A major government think tank has issued a report condemning the North East region as the home of “low wage, high welfare” cities.

In its report – the annual “Cities Outlook” – the Centre for Cities urged Chancellor George Osborne to invest in the North East by putting money into schools and giving local authorities more power to control finance and create jobs.

Alexandra Jones, the Chief Executive of the Centre for Cities, said that the report highlights “the importance of supporting and empowering” cities, and that only that will achieve the objectives this government has set itself.

One of the greatest issues that the report has highlighted is the skills-gap, and the lack of support given to schools, which has contributed to the areas of Newcastle, Sunderland and Middlesbrough having some of the lowest rates of highly-skilled workers in the UK.

The report also called for increased devolution to a local level, suggesting that control of skills and welfare budgets should be returned to city authorities, and that the local authorities should be allowed to keep any savings in welfare, in order to incentivise the creation of skills and jobs.

Another factor by which the success of cities is gauged is the level of population growth, but again the North East falls short. In Sunderland, the population is actually falling by 0.1% a year. All three of the city areas examined in the North East – Newcastle, Sunderland and Middlesbrough – are also paid below the national average.

Most of the “successful” cities in the UK are located in the South, with London, Reading and Milton Keynes some of the highest-paid in the country. The best-educated cities are also in southern areas, counting Cambridge, Oxford, London, Reading and Brighton among them.

The findings will go some way towards derailing Mr Osborne’s promises to create a “Northern Powerhouse”, a plan which is currently supported by the Department for Communities and Local Government and even has its own minister, James Wharton. The plans, which promised in July’s budget to create a “higher wage, lower tax, lower welfare society”, have succeeded in many parts of the country but the North East – on which many of the Chancellor’s plans were focused – has yet to respond in the same way.