THE Tory education revolution allowing parents and teachers to set up their own free schools has flopped in the region, the Government admitted last night.

Just one of the 40 free school proposals that have cleared the first hurdle is from the North-East or North Yorkshire, the Department for Education (Dfe) said.

The announcement brought joy for the group Barwick's Own Second Secondary School (BO2SS), which hopes to open a 600-place school in Ingleby Barwick, near Stockton, in September 2013.

The application will now move to the "business case and plan stage" and be invited to do further work, with ministers expected to give it the go-ahead this September.

However, the other nine applications lodged from the region - from County Durham, Sunderland, North Yorkshire, York, Newcastle, three in Northumberland and another from Stockton - were all rejected.

In Durham City, parents struggling to get their children into top-performing Durham Johnston School had hoped to set up a free school for families in Bowburn and nearby villages.

Meanwhile, tens of millions of pounds will be diverted to free schools from rebuilding crumbling schools, following the dismantling of the Building Schools for the Future (BSF) programme.

That announcement sparked fury in the North-East - where 79 secondaries had their hopes of new schools shattered - with little hope of rescuing the plans from shrinking funding pots.

Last night, Andy Burnham, Labour's education spokesman, said: "At a time when school budgets are falling, every penny should be targeted where it's most needed.

"However, instead of focusing on raising standards in the most deprived areas, as Labour did, the Government is diverting funds to academies and free schools in areas that already have high standards."

The poor take-up was last night welcomed by Ian Grayson, a teacher at Newcastle's Kenton School and the North-East representative for the NUT.

He said: They are an unwelcome and unhelpful addition from the Government that will disrupt the current arrangements and take money away from good schools providing a good education.

Beccy Earnshaw, director of schools network Schools NorthEast, was not surprised by the lack of interest in the region to the scheme.

She said: This was very much a reaction to the situation in the South-East where there is a shortage of primary schools.

In the North-East the shortage of pupils is more a problem than a shortage of places.

She is concerned that the extra money found for the programme will now be spent in the affluent South-East rather than deprived communities in this region.

But Frances Lynch, from BO2SS, said the poor response from elsewhere in the region did not deter her group.

Theres a really big need in our area for a new secondary school, she added.

There are around 900 children aged between 11 an 16 in the town that have to be bussed to schools in other towns.

When the free schools policy was first announced, Education Secretary Michael Gove picked out Middlesbrough, Redcar and Cleveland and Sunderland as areas that would blaze a trail - condemning their "shocking" exam results.

But evidence was already growing that most applications had come from leafier parts of the South, none came from either Middlesbrough, or Redcar and Cleveland.

Last week, a No.10 aide admitted: "The problem with free schools is that the scheme was designed to fill gaps in areas where there are poorly performing schools. But that's not where the applications have come from."

Of the four schools on course to open in September, three are in London and the other in Norfolk. In total, 20 applications are in the South-East.

Last night, a DfE spokesman appeared to admit the policy had changed, when he claimed it was "no surprise" that most applications were from the South-East.

He said the aim was to tackle a squeeze on school places - making no mention of poor exam results - and added: "These over-subscribed areas tend to be in London and the South-East."

The spokesman said the rejected applications may not have provided enough information, or needed to do more work to prove their sponsors were suitable to run a school.

And he added: "They also have to demonstrate that their is demand for a free school. We are not going to hand over millions of pounds otherwise."

Mr Gove has hailed free schools - an idea borrowed from Sweden - as offering "all children access to the kind of education only the rich can afford".

But he is under fierce pressure from the Tory right to allow private companies to make profits from running the schools, to ensure sufficient number open up.

Controversially, the policy will allow sponsors to turn existing buildings - disused office blocks, community halls, or even homes - into cut-price schools, with local education authorities barred from intervening.