Back in 2000, Gordon Brown promised that "within 10-20 years no one should be seriously disadvantaged by where they live". Since then, the government's neighbourhood renewal fund has tried to improve employment, health, housing and schools in our most deprived areas. Progress has been made, but not enough.

Two reports this week show that inequalities within and between our cities are still very stark. Far too many people are still disadvantaged by where they live.

The UK now has 3 million households where no one is in full-time work, according to the Office of National Statistics. That affects almost 1.8 million children in Britain – one in seven. Most of these families live in the most run-down parts of our cities. Your chances of being in full-time work are much lower in Hull than in Cambridge.

Life expectancy is also massively different depending on where you live, according to the World Health Organisation. If you live in Calton in Glasgow, your neighbours on average die aged 54. But if you live in nearby Lenzie, you can expect to live until 82. In London, average life expectancy in leafy Hampstead is 11 years longer than in St Pancras, just a couple of miles down the road.

Poor health is not just the result of the so-called "postcode lottery" in the NHS. It's due to the wider urban environment in our poorest communities. Low employment rates and low incomes. Poor schools and housing. These all contribute to the poor health and short life expectancy in places like Calton.

One way to tackle poor health is to raise employment rates in the poorest bits of our cities. Overall, the UK has more people in work than ever before. But we still have too many areas with too many people not in employment, and these are concentrated in many of our cities.

Recent research from the Centre for Cities confirmed that worklessness is largely an urban problem. England's cities contain 59% of the country's population, but over 68% of those claiming benefits and 64% of the workless. Cities such as Liverpool illustrate the scale of the challenge, with a quarter of its working-age population on benefits. That's almost double the English average.

Worklessness is not just a problem for Britain's largest cities. Hull and Hastings also have very high proportions of their working-age population on benefits.

Low employment and worklessness are an urban problem, and require a tailored, city-level solution. "Postcode lottery" may be a problem in the NHS, but it's not a universal problem. Our cities each need to take their own unique approach to worklessness, tailored to their own labour markets and the skills of their residents.

Our cities also need more powers to increase their employment rates. There's been plenty of devolution talk from ministers. James Purnell recently promised more "power to the people" and "triple devolution" to people, service providers and communities. But we've not yet seen any radical devolution of financial or political powers to city leaders.

One of the reasons why regeneration funding has under-delivered over the past decade has been the over-centralised way that government has spent it. New programmes, like the working neighbourhoods fund, will be more effective if they genuinely devolve funding and powers to people in communities and across real city economies.

Cities such as Liverpool and Birmingham now need more freedom to take their own approach to tackling worklessness, based on the needs of their local labour markets. This means direct control over training budgets, through new powerful skills and employment boards. These would set budgets for local back-to-work and training programmes – using funds devolved from the DWP, Jobcentre Plus and the proposed Skills and Funding Agency.

This is now happening in the capital with the London Skills and Employment Board, chaired by the mayor, Boris Johnson. It's starting to influence job training across London. It will allow London's employers to have a bigger say over training programmes, and should help to increase the capital's relatively low employment rate – which at 70% is well below the national rate of 75%.

Increasing employment in our poorest areas will help to improve the health of people who live there. But trying to do all that from Whitehall will not work. Cities are best placed to sort out their own labour markets, with support from the centre. More powerful cities stand a better chance of improving employment prospects in their poorest areas. That's the best prescription for economic growth and healthy communities.

This article was amended on Monday September 1, at 10.30am.