Twenty years ago the view that social class no longer mattered was widely shared across the political spectrum. Conservative prime minister John Major’s vision of a classless society was echoed a few years later by Tony Blair who insisted that “the class war is over”. Such views were endorsed by leading academics. Eric Hobsbawm was the first to detect the end of the “forward march of labour” back in 1978, and the subsequent decline of industry, working-class solidarity and trade-union membership only seemed to confirm his prescience. He was joined by an increasingly vociferous chorus of sociologists, from Anthony Giddens to Zygmunt Bauman, who announced the arrival of a new globalised world of consumption and lifestyle choice.

Looking across the landscape of Britain today these views look quaint indeed. Motifs of class and inequality proliferate. The familiar pictures of Boris Johnson, George Osborne and David Cameron swaggering at Oxford University’s Bullingdon Club symbolise the languid power of a privileged elite. “Poverty porn” has become a staple across the broadcast media. The remarkable success of the Scottish Nationalist party followed by the unexpected election of Jeremy Corbyn as Labour leader testify to the resurgence of a new kind of anger about how austerity is being used to justify extensive cuts in public spending and welfare. The issue of inequality is perhaps the defining question of our time.

Income inequality in Britain is rising more dramatically than in nearly any other nation. This is associated with London’s central role in global financial and trading networks, which attracts the global super-rich like bees round a honeypot. Meanwhile, Britain’s manufacturing sector continues to decline, and badly paid, casual and insecure jobs proliferate in much of the service sector. The last 30 years have seen the most dramatic shift of resources towards wealthy households in Britain since that caused by Henry VIII’s closing of the monasteries five centuries ago.

So far, so familiar. But it is the wider social, cultural and political implications of these changes that are crucial in understanding what class means today. Economic divisions might actually be acceptable if they act as incentives to encourage people to work hard and if high rewards are justly earned by those with the skills and capacity to carry out the most difficult or demanding jobs. But this is far from the case. Among the best-paid jobs, those who come from privileged backgrounds earn substantially more than those who have the same jobs, but do not come from a privileged background. The BBC’s Great British Class Survey, the largest ever audit of social class in the UK, which I have worked on with Fiona Devine and other co-authors, suggests that this “class ceiling” can give the holder of a top job who was brought up in a senior management or professional family an income boost of up to 20% compared with the income earned by children of manual-labour families who have attained the same kind of senior position. This puts it on a par with the “glass ceiling” that prevents women from rising to the top of their professions.

Chief executives from senior management backgrounds have an average household income of well over £100k, whereas those in the same jobs from other backgrounds earn on average less than £90k. Lawyers from the most advantaged backgrounds earn more than £86k, 31% more than the average £65k earned by those from manual backgrounds. There are some exceptions: the household income of doctors is fairly even, whatever background they come from.

The north-south divide has been replaced by an urban-rural divide in which the whip hand is held by urban elites

We don’t know the reasons for the existence of this “class ceiling”, but it is likely that those occupations that are most stratified between “elite” and regular elements see the top-level positions predominantly filled by those from privileged backgrounds. But elite institutions do not only reproduce these inequalities, they help to generate them. Our analysis suggests that those who graduate from a very few elite universities earn substantially more than those who graduate from other top-tier “Russell Group” universities. Oxford University graduates have household incomes 50% higher than graduates from, for instance, the University of York. These advantages remain, even taking account of social background, type of school attended and degree specialism. But the elite pecking order is changing: although Oxford is paramount, graduates from the London School of Economics, King’s College London and Imperial College now report higher household incomes than graduate from the University of Cambridge, testifying to the increasing prominence of London institutions. The economic elite is therefore crystallising as an increasingly cohesive social and cultural elite, whose lives and experiences are separated from the majority of the population.

The old class division between “middle” and “working” class, which historically mapped on to non-manual and manual jobs, or between those on a wage and those on a salary, is now far less important. In the middle layers of the class structure there are much more fluid boundaries and it is harder to pinpoint a threshold at which point one passes from “working” to “middle” class. It is the fracture between a smaller, wealthy elite and everyone else that now forms the prime class divide. The 6% who fall into the top “elite” class have, on average, a household income of £89k, savings of £142k and houses worth £325k. These tend to be drawn from a narrow range of occupations. It is a while since the eclipse of the aristocratic upper class by a more “meritocratic”, business-oriented and corporate elite has been worth noting.

Tony Blair at the Labour party’s 1999 conference at which he announced: ‘The class war is over.’ Photograph: Adam Butler/AP

There is an important geography involved in this remaking of class relationships. We used to see a “north-south” divide, which pitted the region of the industrial working class – with its dense fabric of working men’s clubs, trade unions, terraced housing and rugged pride – against the “softer” home counties. But this has now been replaced by a more powerful urban-rural divide in which the whip hand is held by urban elites. The wealthy have an increasing presence in city centres, where they play a prime role in driving urban redevelopment. Analysis shows that Manchester is a good example of this trend. Thirty years ago, the city centre had hardly any residents and wealth was concentrated in the suburban ring in North Cheshire. Today, penthouses and gentrified areas abound in the heart of the city. But, of course, it is London where this process is most marked, as the poor are steadily being concentrated in the suburbs, and the city centre, with its astronomical property prices, has become the playground of the super-rich.

Associated with these trends, there is a new kind of cultural intolerance around class. We are far from being a culturally pluralist and tolerant society. It is the “precariat” – the group of people who have the least amounts of economic, cultural and social capital – that is on the receiving end of a powerful snobbery.

Marx famously argued that all societies have contradictory tendencies. This is as true today as when he wrote in the heyday of Victorian industrial capitalism. Now the age divide is emerging more clearly as a prime site of these tensions. Economic accumulation takes place over time and thereby tends to be greatest among older people (though this is not, of course, to say that all older people share in it). Younger people are increasingly relatively disadvantaged compared with their elders, yet at the same time they have high amounts of cultural and social capital, and their resentment is likely to be increasingly acute. Entry to the most privileged careers is more and more demanding: depending not only on access to elite universities but to an intense portfolio of internships, social networking and cultural activity. It is in this context that platitudes around the need to improve social mobility – such as those that Cameron used at the Conservative party conference earlier this month – look out of step with the actual prospects facing ordinary young people.

Given the widening distance (economically, socially and geographically) between the super-rich and the rest of us, the solidifying barriers to entry into the upper echelons of professional and business employment, and the growing acceptability of demonising members of the “precariat” with the very least resources, the 21st century is likely to be marked by increasingly disruptive challenges to the social fabric. The old class war may be over: the new politics of class is only just beginning.

• Mike Savage’s Social Class in the 21st Century is published by Penguin next month. To order it for £7.19 (RRP £8.99) go to bookshop.theguardian.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min p&p of £1.99.