The final death of meritocratic Britain

Reports don't get much scarier than this. Britain, according to the Social Mobility and Child Poverty Commission, is on the brink of stepping over an event horizon of doom and becoming a "permanently divided society".

If action is not taken soon, Alan Milburn's Commission warns, this country's biggest weakness will become irrevocable and irremovable.

It highlights a fundamental failure: the breaking of the link between effort and reward. This is what meritocracies are all about – the idea that those who deserve to succeed will actually do so.

In 21st century Britain, the report worries, this idea is becoming laughable. It points to five million low-paid workers, a housing market where home ownership rates have halved over the last 20 years, public spending cuts and a brutal welfare squeeze as evidence that the gulf between the well-off and the underprivileged will become permanent.

This makes the stakes incredibly high. The implication of failure – that it will become simply impossible for anyone to make it to the top if they are born into the lower class – is so extreme it's almost unbelievable.

Still, that's what Milburn is claiming. Top of his list of the failures is the likelihood that the 2010s will be the first decade when absolute poverty has risen, not fallen.

"2020 could mark a watershed between an era in which for decades there have been rising living standards shared by all and a future era where rising living standards bypass the poorest in society," the commission says.

"If that comes to pass the economic recovery will not have produced a social recovery. Social mobility, having flatlined in the latter part of the last century, would go into reverse in the first part of this century. The United Kingdom would become a permanently divided nation."

Now it's virtually impossible to hit the 2020 child poverty target, a sin none of Westminster's politicians are prepared to live up to.

Milburn condemns them outright:

"None of the main political parties have been willing to embrace such a change nor speak to this uncomfortable truth. They are all guilty in our view of being less than frank with the public. They all seem content to will the ends without identifying the means."

This is not a problem the Social Mobility Commission suffers from. It provides an exhaustive list of proposals which are so wide-ranging the report feels more like an election manifesto. From more shared ownership options to fix the housing crisis, via a call to make unpaid internships illegal, to making the UK a Living Wage nation by 2025 at the latest, its proposals are far-reaching. Not many reports are worth reading in full, but this is one of them.

If you do actually follow that link, you'll realise the Commission comes up with a long list of achievements. But it also identifies the areas where it thinks Britain is, frankly, a mess. Talk about speaking truth to power: this report does not hold back in telling the government that it is getting, er, just about everything wrong. Here's a few of the most eye-catching conclusions:

– GDP per capita is still lower than it was before the recession
– Earnings and household incomes are far lower in real terms than they were in 2010
– Five million people earn less than the Living Wage
– George Osborne has failed to balance the Budget by 2015, meaning 40% of the work must be done in the next parliament
– Absolute poverty increased by 300,000 between 2010/11 and 2012/13
– Almost two-thirds of poor children fail to achieve the basics of five GCSEs including English and maths
– Children eligible for free school meals remain far less likely to be school-ready than their peers
– Childcare affordability and availability means many parents struggle to return to work
– Poor children are less likely to be taught by the best teachers
– The education system is currently going through widespread reform and the full effects will not be seen for some time
– Long-term youth unemployment of over 12 months is nearly double pre-recession levels at around 200,000
– Pay of young people took a severe hit over the recession and is yet to recover
– The number of students from state schools and disadvantaged backgrounds going to Russell Group universities has flatlined for a decade

There's a reason government advisers tell new ministers, when they invite politicians from the other side to come in, set up shop and get them to tell some hard truths, that they might want to think again. This report is a litany of failure for the coalition. Worst of all, though, it laments the government's failure to be honest with voters about the spending cuts and everything they entail. It's not a report ministers should ever really have encouraged or allowed to be written, which is exactly why you need to read it.