Polly Toynbee calls for new tax on housing wealth as London MPs call for bolder equality agenda.

Speakers: Karen Buck, Patrick Diamond, Tom Hampson, Sadiq Khan, Polly Toynbee.

An 'opportunity tax' should be levied on those who had gained most from increased house prices with the money earmarked for social housing, Guardian commentator Polly Toynbee told the Fabian New Year conference debate on inequality.

Rises in property prices, driven by wealth inequality, were preventing those at the bottom from being able to afford housing. Opportunity taxes would be one way to redress the balance, said Toynbee, who was joined by London Labour MPs Karen Buck and Sadiq Khan, Tom Hampson of the Fabian Society and Patrick Diamond of the LSE, in the debate to identify the barriers that were preventing Britain from becoming more equal.

Whilst Labour has made considerable progress in reducing the number of people living in poverty, it has struggled to tackle the inequality in society. Labour MP for Regents Park and Kensington North, Karen Buck, argued that after ten years in power, it was difficult for Labour to refresh its agenda. 'It is difficult to talk about a radical new agenda for the future without admitting failure. The left is very bad at this.'

'We need to speak louder in making the case for income tax as a fair tax' said Buck. Labour needed to explain why the windfall benefits from the huge property boom of the last ten years unfairly accrued to those at the top of the ladder.

Polly Toynbee also argued that Britain was waiting for leadership on 'repellent and grotesque' differences in pay at the top, The point of the image of a caravan crossing the desert, recently praised by Conservative politicians, was that equality is essential to maintaining a cohesive society, Toynbee claimed. If the gap between any two of the coaches became too great, the caravan would fall apart. The gap between the top and the middle matters, not just between the worst-off and the rest.

Toynbee argued that politicians would have to start admitting to the extent of poverty in Britain today and rallying the public behind the necessary measures, since progress on the government's target to reduce child poverty would be impossible without extra spending, in the region of £20 billion a year until 2020

Tootin MP Sadiq Khan warned that measures to tackle poverty so far had done little to touch the 'hard to reach areas'. A Labour party scarred by loss had rightly set itself achievable targets, said Khan, yet these targets did not necessarily address the deeply entrenched intergenerational poverty.

He went on to argue that policy needed to recognise that inequality was about more than just income. 'Who has benefited from the increase in university places since 1997?' asked Khan. He claimed that amongst the bottom 20% of the population, 6% used to go to university, and now 9% do. Amongst the top 20% of the population, 9% used to go to university, and now it is 48%. 'We need to know the consequences of our policies.'

Tom Hampson, Editorial Director of the Fabian Society, also highlighted education as a crucial battleground in the coming years. 'We know now that if you spend large amounts of money in deprived areas, as Labour has done with academies, that you can get good results. But is that enough? Labour has yet to reveal an overall plan for education. We need to make sure that tackling inequalities in education is the heart of the next government's education policy.'

Buck also warned that flagship policies of the last ten years, such as Sure Start, could be at risk in the years ahead. As the government extended the scheme, rapidly increasing the number of centres, funding would be thinly stretched jeopardising many of the benefits of the scheme. 'Sure Start is one of the key ways to build social capital', said Buck, but for this to remain to be the case, the gradual development of the centres in deprived communities had to be protected.

Life chances: Will Britain be more equal? with Karen Buck MP; Tom Hampson, Editorial Director, Fabian Society; Sadiq Khan MP; Polly Toynbee (The Guardian); Chair: Patrick Diamond (LSE). This panel debate took part at the Fabian New Year Conference 'The Next Decade; on January 13, 2007, at Imperial College London.

Event report by Hannah Jameson.