One group in society has never had it so good. Under this government the super-rich, the top 1 per cent, have seen their wealth rise at a rate that others cannot begin to comprehend. Thanks to policies pursued (or not pursued) by Tony Blair and Gordon Brown, these people give away a far smaller share of their income back to the state than the rest of us.
When Peter Mandelson declared new Labour was "intensely relaxed about people getting filthy rich" perhaps voters did not appreciate how true it was. During the 2001 election campaign, Blair told Newsnight's Jeremy Paxman: "It's not a burning ambition for me to make sure that David Beckham earns less money." And though Gordon Brown, according to his aides, is seriously unrelaxed about excessive and unproductive wealth, he has failed, in his eight years at the Treasury, to introduce a significant measure that deals with the very rich.
Labour's record on the poor is commendable. Tax credits focused on child and pensioner poverty, the minimum wage, Sure Start and other measures have made a difference. Apart from the very bottom 2 per cent - usually the unemployed without children and the elderly who do not claim their means-tested benefits - the lowest fifth of society have seen their income rise modestly and steadily. The income gap between them and the reasonably or quite well-off has shrunk slightly - or at least not grown. But as the Cabinet Office's strategic audit concluded recently, when you take into account wealth accrued from property, the gap continues to grow.
It is only when you look at the very top end that the scale of inequality is properly understood. According to Tony Atkinson of Oxford University, the UK's leading expert on inequality, the top 1 per cent of the population now receive more of the nation's income than at any time since the 1930s.
The Office for National Statistics reports that this group of 600,000 people doubled its wealth to £797bn in Labour's first six years. The share of national wealth taken by these super-rich has grown from 20 to 23 per cent, while the share of the poorest 50 per cent shrank from 10 per cent in 1986 to 5 per cent in 2002.
London is said to have 40 billionaires, 13 of whom are foreign. There is no place in the world like it. They are welcomed with open arms. The capital has become the world's most significant tax haven. Theirs is a parallel world, in which the purveyors of yachts, private jets and other accoutrements cannot keep up with demand. Where else in the world could you acquire a diamond-encrusted swimsuit for £15m?
The statistics almost certainly underestimate the true wealth of the super-rich. It is, says Robert Chote, director of the Institute for Fiscal Studies, like "looking through thick fog". Such are the global flows of cash that an understaffed and demoralised Inland Revenue can barely cope - which may account for Brown's fatalism in an area where he could have made a difference.
"Non-domiciled resident tax status" might not set the pulse racing, but to those who believe one of the jobs of a centre-left government is to reduce inequality, it has become a leitmotif. This scam, dating back to colonial times, exempts people who spend fewer than 90 days a year in the UK from paying tax here on any earnings overseas or from investments in offshore havens. They are liable only for tax on UK earnings, but clever accountants help to ensure that this burden is slight. Up to 100,000 people benefit from a largesse that other European countries deny them. It is impossible to know exactly how much money is being withheld from the Exchequer, but it is estimated at tens of billions a year - a good proportion of the entire NHS budget.
Even Margaret Thatcher's chancellor, Nigel Lawson, thought about tackling the loophole, only to shy away. Brown declared in 1994 that he would confront it. "It is not fair that a wealthy few be allowed to work or live in the UK without making a fair contribution through taxation," he said. In 2002 the Treasury committed itself to act, only to be bombarded by pleas and threats from wealthy "non-doms" - several of whom are Labour donors. They warned that any attempt to make them pay up would drive them out of the UK. The government says it is "reviewing" the situation. Senior Labour MPs are nonplussed at Brown's unwillingness to act. "These people are not classic entrepreneurs," says one former minister. "This whole business goes against everything Gordon stands for."
MPs draw a distinction between the Blair and Brown approaches to inequality. The PM is exercised by the plight of the poor, but not at the expense of the rich. His is a next-generation version of trickle-down economics. He sees a role for government in increasing opportunity through education and training, and providing a safety net for those most in need. He takes as a given the beneficence of the wealthy. Brown, however, is personally offended by the conspicuous wealth. Yet he fears that any change to tax levels or rules would lead to capital flight, damaging Labour's entrepreneurial credentials and leaving it vulnerable to the usual charge of envy.
In his Budget on 16 March, Brown will again talk of promoting fairness and justice. He will not, however, deal with the ultimate iniquity, Britain's regressive tax regime. Taking into account council tax (which is graded but not in line with wealth) and VAT and other indirect taxes paid at a flat rate, the top fifth in the income scale pay a smaller proportion in tax (34 per cent) than the bottom fifth (42 per cent). Income tax should address imbalances, but Blair and Brown have agreed not to touch the basic or top rates for a third election in a row. Once, just once, in the past eight years, has the government taken a risk on tax, with its penny increase in National Insurance. Ministers were pleasantly surprised at the lack of hostility, but in spite of that returned to their cocoon.
It is the Liberal Democrats who have summoned their courage. On 28 February, they reaffirmed their policy to introduce a new top rate of tax of 50 per cent for income over £100,000. Currently only 419,000 people, 0.9 per cent of taxpayers, would be affected, and yet Blair described the announcement as "rather dangerous - you catch a lot of people other than the super-rich". But you do not. Nor is there strong evidence that such a move would serve as a disincentive to those aspiring to join the top-rate club.
Surveys suggest new Labour has fallen for a pervasive myth - that inequality does not bother voters. John Hills of the London School of Economics says the opposite is true: "The evidence suggests people are worried about the extent of the gap between rich and poor, even though they hugely underestimate the incomes of the highest-paid." The British Social Attitudes surveys have reported each year since 1989 that at least 80 per cent think the wealth gap is "too high". In researching a forthcoming report on poverty, the Fabian Society found that public perceptions are more sophisticated than politicians allow for. A MORI poll showed that people regard high boardroom salaries, bonuses and pay-offs as the most unethical business practices of all, worse than sweatshop labour and environmental pollution. Even in opposition, when it was desperate to win the 1997 election, Labour showed more courage on "fat cats" than it does now. The recent Higgs report, commissioned by the Department of Trade and Industry, on corporate governance and "rewards for failure" was watered down, even though it proposed voluntary controls.
In the Labour years in office, two dynamics have worked against each other. Brown and Blair have made the first concerted attempt at tackling poverty since the 1970s, producing modest, incremental improvements for most of the poor. Yet they have indulged the financial elite, eager to co-opt its members into endorsing the government's mini-projects or funding the Labour Party. They have put no constraints on the remorseless acquisition of wealth by a powerful few, ever more of which comes from unearned income. Their failure to tackle the second problem may eventually undermine their success in tackling the first.
WHO GAINED MOST, 1997-2004
Compiled by Tom Baird,Nosheen Iqbal, Christopher Thompson & Dominic Elliott
Increase in wealth since 1997*: £ 3.6bn. Now: £3.61bn
Retailer who has dramatically turned round Bhs and Arcadia. Did not go to business school or even take A-levels. Went into the rag trade selling jeans and shoes 35 years ago, making his name as a discount retailer in the 1980s and early 1990s.
Duke of Westminster
Up £3.3bn (194%). Wealth now: £5bn
Property owner with more than 140,000 acres in Britain including 100 acres in Mayfair and 200 acres in Belgravia. His Grosvenor Group's latest projects including transforming a 50-acre derelict site in Bath and upgrading a 42-acre site in Liverpool.
Bernie and Slavica Ecclestone
Up £2.05bn (745%). Wealth now: £2.3bn
Formula 1 motor racing tycoon. Netted £1.9bn after a 1999 bond issue and the sale of 75 per cent of the Formula 1 business in 2000.
Hans Rausing and family
Up £2bn (68%). Wealth now: £4.95bn
Fortune stems from Tetra Pak, which revolutionised product packaging. Recent ventures include Ecolean, which focuses on environmentally friendly packaging.
Up £2bn (133%). Wealth now: £3.5bn
Oversees LNM Group, the world's second-largest steel-maker, with plants in 13 countries. Richest Asian in Britain.
Up £1.18bn (1180%). Wealth now: £1.28bn
Mobile-phone tycoon from Stoke-on-Trent. His Caudwell Group includes Phones4U, the novelty gift chain Discovery Store, and 20:20 Logistics, a handset sourcing firm. Sales at the Caudwell Group leapt 45 per cent to just over £2bn in 2002, and the company now sells 26 phones every minute. Caudwell has a further £75m in assets, including a £10m Staffordshire mansion.
Eddie and Malcolm Healey
Up £1.1bn (440%). Wealth now: £1.35bn
Brothers who began in their father's Hull-based DIY firm. Publicity-shy Eddie made his fortune from property deals and has a £17m home in Barbados. Malcolm netted £200m from selling his Hygena kitchens business in 1987, then made another £800m from a similar move in America. Now lives on £40m Yorkshire estate.
Earl Cadogan and family
Up £1.05bn (210%). Wealth now: £1.55bn
Property tycoon who has spent £60m renovating his 90-acre London estate. Redeveloped Cadogan Hall as London HQ for the Royal Philharmonic Orchestra, as part of a plan for the "transformation of Chelsea".
De Walden family
Up £1.05bn (420%). Wealth now: £1.3bn
Family owns 100 acres of prime property in London, including Marylebone High Street and Harley Street. The estate is a big arts benefactor, helping fund the Sir John Soane's Museum. The family has benefited from the astronomic property prices in central London recently. Family currently headed by Mary Czernin, 68, eldest of four daughters of Lord Howard de Walden, who died in 1999.
Sri and Gopi Hinduja
Up £1bn (91%). Wealth now: £2.1bn
Empire includes oil-trading, banking, telecommunications and trucking in India, Europe and the Middle East. First made money when the shah of Iran awarded them multiple contracts in the 1960s and 1970s; fortune grew through oil-trading with the Saudis. Still dogged by bribery allegations in India over a £750m arms deal.
Viscount Portman and family
Up £940m (362%). Wealth now: £1.2bn
Property owners currently upgrading a 110-acre estate in central London.
Sir Richard Branson
Up £900m (53%). Wealth now: £2.6bn
Eccentric founder of the Virgin empire who dropped out of school at 16 and now specialises in transport and mobile phones.
Sir Ken Morrison and family
Up £750m (150%). Wealth now: £1.2bn
Inherited shops and market stalls from his father. Built them up into supermarket chain.
Up £700m (700%). Wealth now: £800m
Invented the ball-barrow and the eponymous vacuum cleaner and washing machine.
Up £686m (264%). Wealth now: £700m
Property and leisure magnate with shares in Charlton and Preston FCs.
Up £678m (308%). Wealth now: £898m
Fined £1.4m in 2003 for receiving illegal commissions. This has not deterred his plans to help rebuild Iraq, his native land. It is claimed that his General Mediterranean Holdings Company has net assets of £1.08bn.
Up £660m*. Wealth now: £700m
His Northern and Shell group owns the Daily Express, OK! and other titles. Known as "Dirty Des" for his former ownership of soft-porn mags such as Asian Babes.
Sean Quinn and family
Up £641m (493%). Wealth now: £771m
Made money from quarries, hotels, and pub and building supply firms. Most profitable company now is Quinn-direct insurance.
Up £636m*. Wealth now £650m
Wales's second-richest man. Boss of the Total Fitness health club chain and founder of the Kwik Save convenience stores.
Up £621m*. Wealth now: £635m
Finance mogul and chairman of Travelex plc. Member of the Business for Sterling campaign, opposed to Britain entering euro.
Roddie Fleming and family
Up £613m (117%). Wealth now:£1.138bn
Sold the family bank for £4.8bn in 2000.
Mark Pears and family
Up £590 (281%). Wealth now: £800m
With brothers, runs property empire started by grandfather. Family company made a £57m deal in 2002 to join a partnership to buy 252 pubs from Punch Taverns.
Michael Cornish and family
Up £580m (483%). Wealth now:£700m
Sold family's polystyrene packaging group Linpac, which makes boxes for McDonald's burgers and Harley Davidson motorcycles, for £860m in 2003.
David and Jonathan Rowland
Up £560m (560%). Wealth now: £660m
Has £660m investment portfolio, part of it devoted to turning around failing companies.
Up £554m (277%). Wealth now: £754m
Former Tory party treasurer who made money in business services and sold Tyco shares worth £416m. Has made direct donations to Tory candidates, bypassing Conservative Central Office.
Sir Alan Sugar
Up £535m (288%). Wealth now: £703m
Chairman of the computer company Amstrad plc and has a £427m property portfolio. Big Labour Party donor.
John Hargreaves and family
Up £510m (2550%). Wealth now: £530m
Son of a Liverpool docker who founded giant retailer Matalan. Left school at 14 and within five years set up the fashion chain Jaymax. Family stake in Matalan worth £347m.
Up £461m (512%). Wealth now: £551m
Greek Cypriot property owner who recently bought in London's West End.
Up £460m (256%). Wealth now: £640m
Owns £601m stake in Peel Holdings, owner of Manchester's Trafford Centre, which has benefited from booming retail property sales.
Up £450m (900%). Wealth now: £500m
Sold Ayr-based sports goods retail company for £290m in 1998. Britain's most generous philanthropist, giving a fifth of his wealth to charity.
The Duke of Bedford
Up £425m (243%). Wealth now: £600m
Inherited art collection worth roughly £550m. Also runs Bedford Estates, which owns 170 properties in central London.
Up £417m (248%). Wealth now: £585m
Owner of numerous magazines including The Week and the lads' mag Maxim. A former left-wing rebel, he recently toured America reading from his book of poems A Glass Half Full, while dishing out free French wine - a dig at US hostility to France over Iraq.
Up £413m*. Wealth now: £427m
Co-founded Carphone Warehouse in 1989 with £6,000 of his savings and built it into Europe's largest mobile-phone retailer.
Up £405m (900%). Wealth now: £450m
Owner of Graff Diamonds International. With roots in London's East End, has spent more than 40 years in the jewellery business, starting as a Hatton Garden apprentice.
Up £350m (175%). Wealth now: £550m
Owns Britain's biggest licensed sex-shop group - the 90-strong Private Shops - a controlling stake in Sport Newspapers Ltd and numerous properties.
Up £347m (69%). Wealth now: £847m
Set up Interexchange, largest Swiss foreign exchange dealership. Bought £30m of property in Britain,123,000 acres in Australia, £17m of aviation assets and Zurich's Dolder Grand Hotel. Spends about £500,000 a year on his Black Bears polo team.
Benzion Freshwater and family
Up £343m (197%). Wealth now: £517m
Part-owner of Daejan Holdings, a London property company.
Tony Wilkinson and family
Up £342m (412%). Wealth now: £425m
Runs Nottinghamshire-based discount hardware stores.
Sir Paul McCartney
Up £340m (81%). Wealth now: £760m
Ex-Beatle's wealth includes £138m from his first wife Linda, as well as music rights and art.
Jasminder Singh and family
Up £310m (775%). Wealth now: £350m
Arrived from Kenya in 1970, trained as an accountant and worked in the City before going into business with his uncle and building up Radisson Edwardian.
Up £305m (469%). Wealth now: £370m
Owns 40 acres of London property, mostly in Holland Park. Legacy from mother includes 15,000 acres in Dorset and 3,000 in Nottinghamshire.
Up £300m (300%). Wealth now: £400m
Sold the Arthur Prince bookmaking chain in 1995. Plays currency markets and invests in bloodstock. Has a £25m Barbados home.
Up £300m (200%). Wealth now: £450m
Property tycoon who also owns Glasgow-based Rangers Football Club.
Up £298m*. Wealth now: £312m
Co-founded Carphone Warehouse, Europe's largest mobile retailer, in 1989 and floated it in 2000. Retains a £277m stake.
Keith Miller and family
Up £293m (391%). Wealth now: £368m
Runs Edinburgh-based Miller Group, Britain's biggest private housebuilding, construction and property company.
Up £285m (407%). Wealth now: £355m
Financier with £260m stake in Icap, the world's biggest inter-dealer money broker. Other interests include £12m stake in Numis, the quoted broker, and £36m in City Index, the spread-betting firm.
Mark Getty and family
Up £280m (233%). Wealth now: £400m
Founded the media company Getty Images, which has bought picture libraries around the world.
Peter Jones and family
Up £271m (208%). Wealth now: £401m
Former joiner who started as a housebuilder in Cheshire in 1959 and now owns the Emerson Group.
Freddie Johnston and family
Up £268m*. Wealth now: £282m
Holdings in Johnston Press, the 237-year-old Edinburgh-based local newspaper group.
Up £266m* . Wealth now: £280m
Designed Freeserve, the internet service provider. Now has £75m stake in InTechnology, a Harrogate data storage firm.
Our list is based mainly on a comparison of the Sunday Times 1997 and 2004 Rich Lists, which are compiled by Philip Beresford, for whose kind advice we are grateful. However, all mistakes are ours and we apologise to any of the super-wealthy we have omitted.
* Indicates that the person in question did not appear on the Rich List in 1997. The minimum required for inclusion that year was £15m. We have made the arbitrary assumption that the individuals were worth £14m in that year; in these cases, we have not shown a percentage rise. Those whose wealth was then unknown or who operated abroad are not included.