Interesting tangent this thread has gone down... 
Does anyone seriously believe that the children of the rich are genetically more intelligent/capable/harder-working than the children of the poor?
Because if the answer is no, the next logical question is why are the children of the rich so much more successful than the children of the poor?
The answer is opportunity and the right contacts. Many of which are simply there automatically if you are fortunate enough to be born into the right circumstances. A study out recently showed that Oxbridge graduates who came from poorer backgrounds did significantly less well after graduation than their better off peers, despite mostly outperforming them in terms of results. The reason for this was put down to having fewer social networks.
Knowing that, I'm more inclined to ask "how can we direct money to make children from all backgrounds have greater equality of opportunity?"
I do NOT want benefits to be cut because it penalises people who can't help their situation. Those who have fallen on hard times will hurt even more. Those whose sum ambition is to play the system and live off benefits? Well I feel that if that is really all they are aiming for then they can have it - because no one with an ounce of self-respect would ever want to live a life of barely disguised poverty dependent on other people's handouts and people looking down their noses at the 'scroungers'. I pity these people rather than feel anger towards them and I believe that they are a minority, not a majority. Far more goes unclaimed in benefits than is lost through fraud or fecklessness.
However, generous benefits don't help much other than through alleviating poverty. They don't make a more equal society. Many children will still be living a life devoid of aspiration and opportunity because their parents either cannot afford to buy those opportunities or lack the education/skills to give their children aspiration. What we need is something to tackle this.
Better services for pre-schoolers, more money ploughed into education to give children from all backgrounds a much better chance and, most importantly, the opportunity to do all the extra-curricular activities (e.g. day trips, music, sports) that the children of the better off take for granted and which the children of the less well off hardly ever take up because it costs too much. It is these sorts of activities that often lead to future networking opportunities.
People will always look after their 'own'. It's stupid to try to change human nature and create a communist utopia because it won't ever work. However, there is a LOT that can be done to encourage social mobility so that people mix more and we lose an elite that is passed down generation after generation because of genes, not ability. Unfortunately, cutting sure start services and school budgets seems to be doing the exact opposite...