In this paper, I begin by challenging the British Home Secretary's (David Blunkett) denial of the existence of institutional racism in Britain. While recognising the significance of Macpherson's acknowledgement in the Stephen Lawrence Inquiry that institutional racism is, in fact, widespread, I offer a wider definition than that offered by Macpherson. I argue that institutional racism has been a reality in British society from the origins of the Welfare State up to the present day. Utilising the Marxist concept of 'racialisation', which critiques an ideological process that categorises people into distinct 'races', I suggest that racialisation best explains the economic and political factors, which underlay institutional racism in schooling in Britain, both historically and at the beginning of the twenty-first century. I conclude by stressing the need to pressurise the British Government to reject Blunkett's denial of institutional racism and, at the very minimum, urgently to implement Macpherson's recommendations with respect to education.