Liverpool should replace London as the UK's capital city if the government really wants to tackle the North-South divide, an MP says.

Plaid Cymru MP Adam Price says it would be a radical solution to the growing gap between the economic prosperity of parts of the UK.

Moving out of London would be the single greatest contribution to the regions that the government could make Adam Price Plaid Cymru MP

Under his proposal, the Treasury would move to Bootle and the Bank of England to Newcastle.

In the Westminster Hall debate, Regions Minister Chris Leslie insisted the government was working hard to bridge regional gaps.

Government departments were being encouraged to undertake work outside of London and south-east England, said Mr Leslie.

Discrimination

Plans for England's regions to have their own elected assemblies are currently going through Parliament - something Mr Leslie said could have a major impact.

But Mr Price, MP for the Welsh constituency of Carmarthen East and Dinefwr, argued ministers were relying on rhetoric more than action over regional disparities.

He pressed for "explicitly discriminatory" measures to combat the problem.

Ministers say talk of a North-South divide is simplistic

Instead, the government "treating unequal regions equally" by trying to encourage bottom-up regeneration and growth.

Mr Price condemned what he called a "winner takes all" economy, where the worst performing regions were locked in a vicious cycle of underdevelopment.

Tackling the inequalities would not only help deprived regions but also ease the pressures hitting quality of life in London and the South East.

The current situation was a recipe for economic instability, with bottlenecks in the South-East causing inflation.

Easing overcrowding

Mr Price advocated a return to the regional policies seen in the 1960s and 1970s, where industry was grafted into areas like South Wales, Scotland and north-East England.

But the government could help generate jobs itself by moving some of its London-based army of civil servants.

"Moving out of London would be the single greatest contribution to the regions that the government could make," he said.

You just cannot have an approach that constrains or smothers or suppresses prosperity anywhere Chris Leslie Regions Minister

"All other major English speaking states have their political capitals away from their biggest cities."

Mr Price said the shift would not diminish London as a great global city.

Indeed, it could improve its status because overcrowding would fall and the city would still be England's capital.

"Liverpool has nine of the 20 poorest postcodes in the UK," he continued.

"Let's reverse life's lottery of location and put the UK Parliament there - an Anglo-Celtic city that's ethnically diverse and infectiously inclusive."

'Wrong approach'

Moving the Bank of England to Newcastle could mean decisions which caused less damage to northern manufacturing.

Junior minister Mr Leslie accused Mr Price of advocating a redistribution that meant telling people where they should be living.

"You just cannot have an approach that constrains or smothers or suppresses prosperity anywhere in our country," said Mr Leslie.

He argued the government took regional policy extremely seriously.

"Economic development is not just about fairness and prosperity," he said.

"It is also about making sure that we have strong cohesion between all parts of the UK in general."

'Misleading' labels

The minister said the government was looking to develop civil service devolution.

"Departments will have to demonstrate the case for not locating new streams of work outside London and the South-East," he said.

Mr Leslie said the idea of a North-South divide was simplistic and misleading.

In some cases the imbalances within regions were even more marked than those between regions, he added.