THE unequal funding formula which overwhelmingly benefits Conservative-run councils at the expense of those in the North-East is making the concept of a Northern Powerhouse "a joke", the Government was warned today.

Labour MPs from the region are calling on the National Audit Office to examine the way the Government has handed out a £300 million transitional support package for councils over the next two years.

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The cash is to soften the impact of reforms scrapping the revenue support grant given to local authorities in favour of greater reliance on retaining business rates.

Labour analysis suggests 83 per cent of the money has been handed to Tory-run councils while North-East suffers swingeing funding cuts.

Jenny Chapman, Labour MP for Darlington, led a Westminster Hall debate on the impact of local government funding cuts on the North-East and branded it a "straightforward bribe" to Tory MPs.

She said the disproportionate funding settlement came despite the North-East having the lowest life expectancy rates, highest jobless figures, above average rates of ill health and disabilities and the lowest levels of average wealth.

"The Government do not take sufficient account of the varying degrees of need across the country, and councils serving communities with the highest levels of need are not being supported," she said.

Ms Chapman said cuts in Government funding to Darlington Borough Council between 2010-20 in real terms will be £44m in the context of a net budget of £87m.

This has resulted in the council slashing its budget by £12.5m, leaving 186 council staff facing redundancy, closing the town's two libraries plus major funding cuts to social services, health, street cleaning, grass cutting and a host of voluntary organisations, such as the Citizen's Advice Bureau, and the sale of the covered market.

The cost of services it must provide by law is £87.5m while it has funded £2.5m of discretionary services a year for the next four years by using revenue balances.

"Balances that have been wisely saved are now being used to protect front-line services, and what happens after that?"

Ms Chapman condemned the "hideously blatant, politically motivated" divvying up of the £300m emergency funding, which predominantly went to Tory areas.

She added there was money for the Greater London boroughs such as Bromley, which received £4.2m and county councils like Buckinghamshire and Oxfordshire which receive £9m and Surrey which gets £24m.

"But there is nothing for Darlington, or for Durham, Newcastle, Sunderland, Gateshead, North Tyneside and South Tyneside."

She also praised The Northern Echo's campaign and petition, which has so far attracted more than 9,000 signatures, calling on the Government to reconsider its funding formula.

"I am proud that that historic campaigning title is based in my constituency and is campaigning for fair funding for the North-East.

"It used to give the Labour Government a hard time too, but it is completely clear that the decisions that this Government have made are disproportionately band unjustifiably harming the people of the North."

Bishop Auckland MP, Helen Goodman, also pointed out her largely rural constituency had failed to attract any of the extra rural funding, along with others including Durham and Darlington.

Chi Onwurah, Labour MP for Newcastle Central asked how the Government could reconcile allocating is resources to Tory-run authorities with its support for the Northern Powerhouse initiative.

Ms Chapman - who expressed disappointment at the absence of Northern Powerhouse Minister and Stockton South MP James Wharton - said: "The Northern Powerhouse as a concept is being roundly rubbished across the region. It is becoming a joke.

"I want there to be a Northern Powerhouse. I'm proud of my region. I see the potential that it has and I want a Government who is genuinely prepared to support it.

"The Northern Powerhouse is nothing but a slogan. It's nonsense. It doesn't mean anything. It's hollow."

Catherine McKinnell, Labour MP for Newcastle North said that the Government's own figures showed councils' spending power per household between 2010-20 will fall by the highest amount in the North-East - by £465.51 per head, compared with £154.07 in the South East.

She added that while the five most deprived councils in the county - Middlesbrough. Knowsley, Hull, Liverpool and Manchester - had received nothing under the transitional grant, the five least deprived - Hart, Wokingham, Chiltern, Waverley and Elmbridge - had collectively received £5.3m.

Hartlepool MP Iain Wright said that in the last Parliament, Hartlepool Borough Council's grant was cut by 40 per cent and the coming finiancial year is the most difficult it has ever faced.

He said its budget is £8.274m less than last year, representing a year on year reduction of 19.6 per cent.

Sharon Hodgson, MP for Washington and Sunderland West, said: "Councils in some of the pooorest parts of the country are having to cut services back to the bare bones. The fat went long ago."

She said Sunderland council will tomorrow pass its budget in which it must find £46m of savings and a total of £110m by the end of the Parliament.

"That means that the council has a total of £290m to spend by 2020, compared with the £607m it had in 2010.

"That is not trimming, belt-tightening or streamlining; itis an attack - a full scale assault. So much for the rheteoric of a Northern Powerhouse. Northern Poorhouse, more like."

Kevan Jones, MP for North Durham, said: "Where, in the core spending and transitional arrangements, are the lowest reductions being made? What are these very deprived areas? 

"They are Surrey, Hampshire, North Yorkshire and Deveon. We have a ludicrous situation of North Yorkshire getting a 2.5 per cent increase and Surrey a 1.5 per cent increase in core spending.

"A 2.5 per cent increae in our core spending in Durham would mean an additional £10m of funding. On the figures for core spending powers and cuts in 2016/17, Durham will have minus 4.1 per cent, Newcastle minus 4.4 per cent and Sunderland minus 4.3 per cent. Surrey will have a 1 per cent reduction and my favourite place, Wokingham, a 0.4 per cent reduction." 

"The core spending per dwelling figure for Durham County Council is £1,608; for Surrey it is £1,661. It may be thought that that is not much higher, but no account is taken of the demands of an ageing population in Durham, and its higher unemployment and social care needs.

"If the district councils in Surrey are taken into account, the core spending per dwelling figure goes up more than £2,000. I am sorry, but it cannot be right that one of the wealthiest parts of the country is getting more exoenditure than some of the most deprived communities."

Communities Minister Marcus Jones insisted the Government had "done our upmost to ensure that the settlement is right and fair for all" and that Tory MPs represented "a wide swathe of the country.

"The transitional grant was purely intended to mitigate the most significant changes in funding and the authorities that have in proportion the greatest loss in revenue support grant than they would have otherwise expected.

"Local authorities account for a quarter of all public spending, so it has always been clear that they would have to play their part in reducing what was the largest deficit in post-war history.

"In real terms, councils will be required to save 6.7 per cent over the spending review period. At the 2010 spending review, a reduction of 14 per cent was announced, so the pace of spending reductions has slowed significantly for this Parliament, as the Institute of Fiscal Studies has acknowledged.

"The approach we have taken in this historic settlement is aimed at supporting those areas wiuth the greatest pressures and providing councils with the certainty they need as we move towards a system of greater devolution.

"In 2016-17, the core spending power per dwelling in the North-East region is £1,820, which is 3.9 per cent higher than the £1,750 figure for the South East."

Ms Chapman said: "I think we need to ask the National Audit Office to look at this. You combine this with cuts to fire, police, health education that our region is experiencing - it's disgraceful."