Poorest towns 'falling behind'

The "wealth gap" between struggling cities such as Glasgow, Sheffield, Blackburn, and Southampton and the rest of the country has doubled since 1997.

Meanwhile, prosperous locations including Edinburgh, Bristol and Milton Keynes have forged ahead without the need for state help.

The research by right-leaning think tank Policy Exchange examined the fortunes of 18 towns and cities which have received significant funding for urban renewal over the past decade.

The team found that their ability to generate wealth - measured as Gross Value Added - had gone from 7% below the national average to 14% below. By comparison, a sample group of successful towns had increased its lead over the average from 29% to 46%.

Personal incomes had also declined by 1% in relative terms in the areas targeted for aid, and residents were 40% more likely to be out of work than elsewhere - the same disparity as a decade ago.

The researchers, led by Dr Tim Leunig of the London School of Economics, warned that as a result of the widening gulf more people were seeking to escape "in search of the better opportunities that they rightly realise exist elsewhere".

Although the Labour Government had been "well intentioned", the introduction of an array of initiatives including the New Deal for Communities and special grants to firms had not improved the situation. "Successful towns are becoming more successful, poorer towns are becoming less successful," the report concludes. "The status quo has been reinforced, not removed in the last 10 years."

Policy Exchange chief economist Dr Oliver Hartwich said the study showed that funding for problem towns and cities was not helping them catch up. "If anything, they are slipping farther behind while successful towns are stretching their lead," he said.

"While we should not give up on urban policy, much of the £30 billion spent in the last decade appears to have had no effect. Britain needs to consider policies that will make it easier for people to work in places that have high productivity and therefore offer high wages. Urban policy should provide towns and cities with incentives to grow, prevent ghost towns from appearing, and give towns and cities much more freedom to decide how to use regeneration money."