If Dr Tim Leunig had his way, we northerners would all be on our way to Basingstoke by now. In Cities Unlimited, his controversial report for the Policy Exchange think-tank, he argues that regeneration in the North has largely failed. Huge swaths should be left to rot, their populations removed to the prosperous South East. But why leave now, when the regeneration story has only just begun?

It is impossible to argue that Manchester, a world-class city with exemplary leadership, and Leeds, a major financial and legal centre, have not benefited from millions of pounds-worth of public and privately funded regeneration projects. If anything, workers are migrating to these cities, not away from them. A recent report, Cities Outlook 2008, for the research organisation Centre for Cities, found that Leeds gained 34,400 permanent residents in the past decade. Dr Leunig is right, though: there are plenty of dumps in the North, as there are in the SouthEast, the South West, and the Midlands. But he is wrong to single out the North, and wrong to assume that Liverpool, Sunderland, Hull, Scunthorpe and Blackpool are all part of a homogenous northern black hole without a glimmer of hope between them.

Broadly speaking, there are three stages of post-industrial regeneration. There are the cities and towns that have already benefited, led by Manchester, Leeds, Newcastle and Sheffield. Newcastle scored two early hits with the Millennium Bridge (2002) and the Sage music centre (2005) on the Gateshead side of the River Tyne. Both persuaded locals that regeneration brought results. A relatively compact city centre, with limited building space, means that apartments have not saturated the market. In Sheffield, the public realm is outstanding, and many apartment schemes, such as West One in the Devonshire Quarter, have become popular with students and young buyers and renters.

Then there are those in the process, such as Hull, Liverpool, Bradford, Salford, Sunderland, Scunthorpe, Scarborough and Blackpool. Public money has kick-started regeneration, but sustained private investment and private sector job creation is needed to take it forward. The housing stock needs addressing too: Centre for Cities found that cities such as Sunderland and Bradford have too few homes of the size and type to tempt middle-managers, lawyers and doctors.

And then there are countless former industrial towns still with mountains to climb, such as Rotherham, Stockport, Oldham and Rochdale. “The biggest challenge is getting credibility,” says Bill Addy, a director of the property developer Iliad Group, which is working with Rotherham Borough Council to transform the town centre through schemes such as the conversion of the Imperial Buildings arcade into shops and apartments (the latter start at £90,000 for a 340sqft one-bedroom unit). “It is convincing people that Rotherham is a place where they can go and live, work and do business. There is the same challenge in a lot of smaller towns.” It doesn't help that many schemes are on a knife edge. In Stockport, for example, the developer Lend Lease pulled out of the Bridgefield scheme of shops, restaurants, cinema and 250 flats earlier this month, blaming “deteriorating conditions” in the retail market.

Peter Dixon, head of planning and regeneration in the North at Savills property consultants, says that the Policy Exchange report raises a crucial issue. “If you've got a location where you've got a second or third city, such as Leeds and Bradford, Newcastle and Sunderland and Manchester and Salford, the question is, should policy be to try to keep these places at the same level in the hierarchy?”, he asks. “That is not always going to work. Historically, Bradford was once more important than Leeds, when the wool trade was flourishing, but that has changed.”

Everyone agrees that talking in purely economic terms does not give the full story. “The regeneration of an area is not just about house prices,” says Peter Bolton King, head of the National Association of Estate Agents. “In fact, rising house prices, which have traditionally been associated with regeneration, may not be of benefit to local people, who are still working on the same wages and may not be able to afford the new housing. We have to look at the wider picture.” A restaurateur would say more customers, but a teenager could point to the internet café, and a pensioner suggest the new town centre flowerbeds as proof that regeneration is having a positive effect. “The report employs a narrow definition of success, focusing on the hard measures of economic regeneration,” says Sarah Longlands, director of policy at the regeneration organisation Centre for Local Economic Strategies. “Successful urban regeneration requires a more sophisticated mix of strengthening employment and skills development, improvements in quality of life and community well-being.”

Peter Dixon says that Canary Wharf is the best example of successful regeneration. “But that started back in 1986,” he points out. “The acid test is when a place develops a long-term raison d'être. It enjoys sustainable and varied employment, physical improvements, and social and economic benefits.” In the North, he adds, “you can already see physical regeneration happening all over the place. There is Centenary Square in Bradford, a beacon in the city centre, Clarence Dock in Leeds, which is starting to feel like a thriving area, and the Newcastle Quayside. But all have been around for only a decade or so, and a decade is a short time in regeneration.”

That said, who could look at any town or city in the North and say that its prospects had not improved, even slightly, in the past ten years or so? Where was Dr Leunig when the pits and the steelworks and the shipyards first closed down? There might not be a Malmaison on the corner of every street yet, but you certainly won't find anyone sparking their clogs.

Imperial Buildings, Rotherham:

0113-246 1533, knightfrank.com

Angles of the North

Land Registry figures for the average price for a house in June:

Manchester: £114,602, up 4.7per cent in a year

Leeds: £152,795, up 0.6 per cent in a year

Newcastle: £137,381, down 4.7per cent in a year

Liverpool: £124,019, down 0.6per cent in a year

Sunderland: £118,001, down 1.7per cent in a year

Bradford: £127,724, up 2.4per cent in a year

Rotherham: £120,354, up 2.3per cent in a year

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