘level up’ following the crisis – especially in relation to public investment, which will be a key lever to achieving the Government’s vision. Significant investment projects, such as replacements to EU structural funding with the UK Shared Prosperity Fund, present opportunities to tackle inequalities between different regions and different protected characteristics. [22] Equality and human rights must be central to the Government’s investment approach in order to deliver this ambition.
  5. Evidence shows that including equality requirements in strategic investment frameworks and contracts can have a positive impact in local communities. Research into the ‘Women in Construction’ project at the London 2012 Olympic Park demonstrated that public procurement can be a powerful tool to break down gender segregation, particularly where contractors are incentivised to deliver clear objectives on diversity and inclusion.[23] The opportunity to invest in new infrastructure can also leave a lasting legacy for disabled people if accessibility is a central requirement in procurement.
  6. Embedding equality and human rights into investment approaches can also have a positive downstream impact on small and medium sized enterprises, and across supply chains, as a result of requiring them to demonstrate a commitment to equality and diversity in the investment process. We welcome steps taken by HS2 Ltd, for example, to model this approach.[24] 
  7. Recommendation: The Government should put equality at the heart of its investment strategies and procurement activity (including through its forthcoming Procurement Bill), ensuring meaningful equality conditions are built into strategic frameworks and contracts and that delivery is monitored robustly.
  8. Equality and human rights considerations must also be factored in to wider recovery strategies and policies beyond public procurement. We have been engaging with the Department of Business, Energy & Industrial Strategy (‘BEIS’) and, to a lesser extent, with HM Treasury to highlight the need to embed equality and human rights into its strategies and policies (we welcome their recent work to embed equality considerations into ‘Green Book’ spending rules, for example).  It will be essential that the two departments work closely together to ensure greater consideration of equality and human rights issues within those strategies.
  9. Recommendation: HM Treasury should work closely with the Department for Business, Energy & Industrial Strategy and other relevant departments, as well as the Equality and Human Rights Commission to ensure recovery strategies are joined up across government, fully consider and address inequalities and are compliant with the Public Sector Equality Duty in their development and delivery.


Disability, gender, and race

How has the economic impact of the crisis affected disability, gender, and race inequality?

  1. Our research on the impact of Coronavirus on equality and human rights has identified a range of economic impacts on certain groups.[25]
  2. Disability
    1. As outlined above (paragraph 10), disabled people are more likely to be affected by the expected rise in poverty, facing higher rates of unemployment,[26] greater risk of redundancy,[27] and a higher chance of struggling with bills or going into debt.[28]
    2. In February 2021 we published a briefing outlining our advice to Government on its draft National Disability Strategy.[29] We noted that people with learning disabilities have particularly low employment rates,[30] and pointed to research by Leonard Cheshire which found the pandemic had had a significant psychological impact on young disabled people.[31]
    3. Recommendation: The Government should ensure its National Disability Strategy expected to be published in July 2021 is used as a tool for cross-departmental action to address the inequalities faced by disabled people exposed by the pandemic.
  3. Sex
    1. We previously set out in detail our views on the barriers to women’s labour market participation and financial stability as Britain shifts towards economic recovery.[32]
    2. These inequalities include concentration in part-time, low paid employment, and over-representation in health and social care,[33] childcare and education sectors, as well as shut-down sectors such as hospitality and retail, and the ongoing unequal burden of caring for children and family members.[34]
    3. The reduction of employment for part-time employees was greater for women than men in both numerical and percentage terms: down 4.6% for women and 1.6% for men.[35]
    4. Men have also experienced an unequal impact in some areas. In May-July 2020, the employment rate for women of working age was the same as in January-March 2020, whereas the rate for men was 0.2 percentage points lower.[36]
    5. Redundancy rates remained higher for men, although increased more for women, rising from 4.3% to 5.7% for men and from 3.4% to 5.5% for women.[37]
  4. Ethnic minorities
    1. As noted above (paragraph 10), some ethnic minority groups are likely to be hit harder by the pandemic due to existing inequalities such as higher rates of relative poverty and evidence that some groups are falling further behind on paying essential bills. Some ethnic minorities experience higher and faster-increasing unemployment rates.[38]
    2. Certain ethnic minority groups have been worse affected and are at greater risk of future unemployment than other groups.[39] Some ethnic minority people are more likely to be ‘key workers’ in the UK, for instance in the health and social care sector.[40] We are undertaking an inquiry into the experiences and treatment of ethnic minority workers in lower paid roles in health and social care to develop clear, evidence-based recommendations for government and other service providers to tackle racial inequalities.[41]

How effectively is the Treasury taking disability, gender and race into account when formulating policies and making decisions on departmental spending allocations?

  1. While we have not undertaken detailed recent scrutiny of HM Treasury’s approach to equality when formulating policies and making spending decisions, the following information may be relevant.
  2. As above, the Treasury is required to comply with the PSED when developing and implementing policies, and making spending decisions.
  3. In 2018 we published a report that looked at the cumulative impact that changes to the tax and welfare system have on different groups.[42] While this work pre-dates the pandemic, the methodology and many of the findings will remain useful in understanding the potential impact of those decisions now.
  4. Indeed, we have recently engaged with HM Treasury officials to explore how they can better apply the PSED, including assessing cumulative impact. We welcome this engagement as a positive step towards improving how disability, sex and race are taken into account in decision making, alongside other characteristics set out in the Equality Act 2010. It is important that HM Treasury recognises that the PSED is an ongoing Duty that applies to all its functions.

 

How can the Treasury better reflect the impact of its policies by disability, gender, and race in its impact assessments?

  1. We have produced a range of resources to support compliance with the PSED.[43] This includes our guidance on meeting the PSED in policy and decision-making[44] and on how to comply effectively with the PSED specific duties,[45] such as those that require HM Treasury to publish specific and measurable equality objectives.[46]
  2. HM Treasury should aim to go beyond the letter of the law, applying best practice by using the PSED as a strategic tool to help it to address inequality effectively while ensuring its policies achieve their stated purpose. For example, when developing equality objectives under the PSED specific duties, it should consider authoritative evidence of the most serious inequalities relevant to its remit, and develop strategic objectives to deliver real change on these issues, with action plans and regular reporting on progress. We would be happy to provide further advice on this approach.
  3. Recommendation: HM Treasury should apply PSED guidance and best practice as developed by the Equality and Human Rights Commission to ensure it fully complies with the Duty in the design of its policies and in spending decisions. The department should continue to engage positively with the Commission to ensure its takes a best practice approach.

 

 


Regional imbalances

How has the crisis impacted on regional inequality? 

  1. Before the pandemic, our state of the nation report ‘Is Britain Fairer? 2018’ found that poverty rates tended to be higher for women, disabled people and some ethnic minorities.[47] Many of these inequalities played out even more clearly at a regional level: our analysis in England found that severe material deprivation was higher in the North East and North West than in England as a whole. There are significant variations within as well as between regions: for example, Pakistani adults in the North West had particularly high rates of severe material deprivation and in the North East 25% of adults in general and half of all disabled adults experienced severe material deprivation.[48]
  2. Our 2020 research on Coronavirus also included analysis of regional inequalities. On employment, there were marked differences between the nations of Great Britain: in Scotland, the employment rate fell more than in England (0.4% compared with 0.1%) between January-March and May-July 2020, and the unemployment rate increased by 0.5 % to 4.7% (compared with an increase of 0.1% in England).[49] The employment rate increased by 0.4% in Wales during this period.[50] The reasons for this are unclear. It should also be noticed that recent data shows signs of improvement in employment rates.[51]
  3. As noted above, the labour market impact has been felt harder in areas that already had higher levels of deprivation. The economic recovery in these areas, such as coastal towns, the Midlands and the North of England, West and Central Scotland, and in Wales is also likely to be harder.[52]

How can the Government address regional imbalances and mitigate the impact of scarring in regions? 

  1. We welcome the Government’s ambition to ‘level-up’ the economy and address regional imbalances. In December 2020 the Minister for Women and Equalities set out the Government’s approach to addressing inequalities, focussing on the importance of socio-economic and geographic factors.[53] 
  2. The Commission will continue to offer its expertise in identifying and addressing the root causes of the barriers that hold people back from fulfilling their potential. This focus on addressing regional inequalities should stand alongside activity to understand the impact on people sharing different protected characteristics, building on existing evidence about unequal impacts within and between different regions and groups, such as those identified in ‘Is England Fairer?’[54] and by the Government’s Ethnicity Facts and Figures Service.[55]
  3. Recommendation: The Government should ensure that activity undertaken to identify the root causes behind unequal outcomes supplements, rather than displaces, a robust understanding of inequality that exists between people who share different protected characteristics.
  4. In February 2021 we set out our recommendations for how mayors of regional combined authorities with devolved powers (‘Metro Mayors’) can play a key role in supporting resilient and inclusive local economies whilst also building communities that are founded on principles of equality and fairness.[56]
  5. As we look to a future beyond the pandemic, Government has an important part to play to help ensure that Mayors can embed equality and human rights considerations effectively into local decision-making. For instance, HM Treasury has a key role in reviewing how combined authorities evaluate spending of capital investment received from Government. This provides an opportunity to enable Mayors to tackle unequal outcomes in their areas and use equality and human rights tools to address them.
  6. Recommendation: HM Treasury should work with the Government Equality Hub and EHRC to explore how Metro Mayors can be supported to embed equality and human rights into their strategies for recovery.

16 


[1] EHRC 2020 ‘How coronavirus has affected equality and human rights

[2] EHRC 2020 ‘Call for evidence response: Ethnic disparities and inequality in the UK’

[3] EHRC 2021 ‘Briefing on Development of National Disability Strategy

[4] EHRC (2020), ‘Public Sector Equality Duty assessment of hostile environment policies’. This followed our earlier assessment: EHRC (2014), ‘Section 31 Assessment of HM Treasury’.

[5] EHRC (2020), ‘How coronavirus has affected equality and n rights

[6] Bourquin, P., Delestre, I., Joyce, R., Rasul, I. and Waters, T. (2020), ‘The effects of coronavirus on household finances and financial distress’. Institute for Fiscal Studies

[7] Step Change (2020), ‘Coronavirus and personal debt: a financial recovery strategy for households

[8] Delestre, I., Joyce, R., Rasul, I. and Waters, T. (2020), ‘Income protection policy during COVID-19: evidence from bank account data’. Institute for Fiscal Studies.

[9] Blundell, R., Joyce, R., Costa Dias, M. and Xu, X. (2020), ‘COVID-19: the impacts of the pandemic on inequality’ - Institute for Fiscal Studies; Rodriguez, J. (2020), ‘COVID-19 and the Welsh economy: shutdown sectors and key workers’. Cardiff: Wales Fiscal Analysis; Social Metrics Commission [SMC] (2020), ‘Poverty and COVID-19’

[10] Cominetti, N (2021), ‘A U-shaped crisis: The impact of the Covid-19 crisis on older workers’. Resolution Foundation

[11] 19.8% of the whole population experienced relative poverty in 2015/16. This rose to 27.2% of 16-24 year olds and 25.5% of disabled people. Some ethnic minority groups were particularly likely to experience relative poverty: 48.4% of Bangladeshi, 44.9% of Black African and 44.3% of Pakistani ethnic groups experienced relative poverty. UK Government (2017), ‘Family Resources Survey: financial year 2015/16

[12] Institute for Public Policy Research [IPPR] (2020a), ‘1.1 million more people face poverty at end of 2020 as a result of coronavirus pandemic, finds IPPR. See also: Brewer, M., Gardiner, L. and Handscomb, K. (2020), ‘The truth will out: understanding labour market statistics during the coronavirus crisis.’ Resolution Foundation.

[13] Social Metrics Commission (2020), ‘Poverty and Covid-19

[14] Citizens Advice (2020), ‘Excess debts – who has fallen behind on their household bills due to coronavirus?’; Step Change (2020), ‘Coronavirus and personal debt: a financial recovery strategy for households

[15] ONS (2020b), ‘Coronavirus and the social impacts on disabled people in Great Britain: July 2020

[16] Citizens Advice (2020), ‘Excess debts – who has fallen behind on their household bills due to coronavirus?’; Carers UK (2020), ‘Caring behind closed doors

[17] Office for Budget Responsibility (2020), ‘Fiscal sustainability report – July 2020

[18] Equality Act 2006, Section 12

[19] EHRC (2018), ‘Is Britain Fairer?

[20] EHRC (2017), ‘Measurement framework for equality and human rights

[21] Industrial Strategy Council (2021), ‘Annual Report: March 2021’ page 5

[22] Ministry of Housing, Communities and Local Governmnet (2021), ‘UK Community Renewal Fund: prospectus 2021-22

[23] Wright T, Conley H, Sage Journals, (2018), ‘Advancing gender equality in the construction sector through public procurement: Making effective use of responsive regulation’. See also Equally Ours (2018), ‘Shared Prosperity, Shared Rights-Replacing EU funding for Equality and Human Rights After Brexit’. These calls have also been made by civil society organisations representing equality bodies. See: Equally Ours (30 June 2020), ‘Time for a new deal for equality’.

[24] We expanded on HS2’s approach in written evidence we provided to the Lords Covid-19 Committee: House of Lords Covid-19 Committee (2020), ‘Equality and Human Rights Commission – Written Evidence (LBC0167)’. See also HS2 Ltd (2017), ‘HS2 SME Supplier Case Study – Crowders.

[25] EHRC (2020), ‘How Coronavirus has affected equality and human rights

[26] The unemployment rate for disabled people aged 16-64 in October-December 2019 (the eve of the pandemic) was 7.0% and rose to 8.0% in January-March 2021. A similar rise was seen in unemployment for non-disabled people, from 3.2% to 4.3% over the same period. Office for National Statistics (‘ONS’) (2020), ‘A08: Labour market status of disabled people

[27] Citizens Advice research suggests that disabled people, parents and carers are most at risk of being made redundant. Citizens Advice (2020), ‘An unequal crisis: Why workers need better enforcement of their rights

[28] Analysis of ONS data shows that in July 2020 19.5% of disabled people in Britain had struggled to pay their bills, and 21.3% had to borrow money or rely on credit in the last seven days, compared to 13.4% and 18.2% of non-disabled people respectively. ONS (2020b), ‘Coronavirus and the social impacts on disabled people in Great Britain: July 2020’.

[29] EHRC (2021), ‘EHRC Breifing on Development of the National Disability Strategy

[30] data published by NHS Digital also shows that people with learning disabilities had particularly low employment rates, ranging from 17% of those with a learning disability being in paid employment in the Eastern region to just 5% in the North West. NHS Digital (December 2020), Measures from the Adult Social Care Outcomes Framework, England 2019-20.

[31] 57% of disabled workers aged 18-24 said they felt the pandemic had affected their ability to work, and 54% said that it had damaged their future earning potential. Leonard Cheshire (2020), Disabled people plunged into crisis by Covid employment landscape.

[32] See in particular our evidence to the Women and Equalities Committee: EHRC (2020), ‘Evidence to the Women and Equalities Committee sub-inquiry on coronavirus and the gendered economic impact’

[33] According to the Women’s Budget Group, 77% of healthcare staff are women. 83% of those working in social care are women, and around 21% are ethnic minorities. See Women’s Budget Group (April 2020), Crises Collide: Women and Covid-19

[34] Almost 3 in 10 mothers report reducing their working hours for childcare reasons, compared with 1 in 20 fathers ONS (2019), Families and the labour market The Resolution Foundation notes that 39% of working mothers were key workers before the crisis began, compared to just 27% of the working population as a whole. Resolution Foundation (April 2020), Economic impacts of the coronavirus crisis on different groups of workers

[35] Office for National Statistics (2020j), ‘EMP01 SA: Full-time, part-time and temporary workers (seasonally adjusted)

[36] ONS (2020), ‘Coronavirus and the social impacts on disabled people in Great Britain: July 2020

[37] Office for National Statistics (2020), ‘RED01 SA: Redundancies levels and rates (seasonally adjusted).

[38] For example, between Jan-Mar 2020 and Jan-Mar 2021 unemployment increased from 3.6% to 4.1% for white people, compared to an increase from 5% to 11.3% for mixed/multiple ethnic groups, and for Black people from 9% in Jan-Mar 2020 up to 13.8% in Oct-Dec 2020 then down slightly to 10.2% in Jan-Mar 2021. Office for National Statistics (2020), ‘A09: Labour market status by ethnic group

[39] Evidence for England and Wales indicates that Bangladeshi men are four times more likely, and Pakistani men almost three times more likely, to be employed in industries shut down during the pandemic in comparison to White British men. Institute for Fiscal Studies (2020), Are some ethnic groups more vulnerable to Covid-19 than others?, p.19

[40] Francis-Devine, B. (2020), ‘Coronavirus: Which key workers are most at risk?’ House of Commons Library Insight; ONS (2020), ‘Coronavirus and key workers in the UK

[41] EHRC (2021), ‘Terms of reference: inquiry into racial inequality in health and social care workplaces

[42] EHRC (2018), ‘The cumulative impact of tax and welfare reforms

[43] EHRC (2021), ‘Public Sector Equality Duty guidance

[44] EHRC (2014), ‘Meeting the Equality Duty in Policy and Decision-Making

[45] EHRC (2014), ‘Objectives and the Equality Duty: A Guide for Public Authorities

[46] The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017, Schedule 2.

[47] EHRC (2018), ‘Is Britain Fairer? (2018)’.

[48] EHRC (2018), ‘Is England Fairer? (2018)’.

[49] ONS (2020), ‘HI 11 Regional labour market: Headline indicators for Scotland’. ; ONS (2020), ‘LFS: Employment rate: England: Aged 16-64: All: %: SA’; ONS (2020), ‘LFS: ILO unemployment rate: England: All: %: SA’.

[50] Office for National Statistics (2020f), ‘HI 10 Regional labour market: Headline indicators for Wales’.

[51] See updated sources at footnote 50 above.

[52] Joseph Rowntree Foundation (2020), ‘Targeted action for parts of Britain at risk of surging unemployment’.

[53] Government Equalities Office (2020), ‘Speech: Fight for Fairness

[54] EHRC (2018), ‘Is England Fairer? (2018)’.

[55] See for example a key findings from the Annual Population Survey analysis that ‘the North East, West Midlands, and Yorkshire and the Humber had the largest unemployment rate gaps between White people and all other ethnic groups combined (all 5 percentage points or more)’: UK Government Ethnicity Facts and Figures Service (2019), ‘By ethnicity and area (White and Other than White)’ summary of Section 9.

[56] EHRC (2021), ‘How Mayors can make England fairer