The areas with the highest levels of social mobility receive 50% more in Whitehall grants than the least socially mobile areas, new research from the think tank Onward has found.

Government grants to local authorities that are calculated on the basis of deprivation lead to a ‘social mobility penalty’, according to the centre-right think tank.

High deprivation and low social mobility are often closely aligned, Onward found. Two thirds of authorities in the top half of the deprivation rankings are also in the top half of the social mobility rankings and vice versa.

This means that grants that are focused on tackling deprivation often end up overlooking relatively affluent areas that have low levels of social mobility, such as smaller towns, and supporting deprived areas with high levels of social mobility, such as inner-city boroughs.

High social mobility areas are receiving up to £173 more funding per household compared to households in the least socially mobile areas. After controlling for deprivation targeting, this rises to £245.

The think tank calls for a ‘balanced model’ of funding that targets funding to high deprivation and low social mobility areas in equal measure.

Commenting on the report, Alun Francis, chair of the Social Mobility Commission, said: ‘The Social Mobility Commission is very interested in the geographical spread of opportunity across the country. This report contributes positively to this debate and has developed some credible and interesting proposals…It is certainly worth serious consideration from policy makers.’

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