TWO North-East towns have been named as among the areas worst hit by welfare cuts – with residents each losing almost £1,000 a year.

People in Hartlepool (£977) and Middlesbrough (£947) have lost some of the largest sums under controversial Coalition benefit changes, researchers said.

In Middlesbrough, almost 22 per cent of residents have been affected – even more than in Hartlepool, where nearly 19 per cent have lost out.

Worryingly, the majority will fail to find jobs or cheaper homes in which to live, the report said – which will mean a dramatic cut to their living standards.

And, contrary to popular belief, most people affected are in work – not on the dole – losing out because of sharp cuts to tax credits and housing benefit.

The Local Government Association (LGA) said it feared much of the bill for the extra hardship would fall on councils - forcing them to cut spending on roads and care for the elderly.

Sharon Taylor, chairman of the LGA's finance panel, said: “In many areas welfare reform is not encouraging people into work because the jobs simply don't exist.

“Meanwhile, the opportunities for people to downsize their homes to cope with reductions in benefits are severely limited by a lack of affordable accommodation.

“Unless more is done to create new jobs and homes, households will be pushed into financial hardship - and we will see a huge rise in the number of people going to their councils asking for help to make ends meet.”