Labour's Race Equality Act will hurt those it is meant to help

Yahoo

19-03-2025

If a camel is a horse designed by committee, Labour's proposed Race Equality Act is a monster created by a mix of campaigners, vested interests and civil servants.
Many hoped it would never see the light of day, but with the Government revealing plans to force private firms to publish their ethnicity 'pay gaps', we are lamentably edging nearer. Labour is burnishing its credentials as an anti-business party likely to do more harm than good when it comes to social cohesion in modern Britain.
While trade unions have welcomed the prospect of companies being legally required to divulge pay-related disparities for their workforces on the grounds of ethnicity and disability, the timing of enforcing such requirements on the private sector could hardly be worse. As well as raising taxes on businesses, the Government risks slapping additional red tape onto firms when the UK economy is in delicate shape, shrinking unexpectedly by 0.1 per cent in January.
This will only compound the damage wrought by Angela Rayner's radical plans to reform employment rights, which economists expect will impose further costs on businesses that would be expected to allow union equality representatives to take time out during work hours to 'carry out activities for the purpose of promoting the value of equality'.
The unholy trinity of 'diversity, equality, and inclusion' – DEI – does not only worry the free-market fundamentalists who become squeamish over the lightest of regulations. Despite traditionally identifying with the Left and believing that more work can be done to foster more inclusive workplaces in an era of growing ethnic and religious diversification, I firmly believe that Labour's planned DEI revolution poses significant problems from not only a business-development perspective, but also one which cares about social cohesion.
While the equalities minister, Seema Malhotra, has said that legal requirements for firms to publish ethnicity gaps will 'improve the lives of working people and strengthen our country', I suspect that it will achieve the very opposite.
Since 2018, British firms have been the subject of mandatory gender pay gap reporting – which some have argued has contributed to perverse outcomes. These include a reticence to employ women in lower-paid roles or conversely, the unjust penalisation of men applying for higher-paid positions.
Malhotra has defended the introduction of ethnicity (and disability) pay gap reporting on the grounds that it will 'remove barriers to opportunity for ethnic minority and disabled staff'. But the issue is that such pay reporting requirements may disincentivise the recruitment of ethnic-minority and disabled applicants by private firms.
Take, for example, an exclusively white-British, middle-to-upper class private company in a semi-rural area that is looking to strengthen its cultural and technological expertise by drafting in young, aspirational, digitally-savvy, ethnic-minority talent from relatively urban, working-class areas. As an ethnically homogeneous firm, there will be no ethnicity pay gaps to report – but the appointment of these younger workers would inevitably create significant pay disparities on the grounds of ethnicity (even though such forms of recruitment would constitute a modernisation of the firm and enable opportunities for intercultural knowledge exchange which cuts across race, class, generation, and geography).
It is exactly the kind of recruitment that could provide handsome gains for society in terms of business growth and intergroup social trust – yet, mandatory ethnic pay gap reporting may perversely disencourage firms from taking such action for fear of being unfairly viewed in the public domain as a discriminatory institution.
Contrary to creating opportunities for minorities and fostering more inclusive workplaces, Labour's DEI plans risk limiting chances for ethnic-minority progression and the fostering of healthy community relations. It is a classic example of an overbearing and dogmatic Government unduly interfering with civil society, which contributes more – economically, socially, and culturally – than the State over could.
When it comes to navigating the choppy waters of diversity in modern Britain, the Labour Government is all at sea.
Dr Rakib Ehsan is the author of Beyond Grievance
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