The Government is focusing on the right issues as part of its levelling up agenda but needs to dramatically scale up investment and effort, according to the Institute for Government (IfG) think-tank.

A report by the think-tank said achieving the Government’s missions across sectors ranging from schools to transport would boost gross domestic product by £20bn per year by 2030 – but would only narrow the productivity gap between London and the South-East and the rest of the country from 41% to 39%.

The average wage in the South-East would be £7,000 higher than other regions compared to the current gap of £7,400.

Suggesting that rebalancing the UK economy meant changing where people and businesses choose to live and locate, the IfG paper said the Government should create a globally competitive city in every region.

Report author and IfG deputy chief economist Thomas Pope said: ‘Levelling up was a key plank of the 2019 Conservative manifesto, but unless the Government expands the ambition of its policies it will not meet expectations.

‘While the Government’s policies on skills, infrastructure and innovation are broadly evidence-based, even achieving its missions will only make a small dent in regional economic inequality.

‘The Government should be applauded for its reforms to improve policymaking, but if the new administration is serious about levelling up it should deliver these reforms, including further devolution, in full.’

The report emphasised the importance of delivering the ‘system reforms‘ detailed in the Levelling Up White Paper – such as better policy evaluation and more devolution – to redress a history of inconsistency and poor coordination in previous attempts at regional development.