New Labour's big failure - things have not got better

That was certainly how I felt. I'd never been tied to one party. But there was a youthfulness, a vigour, a compassion and a decency about Blair and his colleagues that I found appealing. Thirteen years on and where are we? Blair is due to appear before an inquiry to explain why he took us into a war and he's just landed a six-figure sum to be adviser to a hedge fund, to go with the other fees he's collecting. But that doesn't go to the heart of the matter.

Which is that his movement has profoundly failed. The proof is here, in front of me. It's yesterday's report, An Anatomy of Economic Inequality in the UK, by the National Equality Panel.

It's an indictment of pretty much everything Blair, Gordon Brown, Harriet Harman (who commissioned the study) and their colleagues stood for. If there was one thing we took away from that May dawn all those years ago it was that they would strive to rid Britain of inequality and to close the yawning, socially divisive gap between rich and poor. A year before he entered Downing Street, Blair said: "If the next Labour government has not raised the living standards of the poorest by its time in office, it will have failed."

Once there, he subjected us to slogan after slogan, from "Britain deserves better" in the 1997 campaign to "forward not back" for 2005. There were the ringing phrases that resonate still: "education, education, education" and "tough on crime, tough on the causes of crime".

Yet 13 years on, the very first sentence of this report begins: "Britain is an unequal country, more so than many other industrialised countries and more so than it was a generation ago."

On page after page, this thumping document explodes the New Labour myth. The "large inequality growth of the Eighties has not been reversed." It was a movement that had — still has, if they're to be believed — as one of its dearest tenets, the need to redistribute wealth. Today, says this study, the members of the richest 10 per cent of households will have accrued wealth of £2.2 million by the time they reach retirement; for the bottom 10 per cent, the figure is less than £8,000.

Why does this matter? Says the report: "Wide inequalities erode the bonds of common citizenship and recognition of human dignity across economic divides." Such inequalities "are associated with societies having lower levels of happiness or well-being in other respects" and "the social problems and economic costs resulting from these". For that, read hoodies, gangs, feral children, teenage mothers and entire families that have only ever known benefit payments.

What's depressingly predictable is the reaction of the Government to the study. Brown says it is "sobering" (it is that, all right) before spinning that it "illustrates starkly that despite a levelling-off of inequality in the last decade we still have much to do".

Harman says, in the foreword, the report shows "that public policy intervention works. It has played a major role in halting the rise in inequality which was gaining ground in the Eighties. Public policy has narrowed gaps in educational attainment, narrowed the gap between men and women's pay and tackled poverty in retirement." She is quick to lay the blame on gender — and yes, it's appalling that women still earn so much less than men — but that isn't what this report is really about.

As statements of complacency, of struggling to find anything positive from an overwhelming negative, Brown's and Harman's reactions are hard to beat.

Not that the other side can take much comfort. The evidence is laid bare in clinical detail that Britain's is indeed a broken society, as David Cameron never ceases telling us. But his own creed of putting faith in marriage, and of localised "bottom up" solutions to the nation's social ills, also smacks of massaging. Plus, as the National Equality Panel makes clear, the seeds for much of the inequality we're experiencing now were laid between the late Seventies and early Nineties, much of it during the years of Tory rule.

What changed in that period? It's when Britain underwent a profound shift. Grammar schools were abolished and the lowest-common denominator was made to prevail. I went to a grammar school and recall how we were taught, how the teachers struggled and succeeded, even on limited resources, to provide us (many of whom came from poor backgrounds) with the same education as a fee-paying school.

The pursuit of academic excellence was one of the nation's pillars. Others were community and mutuality. And industry. The language of the City came to the fore. We had privatisations, the share-owning democracy, the disappearance of building societies, council house sales and 1986's Big Bang in the City. New Labour picked up the baton so that every school and hospital must be given a place in a league table, civil servants receive bonuses, and private companies are encouraged to operate public services.

We're now stuck with a nation that is little more than a collection of retail parks, industrial heritage sites and housing estates. I get the same feeling going to parts of Britain that I got on holiday in Greece last year: I don't know what the locals do.

We've handed out welfare like never before, encouraged more pupils go to university (when in the past many of them would have begun apprentice schemes, now being hastily restarted), squandered the profits of North Sea oil, borrowed like mad and relied on a booming — and as is now obvious, deeply flawed — financial sector.

The result is a society that has stalled, that continues to produce inequalities which the panel that compiled the report find "shocking". Things can only get better, we were promised. They did, but only for a few.