Tory-run councils in the South claim they are the victims of the Government's funding policies, not the North-East.

This region's Labour authorities were dismayed when a revamp of the Conservative-devised grant system did not deliver increases they wanted.

While the region gained from London and the South-East, the biggest overall increase went to the Midlands - prompting claims that Labour was ignoring its heartlands.

Now, the Tory-controlled London borough of Wandsworth, which is levying a 45 per cent council tax rise - the country's biggest - is leading the attack on Labour.

During the Thatcher and Major years, Wandsworth was hailed as a model of Tory policies, yielding low poll and council taxes.

But its deputy leader Maurice Heaster said it had lost £6m in grants, adding: "We have been hit this year by a grant system which is skewed towards northern areas and a profligate mayor who is never short of a new way to spend Londoners' money."

Local Government Minister Nick Raynsford dismissed the claim, saying that all councils were getting more money and branding Wandsworth's increase "outrageous''.

In the North-East, the increase in Durham County Council's share of bills is 9.17 per cent, the fourth lowest.

One survey has put the aver-age rise in English shires at 13 per cent - the biggest, 19.6 per cent, falling in East Sussex.

Independent councillor for Weardale John Shuttleworth said: "Labour is more interest-ed in Middle England than its traditional heartland. MPs in County Durham should represent people here, not elsewhere, but they voted for the grant settlement despite our lobbying for more money."