George Osborne is being urged to pump money into northern railway lines, as a way of stimulating the economy of the north of England.

The think-tank IPPR North wants the government to invest £560 million in a "Northern Hub" railway development, to improve the speed and quality of service between Liverpool, Manchester, Leeds, Sheffield and Newcastle.

It's the think tank's second report his week - on Wednesday they claimed that the gap between the unemployment rate in the North of England and the South East is the widest on record. They said that there was "a labour market double-dip over the last year" while unemployment in the south east has remained below its recession peak.

They claim in their report published on Friday that while transport infastructure spending under the coalition is £2731 per head in London and £792 per head in the south east, it falls to £201 per head in Yorkshire & Humber and £134 per head in the North West.

Much of this can be accounted for by the plan for High Speed 2, a line the government is committing to building between London and Birmingham. A report by the Commons Transport Committee last month said the government "could do more to ensure that its expenditure plans involved a fair allocation of resources across the nation”.

Ed Cox, Director of IPPR North said: “If the government is serious about rebalancing the economy, they need to commit to investing in job creation in the North of England which is currently being hardest hit by unemployment.

"Transport investment in the North is vital if we want to see economic growth and people coming off benefits and into employment."

Their report comes as a northern Tory MP urged his party to do more to improve the image of the Conservative party in regions far from London. Eric Ollerenshaw said the party was suffering from an image problem in the north of England, partly because there were so few northerners in the government.

The Tories hold about a quarter of the seats in northern England, whereas they account for more than three-quarters of those in London and the south east.