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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is chief executive of upReach, a social mobility charity
Choose your parents well, because the decision is “becoming ever more important”. This quip was tweeted by Paul Johnson, director of the Institute for Fiscal Studies, as his think-tank launched a sobering report on social mobility last month.
Since the pandemic spotlighted — and exacerbated — inequalities in the UK, the barriers facing working-class young people have risen up the agenda. The idea that it is in the nation’s, and the economy’s, interests to shatter “class ceilings” is gaining traction, including in last week’s speech by Labour party leader Sir Keir Starmer, who stressed his own working-class origins. So the absence of stringent proposals on social class in a new consultation by the Financial Conduct Authority on diversity and inclusion will surprise some in the City of London.
The FCA states unambiguously that diversity and inclusion are regulatory concerns and proposes measures that focus on characteristics protected under the Equality Act. This excludes socio-economic background but covers gender, race, disability and sexuality. Correctly, the FCA suggests mandatory strategies, data collection, target setting and progress reporting on these issues for large, regulated companies.
These reforms are not just morally right but also good for business — “guarding against groupthink” and ensuring “a wider pool of talent”, as the regulator said last month. But the FCA should go further and commit to mandatory reporting on socio-economic background as well.
Social class cuts across all the other issues. Students from a lower socio-economic background who get a first-class degree are still less likely to obtain a top graduate job than a more privileged peer with a 2:2. One solution is to make it easier to navigate entry to a good career. Each year upReach supports 3,000 undergraduates from lower socio-economic backgrounds to secure and then succeed in top graduate jobs, including at City firms. Our network of partner employers is vital — and some already publish socio-economic data.
The evidence base about class in the City is highlighted in “Shaping the Economy”, the latest report from Progress Together, chaired by former lord mayor Vincent Keaveny, and The Bridge Group. It found that “socio-economic background is more likely to impact a person’s route to success in financial services than gender or ethnicity”. Disturbingly, working-class women seem to suffer a double disadvantage, and women from ethnic minorities and lower socio-economic backgrounds a triple disadvantage.
This is outrageous. The commercial rationale for tackling the problem is compelling, both at the corporate level and for the UK economy. Rationally, businesses should hire people with the greatest potential to excel. But some corporate leaders have been strangely slow to cast the net wider. Paying travel and accommodation costs for job interviews and work experience, offering the living wage for internships and using admissions frameworks are trivial investments that can offer a huge return if companies then find talent in previously unexplored demographics and geographies. Business also needs policies to close class gaps in pay and promotion.
Some managers remain unsure how to measure socio-economic diversity. But the OECD, the Social Mobility Commission and The Sutton Trust all agree on the best question to ask employees: occupation of the family’s main earner when you were 14. It’s easy, and the FCA mentions it in their proposals. So the regulator should follow the evidence and its own logic and make reporting of class mandatory for all large financial companies.
Contrary to Johnson’s quip, children cannot choose their parents. But let’s ensure that employers in our most lucrative industries don’t miss out on top talent by choosing too few children from working-class backgrounds.
