In future times looking back on the last quarter of a century, historians will see the pattern of the distribution of income and wealth and wonder at how little debate there was at the time over its extraordinary fluctuations. Why were the politics of these times so little exercised about the most fundamental economic facts upon which all its social programmes were built?

The economic history of the last century was one of almost continuous progress towards a more equal distribution of income. (Ownership of wealth is a more complicated story.) From 1900 to 1978, the annual income gap from top to bottom of society narrowed. But in the last quarter of the century, it soared away into an ever-widening gap, with no prospect of any restraint or diminishing of this dangerous trajectory.

Does it matter? On coming to power, still cautious about alarming the City and business, New Labour said loudly and often that it did not. While determined to pull up the poorest, Tony Blair always said there was no problem about how ‘successful’ those at the top might be. Class envy and Denis Healey's “squeezing the rich until the pips squeaked” was a dead and failed agenda of Old Labour. Although she left top rates of tax at 60% for her first eight years, Mrs Thatcher did immediately cut top tax rates by a sharp 34% which at a stroke gave a huge burst of extra income to the top earners. Top tax rates have stayed among the lowest in the Western world ever since. It is not just tax rates but also low inflation that have fuelled the widening income gap across the West.

There is an overwhelming reason why Labour will have to think again about this question. In the most radical pledge that any British politician ever made, Tony Blair promised to abolish all child poverty by the year 2020. Through introducing a minimum wage and above all through greatly increased social security for children with generous tax credits topping up incomes in low-paid families, the quarter-way mark towards that goal will almost certainly be reached by 2005, with at least 1.1 million children lifted out of poverty – a remarkable achievement. But on present policies, it will be very difficult to reach the halfway mark by 2010. As for total abolition, nothing in present strategy begins to suggest it is possible to achieve. Economists cannot see how it can be done in a society shaped as Britain's is currently.