GORDON BROWN was under fire last night after getting his facts wrong as he defended the rules that deliver much higher spending in Scotland than in the poorer North-East.

The PM astonished MPs by claiming the infamous Barnett Formula - the source of growing anger south of the border - is "based on a needs assessment".

In fact, the formula allocates increases in public spending according to population size, regardless of the relative wealth of people in Scotland, Wales and the English regions.

In the last financial year, Scotland received £8,623 per head from the Treasury, while the North-East figure was £8,177.

Yet income per head north of the border was 95 per cent of the national average in 2006, while the average North Easterner received 81 per cent. The Scottish Parliament - thanks to higher funding from London - has announced spending measures unavailable in England.

Last year, the Scottish National Party's first Budget included plans for free prescriptions, free eye and dental checks, a cut in class sizes in primary schools and a reduction in business taxes. Questioned in the Commons yesterday, Mr Brown told MPs: "The allocation of funds in the UK is based on a needs assessment that started more than 30 years ago. It has been agreed by all parties subsequently and has been followed by every government since.

"It is based on the idea that we should allocate resources in the UK on the basis of need."

It is the first time a Government minister - let alone a prime minister - has attempted to defend the Barnett Formula on the grounds that it is based on need.

The gaffe will further fuel resentment that a Scots-dominated Government is refusing to even review the rules, introduced for one year only in the late Seventies.

At the end of last year, The Northern Echo revealed that No 10 Downing Street aides were arm-twisting Labour MPs and peers pushing for a rethink - warning of "consequences" if they continued to do so. Only days before leaving No 10, Tony Blair nearly admitted that higher spending was a bribe to keep the Scots within the UK.

Last night, Graham Stringer, the Manchester MP who questioned Mr Brown, warning the Barnett Formula was a "threat to the Union", said: "It was a bizarre answer and 100 per cent wrong."

Fiona Hall, a North-East Liberal Democrat Euro-MP, said: "It is astonishing to hear the prime minister defend the Barnett Formula on the basis of need. The very problem is that it is not based on need.

"The formula has no legal or democratic justification and my constituency has increasingly lost out due to this unfair system of funding distribution."

Introduced in 1978, the formula - named after treasury chief secretary Joel Barnett - gives England 85 per cent of increases in public spending, Scotland ten per cent and Wales five per cent.

For example, when the Government gave permission to the £16bn Crossrail project in London, Scotland was automatically handed £500m - while the English regions received nothing.

Chancellor Alistair Darling will publish a factual paper on the formula in the summer - but has insisted that does not mean a review.