For every 12 net new jobs that have been created in cities and towns in southern England since 2004 only one has been generated in towns in the rest of Britain, according to a report by a thinktank that has compared urban areas across the country.

The thinktank, the Centre for Cities, found that the gap between Britain’s best and worst performing towns and cities had dramatically widened in the last 10 years, creating a two-tier economy of dynamism and decline.

Its annual report, entitled Outlook 2015, compared the performance of the UK’s 64 largest cities and towns and found the south far outperforming the north between 2004 and 2013.

The research data come after a year in which devolution to city regions proved a hot topic in national and local government, with the chancellor, George Osborne, setting out a vision for building a “northern powerhouse” to compete with London and the south.

During the 10 years studied in the report, the population of towns and cities in the south grew by 11.3% – double the rate of towns elsewhere. Milton Keynes was found to be the fastest growing place in the UK, expanding by 16.5%, followed by Peterborough and Swindon.

Only two places outside the south, Northampton and Cardiff, featured in the top 10 for population growth. Sunderland, meanwhile, was the only city to shrink, losing 1.4% of its population.

But as southern cities have prospered, they have become less affordable as places in which to live. In 2004 the average house in a southern city or town was nine times people’s average earnings. By 2014 the price had grown to more than 13 times the average wage, the report says.

Yet there was virtually no change in affordability in cities elsewhere.

Not all the most dynamic areas were in the south, however. Aberdeen and Warrington had some of the largest increases in the number of businesses, while Edinburgh and Coventry also made the top 10 in the list.

Grimsby and Blackpool, meanwhile, were found to be the only two towns to have fewer businesses in 2013 than they did in 2004.

The report makes grim reading for other northern towns. Rochdale finds itself once again towards the bottom of the tables. The former mill town in Greater Manchester lost 9,300 jobs from 2004 to 2013, a drop of 12.2%.

Commenting on the figures for jobs growth, Simon Danczuk, Rochdale’s MP, said : “Most of the areas with bad jobs growth figures are in the north and they make a mockery of Osborne’s northern powerhouse claims. The reality is we’ve been a northern punchbag in this parliament and when people in my constituency won’t open a shop because the business rates are three times more than the rent then you know ministers are not on the side of enterprise.

“Add to this the abject failure of the regional growth fund, businesses being starved by the banks and Tory thinktanks arguing that northern cities are beyond revival – and a clear picture emerges. Ministers are paying lip service to the north, and are not really serious about rebalancing our economy.”

Given the scale of the challenge facing the next government, the report asks all parties to ensure their visions for cities are based on significant devolution of fiscal and structural powers, providing incentives for towns to support economic growth, and giving greater flexibility to ensure money can be spent where it is most needed.

In November, Greater Manchester became the first city region to sign a devolution deal with central government. In exchange for Greater Manchester arranging to have a directly elected mayor, who will work in partnership with the combined authority, a series of London-style powers is to be devolved, including some relating to transport, planning, housing, police and skills.

Andrew Carter, acting chief executive of Centre for Cities, said: “The stark picture the report paints of the enormous gap in the fortunes of UK cities over 10 years underlines why a ‘steady as she goes’ approach must be scrapped.

“We must move from thinking that bundling up new funding streams with bureaucratic delays, or simply tinkering around the edges with well intentioned announcements, will be enough to reverse trends that are becoming increasingly entrenched. ”

Carter added: “Cities need long-term funding and strategic planning, and policies that go to the heart of addressing the key drivers of economic growth – including transport, planning, skills and housing.”