The Macpherson inquiry into the death of Stephen Lawrence has provoked a furore over the state of race relations in Britain. It recommends sweeping changes. But are its conclusions justified? Stephen Bevan and Nicholas Rufford report

"They set about him with bricks, leaving him with head injuries, broken teeth and extensive bruising," said Tony Simpson, the detective sergeant in charge of the investigation. "At first we thought he had spinal injuries. He could have been killed."

Simpson, 34, is head of one of Britain's first racial incident units. Set up three weeks ago, its beat is a densely populated inner-city area of four square miles covering the Longsight, Gorton and Levenshulme areas of Manchester. Black and Asian ethnic minorities comprise up to 30% of the population.

The unit's brief is to seek out and solve racist crime. "Our first priority is to make sure all racial incidents are reported to us," said Simpson. "We suspect there is massive under-reporting and we need to change that."

Since the unit was set up, 15 racial crimes have been reported - more than half as many as were reported last year. They include assaults, verbal abuse, stone and egg throwing, vandalism and, in one case, a white youth urinating through a black family's letter box.

"It's racism and its widespread," Simpson said. On Friday, one of the four officers in the unit set out to investigate the campaign of harassment against Baldev Patel, a 54-year-old shopkeeper, who has been victimised by a teenage white gang for the past three months. Among other things, they have daubed the metal shutters of his shop with the words "Die Paki", pushed fireworks through his letter box at night and thrown beer over his wife and children. "We have had to close the shop because of these boys, but still they make trouble most nights," said Patel's wife Sumitra.

On Friday afternoon, in front of the detective, the gang swaggered by and made threats from the other side of the street. Asked if they were responsible for the graffiti, one nodded while the others laughed. Did they care that they were making the family's life a misery? "Not a Paki f***," came the reply.

There are racists in Britain. But is Britain racist? Last week, the inquiry into the murder of Stephen Lawrence implied that racism has infected much of society. Is it right?

IN the southeast London suburb where Lawrence died, armoured police vans were parked on street corners. Metal barriers and tape sealed off the roads. Scores of officers were stationed along the thoroughfare and side streets, some on guard, some conducting door-to-door inquiries. Last Thursday afternoon Eltham looked as if it had been hit by a national emergency. Reporters were milling about. Someone had thrown a pot of paint, desecrating the memorial to Lawrence, and Jack Straw, the home secretary, was investigating.

On the pavement at the spot where Lawrence bled to death in April 1993, stabbed by a gang of white youths, lies a granite slab inlaid with gold lettering. When the Macpherson report was published, white paint was splashed over the memorial. A childish gesture by a stupid youth, or further evidence of a deep-seated culture of racism?

As he studied the damage, Tek Anim, a 19-year-old black student of business and marketing at Greenwich University, was unequivocal. "Yes, it's a racist area," he said. "Before I started at the university, my brother warned me not to walk around Eltham, but I didn't think he was serious. I soon learnt after a certain hour at night not to walk through the place."

Many black residents describe an atmosphere of violence and intimidation. Anim said a black friend of his had been attacked recently. He himself had suffered an unpleasant incident last November when he was making his way home through the area. He boarded a night bus to be greeted by the intense and unnerving stare of a young white male passenger. They exchanged no words. But when the white man got off the bus he yelled abuse at Anim, banged on the window and gestured obscenely.

But others report a very different kind of experience. Down at the Eltham Kebab restaurant, outside which two youths have been stabbed, the view was the opposite. "There have been two incidents in the 12 years I have been here. It's not as bad as they say," said the manager. He is Turkish, but does not feel threatened by race hate.

A Sri Lankan man, who moved with his family to Eltham in 1993, painted a similar picture. "All our neighbours have been very helpful," said the man, who lives on the Brook estate, home to some of those suspected of killing Lawrence. "We haven't had any problems."

If they cannot agree on whether they are racist, the residents seem to agree that the police are racist. In Greenwich, the local police received about 400 complaints of racial offences last year. One of the local community organisations received more than 1,000. A discrepancy explained, according to one community worker, by local distrust of the police.

Dr Tom Butler, the Bishop of Southwark, said: "The police need a lot of help in building links with the black community." In his conversations with black youngsters, they almost invariably raise difficulties with apparent racism in the police.

Around Britain, ethnic minorities complain of prejudice at the hands of the police. Throughout the country, blacks are more likely to be charged than whites, more likely to be jailed if convicted, more likely to be denied bail. Stop-and-search figures show that blacks are far more likely to be pulled over than whites - and this experience, too, holds true across much of the country.

In London, 37% of those stopped are black or Asian; in the West Midlands 31% and in Bedfordshire 19.8%.

The Lawrence inquiry reached this conclusion: "Institutional racism . . . exists both in the Metropolitan police service and in other police services and institutions countrywide."

THE institutional racism with which the police are charged is not an overt prejudice. It can be "unwitting", a pernicious attitude of mind. The report explains: "It can be seen as detected in processes, attitudes and behaviour which amount to discrimination through unwitting prejudice, ignorance, thoughtlessness and racist stereotyping which disadvantage minority ethnic people." It has aroused controversy. How can such a thing be detected? How can one man know what is in the mind of another?

Macpherson goes much further than Lord Scarman in his report following the Brixton riots in 1981, who said he found no evidence of institutional racism. Instead he said there were racists and there was racial discrimination.

Macpherson justifies his much more sweeping conclusion in a detailed and shocking account of the Lawrence murder and the extraordinary, unbelievable degree of incompetence and mismanagement shown by the officers in charge of its investigation. This was not just blundering. Macpherson says it reflected something more sinister: racism.

He cites the treatment of a key witness to the murder itself, Duwayne Brooks, who was with Lawrence when he was attacked. Police at the scene failed to treat him with due sensitivity.

They noted he was "very agitated" and later "highly excitable". This is language, Macpherson says, which betrays the fact that they had him "stereotyped as a young black man exhibiting unpleasant hostility". In this regard, it is worth noting that not one of the 60 police officers who gave evidence to the inquiry had received any race relations training.

Sir Paul Condon, commissioner of the Met, has refused to accept that his force is racist, but on the grounds that prejudice may be "unwitting", he was prepared to back the report last week. Condon has already launched a series of initiatives to improve race relations, including the establishment of a special racial and violent crime taskforce, under the command of John Grieve, former head of the anti-terrorist unit. Among other cases, Grieve is re-investigating the Lawrence case.

Last week, other measures were also announced to curb racism inside the force, including the use of undercover black officers to test racist attitudes.

But Macpherson's report has been condemned as over the top and unworkable by some of the brightest and most liberal officers in the force. In its recommendations, it calls for a range of changes to the criminal law and police practice. It calls, for instance, for the police immunity to prosecution under the Race Relations Act to end. One senior officer said that the move would bring a flood of bogus claims, leaving the police hamstrung with paperwork. "It would be all too easy for a suspect about whom we were making legitimate inquiries to accuse us of racism," said one senior officer.

David McIntosh, senior partner at Davies Arnold Cooper, a leading City law firm, and chair elect of the Law Society's civil litigation committee, said that the act could open the floodgates. "There is a very distinct danger that false claims of discrimination will be raised when legitimate [police inquiries] are taking place," he said.

There are other profound reservations. There was almost universal criticism of the suggestion that the double-jeopardy system under which a person cannot be tried twice for the same offence be reviewed. It is almost certain not to be adopted by the government. But another reform which appears superficially to be a positive step forward - to fix quotas for ethnic recruitment - has also prompted concern.

In America, the experience of such quotas was that they lowered standards and increased corruption. In the 1970s and 1980s the New York police department lowered its standards in order to increase the recruitment of minorities. In other forces, the ethnic quota has led to an increase, rather than a decrease, in the amount paid out in compensation for police brutality. There is no guarantee that a force which is demographically more like the local community will act with any greater sensitivity towards it.

THE five men who have been accused of killing Lawrence were not just racists, they were "young men bent on violence", according to the report. They had an appalling history of violence, which revolved for the most part around knives and stabbing. They started young. In 1991, Sean Kalitsi was threatened on the steps of Kidbrooke school by two other 14-year-old pupils: Jamie Acourt and Luke Knight, both now among the Lawrence suspects. As he walked away, Kalitsi recalled last week, he was kicked in the back by Acourt. This left him unconscious and he ended up in hospital.

Tackling racism in the police is only one part of Macpherson's purpose: he calls for broad and radical changes throughout society. Most important, the report says, is to quell racism in the playground. It is this, as much as anything, which encourages the likes of Acourt and Knight.

"Racism exists within all organisations," the report states. "It infiltrates the community and starts among the very young." On this basis, Macpherson calls for a number of wide-ranging reforms in education, including the establishment of league tables showing the level of racial incidents in schools and a broadening of the national curriculum to improve ethnic awareness.

But are British schools a seedbed of institutional racism? The report cites one piece of evidence: a research project undertaken by the Race Equality Council in Wales. It examined 407 cases of racial abuse and violence reported last year. Of these, 50% were committed by children under the age of 16 and 25% between the age of six and 10.

Can any national conclusion be drawn from this?

The picture is confused. Michael Marland, headmaster of North Westminster community college, warned of mounting youth gang violence. The gangs were both black and white and as likely to attack rivals of their own colour as each other.

"It is about gratuitous violence," he said. It is not so much a problem of racism, he warned, but about the creation of a youth underclass.

Street protest: the National Assembly Against Racism organised a march to Trafalgar Square yesterday against the asylum and immigration bill. Photograph: Francesco Guidicini

Meanwhile, teachers' unions warn of increasing violence against their members. One black teacher was recently beaten up by white pupils in her class at a school in Lewisham, south London.

The experience at Kidbrooke school, at which Kalitsi was attacked eight years ago, is inconsistent. When Kalitsi attended he was one of only four black children out of 120 in his year. Now 42% of the pupils have parents who were born overseas. One student said last week: "I do feel there's been a lot of bad press around. People's first impression is that we are all racist. But that's not been my experience."

Multiracial schooling seems to work for her.

Macpherson maintains that racism is not just endemic in the police or schools but in "institutions countrywide". But is that fair? There is ample evidence of individual outrages of racism. John Mitchell, (not his real name), had been working for a well-known high street burger chain for only a few days when a female colleague approached him, shouted "Black bastard" and informed him she was a member of a fascist organisation.

Mitchell's manager, when he was told of the incident, replied: "That's not very good is it?" But nothing was done and Mitchell, who lives in Cardiff, soon found himself on a constant round of the worst jobs - cleaning lavatories and scraping out waste bins.

But a cursory inspection of available statistics contradicts the simple view expounded in the report that the black Briton is a victim of institutional racism. In fact, in many areas, the black and Asian community have performed far better than the white.

Darcus Howe, the black writer and broadcaster, said: "At times I could barely recognise the Britain that was being described in the report and the reportage that surrounded it - this rampant, crazy, racist place - I have a little difficulty with that."

Tariq Modood, professor of sociology at Bristol University and author of the 1997 report Ethnic Minorities in Britain for the Policy Studies Institute agreed. "There has been movement. There is a growth in self-employment, in non-manual occupations and managerial posts," he said. "Most ethnic minorities now are getting very well-educated. Even young black men are much more likely to stay on in education after the age of 16 than their white peers. Taken as a whole, ethnic minorities are now twice as likely to go to university as whites."

In London, where there are 20% blacks and Asians in the population, 29% of nurses, 31% of doctors and more than 20% of civil servants come from the ethnic minorities. Although there are still no black High Court judges, blacks are relatively well represented in the law profession. Last year 15.8% of all new solicitors were black and Asian, as were 25% of those enrolling on the bar vocational course to become barristers.

In medicine the picture is the same: 23% of those studying medicine at university are from ethnic minorities.

In the media, 7.4% of BBC staff are non-white; at Channel 4, the figure rises to 9.5%.

Among leading employers, British Airways employs 13% blacks and Asians; Marks & Spencer 9.5%.

This is not to deny that there are institutions which are racist, in Macpherson's definition. The armed services, plagued with complaints of racism, still only employ 1% from ethnic minorities. But they have a policy in place for boosting this to 5% by 2002.

Ruby Spolia is a successful Asian businesswoman - a director of the London-based gift company Present Day. "Second and third generations have prospered here. They have been allowed to prosper, allowed to develop their potential, even if it wasn't a deliberate decision to let them do so," she said.

There were no black faces around the Downing Street table last Thursday morning, when Tony Blair broke the new Labour convention of confining cabinet discussion to 40 minutes, and instead convened a lengthy debate on race.

Straw opened with a summary of the Macpherson report. "It was a serious debate," recalled one minister present. "We debated what we could do as a government to fight racism, and what the limits of government action should be. We did not want to go totally politically correct."

Indeed, Straw welcomed much in the report, including the plan to extend the scope of the Race Relations Act. But this was balanced by scepticism about other recommendations.

Many cabinet ministers feel uneasy about legally defining a racist offence as any where the victim feels this was so. David Blunkett believes school league tables of racist incidents would be counterproductive.

And Straw, as he outlined the report to cabinet, highlighted Macpherson's suggestion that using racist language, even in private, should be an offence - an idea inspired by the police's covert videotape of the Lawrence murder suspects' knife-wielding and slur-throwing as they sat at home.

"If we were to go all the way with Macpherson, that would mean making what people say within the family in the privacy of their own homes a possible criminal offence. Many of us were uncomfortable with that," said a cabinet minister.

In an article in tomorrow's New Nation newspaper, Blair will write of his intention to make "Britain a beacon to the world of racial equality".

He describes his hope that one day there will be a black figure like the American general Colin Powell who will have risen to the top.

These are laudable ambitions: but is the Macpherson report going to bring them closer? And is Blair missing the point? Matthew Griffiths, editor of the Brixton-based The Voice, said he welcomed the report and what it stood for but added: "Still nobody has lost their job over it. And still nobody has ended up behind bars."

IN all the racial uproar, the real point may have been obscured. The more important reason that Lawrence's killers are still at liberty is that the Metropolitan police was grossly incompetent. Nothing went as it should have done: the crime scene was not properly handled, the subsequent investigation was marred by such mundane things as the availability of mobile phones.

On one occasion one of the suspects was seen removing a bin liner from a house which could have contained important evidence linking him to the murder. The surveillance operator who watched it could not call for back-up because he did not apparently have a mobile phone.

It should be remembered that other white victims of thuggery by the suspects in the Lawrence murder have also been failed by the judicial system. The case of one white youth who was stabbed in the arm by one of them, David Norris, never went to trial. Norris was picked out during an identity parade, but the Crown Prosecution Service recommended that he was not charged.

Perhaps more vital to the operational credibility of the Metropolitan police are reforms inspired by Condon, not Macpherson, to establish rapid-response teams to descend on murders during the "golden hour" after they are first reported. This is as important as race reforms in improving the performance of the police.

Condon, meanwhile, has said he wants the five suspects to "feel hunted", but there is little realistic chance of any conviction for the Lawrence murder. This is what his parents wanted. "They will continue to campaign until someone is brought to justice for Stephen's murder," said a family spokesman.

The report has not helped bring her son's killers to justice and Doreen Lawrence is pessimistic that it will be the "watershed" in race relations predicted by Straw. Institutional racism or not, the reality is that racists like those who killed her son are not going to go away. "My feelings about the future remain the same. Black youngsters will never be safe on the streets," she said.

Others are more optimistic. Nina Wadia, 29, star of Goodness Gracious Me, the hugely successful Asian BBC television comedy, says there has been a marked improvement in race relations. "There is a very positive trend happening," she said. "Six years ago there would just be myself and two other black girls who would meet at every audition. Now when I go to auditions, there are 20 other new faces."

She is about to play a non-Indian girl in a new television sitcom.

"That will be a breakthrough character," she said. "She will just be a character, and her race will be completely ignored - that is when we will know that something has been done."

The black and white experience

 Ethnic minorities comprise around 5.5% of Britain's 55 million population

THE LAW
Of solicitors now entering the profession, 15.8% are black, up from 11.8% in 1993. 8.5% of all barristers are now non-white

 THE MEDIA
BBC staff are 7.4% black and Asian, up from 2.8% in 1990. Channel 4 employs 9.4%

MEDICINE
23% of those now entering medical school to train as doctors are non-white

ARMED SERVICES
The military accepts it has been 'unwittingly' prejudiced in the past. At present less than 1% of employees are of ethnic origin. But a target of 5% is set for 2002

 POLICE
There is substantial evidence of discrimination by the police. Of those stopped and searched last year, 18% were black or Asian

SCHOOLS
7% of secondary school teachers are now of ethnic origin, as are 5% of primary teachers

 UNIVERSITY
12% of all students registered as British are black and Asian

EARNINGS
Black women on average, now earn more than their white counterparts - £6.10 an hour as opposed to £5.19 an hour. Indian men also earn more than whites - earning on average £9.22 an hour, compared with £9.10 for whites

 EMPLOYMENT
British Airways employs 5,850 non-white staff - 13% of its total workforce. Marks and Spencer has increased its proportion of ethnic staff from 5.7% in 1995 to 9.5% now

 UNEMPLOYMENT 13% of whites are unemployed, compared with 24% of blacks and Asians. But since 1993, ethnic unemployment has dropped by 8% - compared with 3% for whites

WEALTH
Ethnic minorities are underrepresented among Britain's richest. In 1993 only eight non-whites featured in the Sunday Times Rich List. By 1998, this had risen to 18, or 4.5%

 MARRIAGE
Just 1.3% of marriages are 'mixed'. But a quarter of all black and Asian men now have a white wife or partner, and the trend is increasing