On his so-called Damascene trip to Easterhouse a few years ago, Iain Duncan Smith railed against New Labour for failing to tackle the gap between rich and poor.

Quite right. Income inequality is the single biggest barrier to social mobility. So said Jonathan Portes of the National Institute of Economic and Social Policy Research last week, with plenty of evidence to back his thesis. Yes, in 21st-century Britain, the largest determinant of a child's educational attainment and future employment is not IQ but household income.

Why then is the Coalition Government mouthing platitudes about social mobility while presiding over the fastest acceleration in inequality since Charles Dickens exposed the evil underbelly of socially stratified Victorian Britain? Why are we celebrating the bi-centenary of the creator of Oliver Twist by opening more food banks for the needy than at any time since the Great Depression?

It's going to get a lot worse. The Government mouths off about high pay without doing anything to curb it, while allowing the national minimum wage to lose touch with the real cost of food and fuel and hacking back in-work benefits. And yesterday it moved a step closer to its cherished ambition of lopping £18 billion a year off the welfare budget.

There were a couple of measly concessions on "grace periods" and "discretionary payments" but these will merely delay the emergence of some of the worst horror stories. The Coalition will get away with it, at least in the short-term, because it has successfully peddled mythology about a "scrounger culture". Fewer than 300,000 adults out of 40 million have never worked and many of them have applied for literally hundreds of jobs. Given mounting unemployment, some of those who voice off about malingerers are about to taste the bitter reality of trying to live on £67 a week.

The true face of the Welfare Reform Bill is wheelchair users losing mobility benefits, terminally ill cancer patients being assessed for work and accident victims who have always worked being driven back on to basic means-tested benefits after a year. Thousands genuinely unable to work will be forced into unsuitable jobs or dire poverty. (In yesterday's debate one Tory backwoodsman seriously described being sick or disabled as "a lifestyle choice", to the righteous fury of Scots wheelchair-using MP Anne Begg.) These changes are being forced through without any evidence base to suggest that they will work at a time of lengthening dole queues with the long-term unemployed stuck at the back, furthest away from meaningful employment.

Yesterday 60 Scottish charities, trade unions and faith groups joined to condemn the "terrible impact" the bill will have on Scottish households and urge every Scottish MP to support the "six vital amendments" agreed by the House of Lords.

Labour has been pusillanimous in not daring to oppose a benefit cap outright, though it is right to insist that Britain needs jobs before cuts and right too to call for the return of rent controls. (The benefits cap argument is largely about private landlords charging whatever they like.) Labour's problem is that just now nobody is listening to them.

That does not apply to the Liberal Democrats without whom the Coalition could not survive. Much of this beastly bill must go against every fibre of their being. So why did only a handful of LibDems (Alan Reid from Argyll and Bute was the only Scot I could find among them) vote to soften the hardest edges by adopting some of the Lords amendments?

Why does Nick Clegg monotonously spout his mantra about increasing social mobility being "the over-riding social policy priority of this Government" when his grand obsession – raising the income tax threshold – helps low-paid part-timers least and the unemployed not at all. He knows this. So never mind the "squeezed middle" and "alarm-clock Britain".

Who will speak for those at the bottom? Charles Dickens? We need him now.