By John Andrew BBC local government correspondent

Regional disparities are nothing new.

They have been exercising politicians since at least the 1920s, but worryingly, the gap between the most and least prosperous areas of England has been growing.

Measured by output per head, the North East of England lags 40% behind the South East.

Property prices are an indicator of regional wealth

Evidence to the committee from the North East Assembly put it starkly: "It is unacceptable that someone born in the North East is likely to have a shorter life, fewer qualifications and earn less than someone born in the South East."

Nowhere is the disparity more visible than in housing.

In run down parts of the North of England there are empty terraced houses you couldn't give away, while the same homes in the South could command �250,000 or more.

So why is the gap widening?

The committee point out that so far governments have developed policies for the benefit of all regions and that has meant the South East continues to pull ahead of the rest.

"The only way in which the gap can be reduced is to make conditions in the less prosperous regions more conducive to business growth," the report says.

In effect MPs are calling for some positive discrimination in funding to less prosperous areas.

'Cycle of deterioration'

In fact, some of that shift is already happening.

This year a new government funding formula for council grants tended to shift resources away from London and the South East to less wealthy areas.

This process will continue in the years ahead and is already the source of much anguish in the South.

But MPs want the government to go further and help less prosperous areas develop the "fundamentals" for growth.

These include a good transport system and more research and development, the level of which they describe as "pitifully low" in areas like the North East.

They make it clear this is not about a north-south battle, but in the interests of both.

The danger for the South is that continually trying to meet demand leads to overcrowding and a poorer environment, creating a cycle of deterioration.

Boom areas

The report says spreading developments across the regions would be far more sustainable and would reduce overheating in the more prosperous regions, while stimulating development in others.

The government is committed to reducing regional disparities by 2012, but the committee says ministers will have their work cut out unless there is a marked shift in policy and funding.

MPs believe that elected regional assemblies would only be able to scratch the surface of the problem unless they get more powers - particularly over transport and business growth.

Now Chancellor Gordon Brown is giving councils who attract new jobs and investment the chance to keep a bigger portion of their business rate income - a move he believes will benefit all regions.

Ironically, though, the system will probably include a limit on what councils can receive to stop boom areas - mainly in the South from gaining too much.