Inequality 'rising under Labour'

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Figures released by the Office for National Statistics showed income inequality rose in 2005/06 - after drops in previous years partly generated by the minimum wage and tax credits.

Pay for the best-off fifth of the population stood at £68,700 - 16 times greater than the £4,200 of the bottom 20%.

Once benefits and taxes are taken into account, that ratio dropped to four times - unchanged on the previous year's situation.

The ONS said inequality "still remains high by historical standards" with the large increases of the late 1980s still not reversed 10 years after Labour swept to power.

Cash benefits made up 61% of the gross income of the poorest fifth of households, figures showed, with more than a quarter of their income being taken up in indirect taxes.

Technological change and a decline in the role of trades unions could be to blame for a growing gap between wages for skilled and unskilled workers, research suggested.

Shadow chancellor George Osborne told the Telegraph: "After he (Mr Brown) has been running the economy for 10 years we have growing inequality and the poorest fifth of people paying the greatest proportion of their income in taxes. Where's the fairness in that?"

And Liberal Democrat spokesman Vince Cable said: "The Blair-Brown government has wasted its opportunities; Labour has failed to build the fairer society it promised."

The Treasury said the figures showed the tax burden had dropped.