An Institute for Public Policy Research (IPPR) report argues that government targets to bring regional growth rates more into line with each other are inadequate. The next comprehensive spending review should set an "unambiguous" target to reduce disparities in output per head across the UK, it says.
While London and the South East face high living costs, rising house prices and transport congestion, northern regions are blighted by job shortages and a weaker economy, the institute points out.
Since 1992 the gap in prosperity between the North East and South East has doubled from about 30 per cent to nearly 60 per cent, the think-tank says. One in five of the working population in the North East claims key state benefits, it notes.
"Tackling regional disparities has rightly risen up the agenda. The government has made some progress, but it needs to go much further," said John Adams, the IPPR's northern research director and co-author of the report.
"The targets are ineffective and lack ambition and are simply aimed at reducing the gap in growth rates between regions. A strong regional economic policy is important for promoting the UK economy," Adams added.
Employment should be given equal weight with productivity as the focus for regional economic policy, the report argues. It says prosperous regions should bear more of the costs of success through schemes such as congestion charging and capturing increases in land values.
The key to regenerating deprived regions is not to try and create jobs in poor areas but to create jobs "in areas attractive to employers but in travelling distance of deprived communities", it adds.
A New Regional Policy for the UK is available from Central Books (tel) 0845 458 9910.