The independent Baroness McGregor-Smith Review, which took evidence from around 500 individuals and companies including those in the FTSE 100, found people from BME backgrounds are still being held back in the workplace because of the colour of their skin, costing the UK economy the equivalent of 1.3% in GDP a year.

The review also found employment rates for people from BME backgrounds are 12% lower than their white counterparts at 62.8%, compared with 75.6%. In 2015, one in eight of the working age population were from a BME background, yet BME individuals make up only 10% of the workforce and hold only 6% of top management positions.

This figure matches the findings of the first Accountancy survey of BME partners and senior managers at the UK’s top 10 accounting firms, which found that out of more than 4,700 partners in this highest slice of the accountancy profession, only 5% came from the BME community.

People from BME backgrounds are more likely to work in lower paid and lower skilled jobs despite being more likely to have a degree, the McGregor-Smith report revealed.

Amongst its recommendations, the review calls for companies with more than 50 employees to publish a breakdown of their workforce by race and pay band; draw up five-year aspirational diversity targets; and nominate a board member to deliver on these targets.

Baroness McGregor-Smith said: ‘The time for talk on race in the workplace is over, it’s time to act. No-one should feel unable to reach the top of any organisation because of their race.

‘The consequences of continuing to do nothing will be damaging to the economy and to the aspirations of so many. So from the Cabinet table to the board rooms, there is no more time for excuses - just change.’

The Department for Business, Energy and Industrial Strategy (BEIS) has announced that a business diversity and inclusion group will be set up and chaired by business minister Margot James.

The group will bring together the leaders of three industry-led diversity reviews. McGregor-Smith will be joined by Sir Philip Hampton and Dame Helen Alexander, who are leading a review aimed at increasing female leadership in FTSE companies, and Sir John Parker, who is leading a consultation on recommendations to increase BME representation in the boardroom. It will also include representatives from the CBI and the Financial Reporting Council, among others.

As part of the recommendations, Business in the Community (BITC) has agreed to publish an annual list of Best 100 Employers to celebrate success and highlight best practice.

In Accountancy’s 2016 study, EY topped the list of professional services firms with high level BME representation, with 8% of partners identifying as BME, followed by KPMG (7%), PwC (6%) and Deloitte (4%).

EY’s diversity initiative is one of the case studies included in the McGregor-Smith review, with firm asserting its recruitment teams sets targets for recruitment of BMEs at all levels. EY said its board challenges the proportion of BME senior promotions and challenges whether it has achieved its target to admit 10% BME partners every year; EY says since the inception of the programme, BME partner representation has gone up from 3% in 2012 to 8% in 2016 and more of its BME population are receiving high performance ratings.

Race in the workplace: The McGregor-Smith Review is here.