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We are lurching towards a settlement between citizen and state that risks fuelling the acute social inequalities that exist within Britain. A new approach is needed.

There were three pieces of research launched this week that warrant serious reflection on the changing social contract between citizens and the state in an age of austerity.

The Social Mobility and Child Poverty Commission published the findings of a longitudinal study showing that the children of well-off parents were 35% more likely to become high earners than their brighter, but poorer, peers. This was attributed to their parents’ ability to exploit their social and professional networks to connect their children to labour market opportunities such as internships, and help them to develop their ‘soft’ skills (skills which do not increase productivity but represent what economists call ‘signalling’: signals which influence recruitment processes). The research shows that disadvantaged children are being hit with a double-whammy barrier to career development: a glass ceiling that inhibits their progression but also a ‘glass floor’ that limits their early opportunities.  

The second piece of research was published by Runnymede Trust and revealed the extent to which recent welfare changes will impact ethnic minorities. It shows that while ethnic minorities form 14% of the UK population, they will make up around 25% of those worst affected by the Government’s recent budget. This is because they tend to be lower paid, younger, have higher child poverty, are more likely to be working part-time and have more of a reliance on tax credits to top up their incomes. Shockingly, the study found that half of all Bangladeshis – almost a quarter of a million people – will lose £1,000 or more in income per annum.

The third piece of research was a study launched by Business in the Community (BITC), which aims to be the largest ever survey on the impact of race on people’s working lives ( It is likely that the research will uncover the racial biases – conscious and unconscious – that mean only 1 in 16 senior managers in the UK are from an ethnic minority, despite ethnic minorities making up 13% of the population. Findings from Project Implicit’s Race Bias Test have previously shown the scale of unconscious racial bias in society and in the workplace. It challenged the myth that racism is a thing of the past, exclusive to those of an older generation, by showing that 70% of 18-24 year olds in the UK have a racial bias, compared to 65% of those aged 70 and over. Worryingly, 66% of top executives in the UK have a racial bias. This is consistent with research that points to structural racism in our labour market.

Many will see the above as a depressing portrait of our society, or even rationalise it as an aggregation of individual biases and privileges that form an unfortunate but unavoidable social phenomenon in a capitalist economy. But it is much more than just a reflection of the sort of society we live in: it signifies a complete failure of our social policy and an unwillingness from those in power to address the social imbalances that threaten the fundamental principles and aspirations of social democracy.  The jostling of the political classes to transform the social contract between citizen and state – through austerity, public service reform and wholesale changes to the welfare system – risks fuelling the social and racial inequalities that exist in Britain.

Movement towards a new citizen-state relationship, typically involving the state doing less, and the citizen doing more (sometimes taking over services directly), is empowering those communities (usually white, middle class) with higher levels of social resource and confidence while weakening those that are disadvantaged. It is no wonder then that cuts to local government and demands for a fundamental rewiring of local services have, alarmingly, resulted in a redistribution of public money away from the poorest areas and to the richest. Research shows that the middle-classes have clear advantages in public service provision.    

There is no question that given the scale of the challenges facing society – and the failure of top-down solutions to address them – we need a new relationship between citizens and the state. It is telling that even in times of plenty and with robust Government-led interventions, inequalities have persisted. Empowering communities to take a stronger role in addressing social challenges is critical. For example, tackling structural racism in the labour market requires a concerted effort involving a coalition of actors – from local businesses, to trade unions, to community organisations – and not just the state. But a new social contract built on state retrenchment, which is the model we seem to be following now, will only absolve those in power from tackling social injustice, and under a worst-case scenario may replace a creaking Beveridge settlement with a Darwinian model of public services.

As my colleague Anthony Painter has argued, in order to address the acute challenges we face we must promote person-to-person social justice. Crucially, this doesn’t involve a crude handing over of power and responsibility to communities and individuals, or to the market; but a smart combination of traditional and non-traditional power that develops the state’s role as an enabler but harnesses and strengthens the capacity of all people to lead change.  

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