Britain's five richest families worth more than poorest 20%Oxfam report reveals scale of inequality in UK as charity appeals to chancellor over tax

The scale of Britain's growing inequality is revealed today by a report from a leading charity showing that the country's five richest families now own more wealth than the poorest 20% of the population.

Oxfam urged the chancellor George Osborne to use Wednesday'sbudget to make a fresh assault on tax avoidance and introduce a living wage in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.The development charity, which has opened UK programmes to tackle poverty, said the government should explore the possibility of a wealth tax after revealing how income gains and the benefits of rising asset prices had disproportionately helped those at the top.

Although Labour is seeking to make living standards central to the political debate in the run-up to next year's general election, Osborne is determined not to abandon the deficit-reduction strategy that has been in place since 2010. But he is likely to announce a fresh crackdown on tax avoidance and measures aimed at overseas owners of high-valueLondon property in order to pay for modest tax cuts for working families.The early stages of the UK's most severe post-war recession saw a fall in inequality as the least well-off were shielded by tax credits and benefits. But the trend has been reversed in recent years as a result of falling real wages, the rising cost of food and fuel, and by the exclusion of most poor families from home and share ownership.In a report, a Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.

The most affluent family in Britain, headed by Major General Gerald Grosvenor, owns 77 hectares (190 acres) of prime real estate in Belgravia, London, and has been a beneficiary of the foreign money flooding in to the capital's soaring property market in recent years. Oxfam said Grosvenor and his family had more wealth (£7.9bn) than the poorest 10% of the UK population (£7.8bn).

Oxfam's director of campaigns and policy, Ben Phillips, said: "Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, while millions of families are struggling to make ends meet.

"It's deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline."

The UK study follows an Oxfam report earlier this year which found that the wealth of 85 global billionaires is equivalent to that of half the world's population – or 3.5 billion people. The pope and Barack Obama have made tackling inequality a top priority for 2014, while the International Monetary Fund has warned that the growing divide between the haves and have-nots is leading to slower global growth.Oxfam said the wealth gap in the UK was becoming more entrenched as a result of the ability of the better off to capture the lion's share of the proceeds of growth. Since the mid-1990s, the incomes of the top 0.1% have grown by £461 a week or £24,000 a year. By contrast, the bottom 90% have seen a real terms increase of only £2.82 a week or £147 a year.

The charity said the trends in income had been made even more adverse by increases in the cost of living over the past decade. "Since 2003 the majority of the British public (95%) have seen a 12% real terms drop in their disposable income after housing costs, while the richest 5% of the population have seen their disposable income increase."

Osborne will this week announce details of the government's new cap on the welfare budget and has indicated that he wants up to £12bn a year cut from the benefits bill in order to limit the impact of future rounds of austerity on Whitehall departments.

Oxfam said that for the first time more working households were in poverty than non-working ones, and predicted that the number of children living below the poverty line could increase by 800,000 by 2020. It

said cuts to social security and public services were meshing with falling real incomes and a rising cost of living to create a "deeply damaging situation" in which millions were struggling to get by.

The charity said that starting with this week's budget, the government should balance its books by raising revenues from those that could afford it – "by clamping down on companies and individuals who avoid paying their fair share of tax and starting to explore greater taxation of extreme wealth".

The IMF recently released research showing that the ever-greater concentration of wealth and income hindered growth and said redistribution would not just reduce inequality but would be economically beneficial.

"On average, across countries and over time, the things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme", the IMF said in a research paper. "And the resulting narrowing of inequality helped support faster and more durable growth, apart from ethical, political or broader social considerations."

Phillips said: "Increasing inequality is a sign of economic failure rather than success. It's far from inevitable – a result of political choices that can be reversed. It's time for our leaders to stand up and be counted on this issue."

Larry Elliott - The Guardian March 17th 2014

Budget 2014: a boost for childcare is a bonus for the whole economyHelping mothers back to work gets them off benefits and paying taxes – a net gain that could be worth up to £1.5bn a year

Jacqueline Gold, the boss of Ann Summers sex shops, says she has a pretty good idea of what women want. As George Osborne puts the finishing touches to his budget, he would do well to listen to her – specifically, to her call for more help with childcare costs.

Polls show a bigger lead for Labour among female voters than male. Time and again, the coalition has been attacked for an austerity drive seen to have disproportionately hurt women.The cost of living debate has died down somewhat given the recent fall in inflation. But with just over 400 days until a general election, Labour has wisely steered the discussion towards the cost of childcare, which for years has outstripped wider inflation. The party has vowed to expand free childcare for working parents of three- and four-year-olds andraised the prospect of free childcare for all pre-school children.Gold's call for childcare costs to be deductible from personal tax bills is being seen as a way to get more mothers of pre-school children into work, or on to more hours of work – something surveys suggest manywomen want but struggle to make pay.

Britain needs to boost productivity, and given that several studies have linked higher maternal employment rates to higher productivity, such a move could be attractive economically for the chancellor.Granted, the UK already has a relatively high headline maternal employment rate: the latest full report from the Office for National Statistics showed the gap in employment rates for women with and without children narrowed over the 15 years to 2010 from 5.8 percentage points to just 0.8 percentage points. But those figures cover all mothers with dependent children, and where the UK really has a problem is in helping mothers with children under five. And although that 15-year period saw a rise in the percentage of mothers working full-time to 29%, there were still far more doing part-time work, at 37.4%.There are many factors at play in people doing part-time work; some are related to choice, some not. But again, surveys suggest many women would work more hours if childcare were easier to arrange and more affordable.

With the debate heating up and Osborne under pressure to back up his promise to "help hard-working families", budget-watchers say some proposal on childcare is likely.We might see an "Ann Summers cut", says Alan Clarke, an economist in London at Canada's Scotiabank. He sees a Canadian connection: "The UK has cherrypicked various things from Canada: a central bank governor, austerity focused on spending cuts rather than tax hikes… Indeed, Canada already allows the cost of childcare to be deducted from personal tax bills."But Osborne should consider another precedent. In Australia, a move to reduce childcare costs by offering tax refunds saw many providers simply raise their prices, points out Dalia Ben-Galim at the Institute for Public Policy Research (IPPR). Without a market intervention, such as a cap on childcare prices, the UK risks the same effect.

That is something parents can ill afford, given childcare costs have already soared 27% over the last five years, according to the Family and Childcare Trust's annual childcare costs report this month.The trust highlighted the high proportion of earnings that British parents spend on childcare, compared with most advanced economies. Only Swiss parents spent more, according to a 2012 report from the Organisation for Economic Co-operation and Development (OECD). British parents paid out 26.6% of net income, more than double the OECD average of 11.8%.

The Family and Childcare Trust wants an overhaul of the system and, in the short term, free early education extended to all two-year-olds.

That kind of change is unlikely this week. But one demand that has caught policymakers' attention and may make a more affordable vote-winner is a change to the planned universal credit.As things stand, the welfare reform will mean parents earning enough to pay income tax will be able to claim 85% of childcare costs of their childcare. However, parents who earn too little to pay income tax will only be able to claim 70%. Gingerbread, which campaigns for single parents, wants Osborne to invest an extra £200m so all parents on universal credit can claim back 85%.

Taxpayers without children may question why they should foot the bill for mothers to have an easier path back to work. But – aside from the economic perils of a falling birthrate – hindering women who do have children from getting back into the labour market is a waste of talent and a loss to businesses. There are also big costs in terms of welfare spending and lost income tax.That brings us back to Osborne. Giveaways seem to run counter to the austerity drive, which we are told has some way to go yet. But putting more into the childcare pot, if done in the right way, should reap big rewards for the public coffers – as much as £1.5bn in a single year, according to the IPPR.

The thinktank has tallied up the effects of extra tax revenue and lower public spending when maternal employment is boosted and £1.5bn is a best-case scenario of the rate rising 10 percentage points. Boosting it by five percentage points could generate £750m.Don't expect any such brave moves this week. But do bank on Osborne at least asking himself what employers like Gold want; and, secondly, what women want.