Local government must have adequate funding to level-up deprived English towns, according to new research.

The Conservative government’s promise to level-up towns that have been left behind is under threat from the economic impacts of COVID-19 and Brexit, the report by the Institute for Fiscal Studies (IFS) warned.

While areas dependent on manufacturing and with less-educated workers could bear the brunt of Brexit disruption, the IFS found no relationship between measures such as pay, employment and education, and areas suffering the most from the pandemic so far.

However, coastal tourism hotspots such as Blackpool and Great Yarmouth, and some northern and Scottish cities such as Liverpool, Newcastle and Glasgow face a ‘double whammy’.

The report concluded ‘spending on day-to-day services … may be as, if not more, effective’ than investment in infrastructure projects.

It added: ‘Devolution of significant economic power to the regions could be as important as, or more important than, decisions made in Whitehall.

Reducing disparities in investment in areas such as research and development and transport – where investment in London is almost three times higher than the rest of the UK – could also contribute to levelling up.

Research economist at the IFS, Ben Zaranko, said: ‘This year’s Spending Review would be a natural place to start fleshing out some of the detail of the Government's much-vaunted levelling-up agenda.

‘Closing some of the gaps in spending on transport and research and development between regions might be beneficial.

‘But for many areas, greater funding for things like schools, further education and local government could be more effective.’