THE average North-East family income is now £17,000 below that of families in London, a new study reveals.

IPPR North, which compiled the report, says average household income in the region is £24,000, compared to £41,000 in the capital.

The think tank's report, Tax, Spend and Northern Productivity, warns that unless the Government invests more in the North of England this gap will increase.

Ahead of the Budget, IPPR North is calling on the Chancellor to allocate more on infrastructure and public spending in the North or risk failing to create the so-called Northern Powerhouse.

The report found that the difference meant Northern households paid £4,300 less in direct taxation than those in London.

Luke Raikes, research fellow at IPPR North, said it was normal for wealthy households to contribute more in tax.

However, he added: "The gap between London and the rest of the country - particularly the North - is remarkable.

“The government’s planned infrastructure investment will only reinforce that gap, by failing to invest in the creaking infrastructure of the North.

“If the concept of the Northern Powerhouse is to have meaning, then the North needs the Budget to set out a clear plan for a Northern economy which creates more and better jobs. This starts, but doesn’t end, with a long overdue investment in the region’s infrastructure.

“The capital will always be wealthier, but the right plan and the right investment the North of England can fulfil its significant potential. But to even begin to do so, the power and budgets to make this a reality must head North in the Chancellor’s statement."

To make the North more productive and help create prosperity, IPPR North says the Budget must invest significantly in Northern transport projects, handing the relevant powers and budget to Northern leaders to connect the region.