ASYLUM-SEEKERS face destitution, and racism is endemic among young people, according to the report.

The report, which is backed by Roman Catholic, Methodist and United Reformed Church leaders, makes a clear challenge to Church and State to improve the worsening lot of the poor.

Recommendations include allowing asylum-seekers to take paid work and so contribute to society. The report also calls for the statutory nature of the youth service to be reinstated and for proper funding.

“We need to ask if all the talk of regeneration and prosperity reflects the reality for many in Britain today,” Baroness Richardson of Calow, chairwoman of the Commission on Urban Life and Faith, which produced the report, said. She recognised that cities had been transformed, yet too many people were still living in poverty.

She said that the Churches could build “faithful capital”, made up of hospitality, generosity, time and attentive commitment to the needs of the most deprived. The aim was “to achieve long-term change away from self-interest and contagious decadence”, she said.

The report says that Churches must issue a “stern challenge” to those who are rich but ignore the needs of the poor.

It says: “The Churches must communicate this message to comfortable Britain, where even though most people might not count themselves as wealthy, in reality we and they have more than enough.”

The report highlights what is described as the “two paradoxes of prosperity”.

While most people have become more prosperous over the past 20 years, the gap between rich and poor has widened and society is “more unequal than ever”. Examples include wealthy people netting bonuses of millions while others are going hungry.

But, the report says, there is no evidence that those who have benefited from the new prosperity are happier. “Much evidence suggests that they are short on life satisfaction. They experience unease over crime, personal relationships, mental health and basic trust of others.”

The report appeals to the Government to consider bringing in a “living wage” that would be higher than the minimum wage, currently £5.05 per hour.

It asks: “Why is it that young people in Britain, the fourth-largest economy in the world, are among the most depressed in Europe? Why is it that despite year after year of economic growth, as a society we are no happier?”

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