In post‐colonial societies the educational performance of minority students often lags behind the majority, and the failure of educational systems to deliver equal access and educational success to minorities remains a source of tension and conflict. Educational inequalities persist, especially now that strategies to alleviate unequal treatment are being abandoned in some countries. In other countries, notably Britain, new forms of inequality are emerging as post industrial education systems have been encouraged to respond to market forces. This article focuses on the effects of the creation of education markets on ethnic minority children and young people. In particular it discusses whether social class and urban location disadvantage minorities in the education market, whether an education market encourages ethnic and racial segregation, whether devolving budgets to schools affects equity, and also whether there are aspects of markets that enhance opportunities for some minority students. The article concludes by noting that minority success in competitive education situations may actually increase xenophobia in national majorities. [1] This article refers to groups described as ethnic or racial on the basis of characteristics imputed to them by others (Rex, 1986, ch. 1) and also self‐assignment in the 1991 Census. This indicated that the ‘ethnic’ composition of the UK comprised 94.5% white, 5.5% ethnic minority of which 1.6% defined themselves as black African, Afro‐Caribbean, or black other, 2.7% as South Asian, Indian, Pakistani or Bangladeshi, and 1.2% as Chinese or other Asian.