TONY BLAIR returned home to the North-East yesterday to announce a massive cash boost for education - fuelling hopes that the Government is going to tackle the North-South divide once and for all.

Speaking in Middlesbrough, where he opened a community learning centre, the Prime Minister said the reforms would stretch from the under-fives through to the university system.

He also confirmed Chancellor Gordon Brown's review - to be announced on Monday - would spell out the benefits to the NHS of the massive spending increase announced in the Budget in April.

Mr Blair said: "We said schools and hospitals first, and the Budget and now the spending review show that we mean it."

Opening the centre, part of the Macmillan College campus in the town, Mr Blair said Britain had enormous strengths.

He said: "We have to make sure education remains the number one priority."

"It's not that we should ever abandon the comprehensive ideal, but build on that ideal to achieve a system far more diverse, far more tailored to the needs of every child."

His comments boosted hopes that the Chancellor would also pour money into tackling regional deprivation.

There had been speculation that extra funds would be channelled through regional development agencies such as One NorthEast and Yorkshire Forward.

One NorthEast chairman John Bridge said that ensuring economic development and creating more jobs in the region was a top priority, adding: "I am certain that it will be addressed in the Comprehensive Spending Review."

Mike Collier, One NorthEast chief executive, said he would welcome any increase in money that helped the region.

Kevan Jones, MP for North Durham, said the expected extra funds for One NorthEast would be welcome - "but it has to be properly spent".

He said: "I am not confident so far that it has been spent particularly well."

The MP said the key thing was extra help for education, manufacturing, and particularly transport, including dualling the A1 north of Newcastle and improving rural bus and rail services.

Newcastle Central MP Jim Cousins said he hoped to see a move towards a regional block grant for the North-East,.

This would not only include extra money for the regional development agency but also allow extra spending on the region's health needs and tackle housing neglect.

He said that more money should be spent on improving the region's skills and training, especially through higher education where there was a "massive problem of under-achievement".

Mr Cousins also warned against throwing money at London and the South-East to tackle congestion and housing market over-heating.

He said: "That can't possibly succeed, and the money needs to be directed to the North.

"We have open roads and plenty of people who want to work."