Billions of pounds poured into inner-city regeneration schemes may have been wasted, a new inquiry reported today.
A study of spending in 18 towns and cities including Walsall and Coventry concluded that the economic gap with the richest parts of the country had actually grown larger.
The study, published today by centre-right think tank Policy Exchange, looked at the effects of regeneration schemes costing £30 billion over the last ten years.
These were designed to raise living standards in relatively poor areas. But the poverty gap had actually become wider rather than smaller, the report warned.
Wealth per person in the areas receiving regeneration funding had fallen from nine per cent below the national average in 1997 to 14 per cent behind in 2004.
By contrast, the richest towns and cities, such as Edinburgh, Windsor-Maidenhead, Peterborough, Bristol, Milton Keynes and Swindon, had become even richer.
They were 39 per cent above the national average in 1997, but 46 per cent ahead in 2004.
The figures are based on GVA per person, the official measure of wealth. Average income in the towns receiving funding also fell from 17 per cent less than the national average in 1997 to 18 per cent behind in 2005.
And unemployment is still a stubborn 50 per cent higher in these areas than nationally.
Other towns and cities examined by the study, led by Dr Tim Leunig of the LSE, included Sheffield, Liverpool, Hull, Southampton, Leicester and Glasgow.
Policy Exchange’s Chief Economist, Dr Oliver Marc Hartwich, said: "The big picture is the same: towns which receive large amounts of urban policy funding are not converging to the UK average.
"If anything, they are slipping farther behind while successful towns are stretching their lead. Rather than poor cities and rich cities converging economically, they are doing the opposite.
"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."