After decades in the background of political debate, income inequality has come front and centre in the fight over Britain’s future. According to a 2017 survey conducted by NatCen Social Research, more than two-thirds of Britons believe that government should reduce the gap between rich and poor. To the left, Jeremy Corbyn laments “grotesque inequality”, and to the right, Theresa May pledges to fight for the many, “not the privileged few”.

But Britons remain remarkably sanguine about wealth inequality. Only 15% “agree strongly” that ordinary people do not get their fair share of the national wealth – despite wealth inequality being twice as high as that of income.

The richest 10% own nearly half of British wealth, and the bottom 50% own less than 10%. Yet British voters remain strongly opposed to the policies that might narrow the wealth gap. Almost three-fifths of British voters think that inheritance taxes are “unfair” – a higher level of opposition than for any other tax. And taxes on property – that other great pillar of British wealth inequality – fare just as badly in the court of public opinion. No politician has dared to reform council tax for nearly three decades, despite it being almost as unfair and regressive as the poll tax.

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This is the paradox of inequality in Britain: the wealth that is most unearned is the most politically protected. Parents and property remain the best predictors of life chances, but all the best policy tools for correcting this injustice remain off the table.

This presents a problem – not only for households that have been locked out of wealth formation, but for Britain’s economy, society and politics as a whole. First, high levels of wealth inequality reduce the dynamism of the economy. This is certainly true at the bottom of the wealth distribution: the quarter of UK households that have no wealth or savings lack the security to take new risks or pursue new opportunities – be they in education or in business. But it is also true at the top: high house prices in cities such as Cambridge, Bristol and London reduce labour mobility and price younger workers out of home ownership, forcing them to live in cramped and expensive rental accommodation. In other words, the problem is not poverty, but inequality itself.

Second, high levels of wealth inequality skew future social outcomes. With inheritance taxes very low and easy to avoid, property wealth is – to borrow a poetic phrase from John Major – likely to cascade down the generations. The rich will not just stay rich, but in all likelihood will get even richer: the bank of mum and dad financed a quarter of all UK mortgages in 2017. And the growing share of the unpropertied will fall further behind, with equal opportunity becoming a pipe dream.

The danger is that the paradox of wealth inequality becomes self-reinforcing: as wealth at the top increases, the likelihood of redistributive reform decreases. The reason is that high levels of wealth inequality bias the democratic process. Martin Gilens has documented definitively the “elite economic domination” of American politics. But similar concerns about the unequal influence of the new aristocracy have been raised in Britain.

The paradox puts progressives in a bind – good policy is bad politics. Should they fight political opinion, making the case for taxes on land and inheritance, but in new clothes? Or should they leave well alone, in favour of more popular, if less effective, policies?

One solution floating around these days is to revive so-called asset-based welfare policy. Everyone loves owning a house: if progressives want both to help poor people and to increase their popularity, then they should help low-income renters to buy their own homes.

But while subsidising home ownership is an effective tool for boosting private wealth accumulation, it is unlikely to solve the problem of inequality. For while the house price boom of the 1990s and early 2000s enriched millions of property owners, it also impoverished property renters. Asset-based welfare policies provide no solutions to the challenges of today’s market. The government could, as with help-to-buy, subsidise renters to buy their own home – but this would further boost demand and hence prices, leaving lower-income renters even deeper in the lurch. Or it could subsidise developers to build more homes – but there is little evidence that new supply would bring down overall prices.

The real way forward, then, is not to subsidise private property wealth – which is a largely zero-sum exercise – but to invest in social wealth. This will free households to work, retrain and take risks, in the process enabling them to accumulate private financial assets. Britain should focus one three types of social investment.

One is social housing: the government has spent more than £190bn in housing benefit since 2010 – a whopping sum – draining social wealth into private hands. These funds could be redirected toward the acquisition of public land and construction of social housing.

Another is education: skills retraining is crucial to labour market success, but most unskilled households lack the resources to invest in themselves. One solution could be for the government to establish an “opportunity fund” for each child, which can be spent on training and costs associated with it.

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And a third is childcare: low-income households, especially those headed by single mothers, are often unable to work – let alone train – because of the prohibitive costs of childcare. Britain should follow the example of other European countries and roll out universal childcare provision, a uniquely important form of social wealth.

Investing in risk-deflecting social wealth would reduce overall levels of inequality in a long-term, sustainable way. New social investment would free unpropertied households to pursue opportunities without fear of falling through the net and losing the roof over their heads. The best part, though, is the popularity of such policies. Seven out of 10 people want more spending on schools. And six out of 10 people would be prepared to pay more tax to increase NHS spending. A similar number support more spending on affordable housing.

Effective taxes on inheritance and wealth are not coming any time soon. But we can start the process of rebuilding our common wealth today. The end of austerity and the start of a social investment campaign is a winning platform.

• Simon Tilford is chief economist at the Institute for Global Change. This article was written with David Adler, researcher at Generation Rent