07/03/2017 00:01 GMT | Updated 07/03/2017 07:03 GMT

Whitehall 'Should Strike New Deal With Councils Post-Brexit'

A new deal is needed between Whitehall and local authorities to make the UK economy work for everyone and prevent further division post-Brexit, a think tank has suggested.

The RSA Inclusive Growth Commission said new social contracts should be struck between central and local government to give local areas greater responsibility for, and control over, economic and public services spending.

The Commission believes this would help to make the UK economy more inclusive and beneficial to all.

Stephanie Flanders, chairwoman of the commission, said: "The way the economy and public services are run in the UK has failed.

"Chronic low productivity, weak growth in living standards and high levels of regional deprivation are all mutually reinforcing in the UK today.

"Together they help explain both our poor economic under performance and the disaffection we see in so many communities across the country.

"The Government is beginning to grasp the seriousness of these issues.

"But the gap between aspiration and reality is very wide and will not be fixed by Whitehall pronouncements alone.

"If we really are going to build a nation that 'works for everyone', then we need a reset in Whitehall and Town Halls which empowers all levels of government to deliver a more inclusive vision of prosperity across the UK.

"Failing to do so would mean a real risk the country becomes more divided outside the EU than it ever was within it."

The final report from the commission concludes that successive governments have prioritised broad economic growth instead of ensuring all parts of the nation contribute to, and benefit from, economic growth.

Meanwhile, a focus on the quantity, rather than quality, of jobs created has helped produce a divided country with some areas feeling left behind.

Under the commission's proposed way of working local areas would be able to agree with central government how they want to deliver inclusive growth.

Charlotte Alldritt, director of the commission, said: "The divide between the 'haves and the have nots' was an issue long before Brexit, but the referendum exposed the depth of the problem in the UK.

"And it's only going to get worse – with a further squeeze on living standards expected as welfare cuts and higher prices bite, and automation threatens ever more jobs.

"A new model of inclusive growth is needed."

The report also recommends the creation of a new £76 billion Inclusive Growth Investment Fund to channel any repatriated funds from the EU into projects that support growth for all.