The LSE-affiliated body said there were ‘no signs of improvement’ in unemployment or income in the towns that had received funding.
The Policy Exchange selected 18 towns and cities targeted for investment – including Sheffield, Liverpool, Hull, Southampton, Coventry, Leicester and Glasgow – and then compared the economic performance of these ’urban policy towns’ with the national average, and with six towns that have not received funding but have economically outperformed the national average.
Key economic indicators such as income and unemployment levels were examined. Although towns such as Edinburgh, Windsor, Maidenhead, Peterborough, Bristol, Milton Keynes and Swindon were ‘high performing’, many of the selected towns had performed significantly worse that ‘untouched’ towns.
The report found that for income, urban policy towns began 17 per cent behind the UK average in 1997, and ended 18 per cent behind in 2005.
In unemployment terms there were still 50 per cent more people out of work in urban policy towns than the national average.
The 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.’
Local government minister John Healey told the BBC that the government ‘totally rejected’ the report’s findings.
He added: ‘Our towns and cities have overcome years of decline and decay with economic performance rising in six out of eight of the largest cities in England since 1997.’