Liz Leffman, the Lib Dem parliamentary candidate for the Meon Valley, said think tank Policy Exchange was 'out of touch with reality' after it claimed towns and cities in the north were failing.

She said: 'We have already got too much development planned for our area as it is. The idea that people should abandon the north and move to the already crowded south east, where house prices and living costs are sky high, is simply ridiculous.'

The right-leaning think tank suggested some cities in northern England were 'beyond revival'.

At one point the report stated: 'The evidence strongly suggests that there is next to no chance of people in Sunderland having the same opportunities as the people of Birmingham or Portsmouth, let alone the same chances as those in London or Oxford.'

Policy Exchange, a registered charity, has been described as David Cameron's favourite think tank. But the Tory leader described the report as 'insane'.