POLICE, fire and other key North-East council services are in line for a cash injection under new plans to overhaul local government finance.

Government ministers have pledged to cut through red tape in an attempt to simplify the complex funding formula for emergency services and councils.

Last night, Local Government Minister Nick Raynsford said the change would be good news for hard-up authorities in the North-East and North Yorkshire.

The new formula is to be introduced in April and will replace the current method with a fairer system that reflects local difficulties and areas of deprivation.

Last night the Government published a series of options for key services. If ministers decide to boost northern areas at the expense of the affluent south this could mean:

* An extra £7.4m for policing in the North-East and more than £2.7m for bobbies on the beat in Yorkshire;

* A £7.7m boost for fire services in the North-East and as much as £8.5m for North Yorkshire and Humberside;

* An increase in cash available for roads maintenance;

* Up to £36.2m for schools in the Yorkshire and Humber regions and more than £5m for teaching in the North-East;

* Up to £4m extra for social services across the region.

The estimates are based on this year's spending figures and do not include any money that maybe announced by the Chancellor later this year.

Local authority leaders are pinning their hopes on the new funding formula after council tax rises this year.

County Durham leader Ken Manton went so far as to make an unprecedented plea for help to Prime Minister Tony Blair.

The authority found itself so short of cash that it had to impose a council tax increase of 14.8 per cent - one of the highest in the country. The average increase elsewhere in the region was ten per cent.

Officials gave a cautious welcome to the report last night, but warned that under some of the options being considered by the Government spending may actually be cut.

Announcing a consultation exercise last night, Mr Raynsford said: ''A number of northern authorities do stand to gain, but this is not about shifting resources in one direction or the other, it is about meeting needs and ensuring that our grant distribution formula accurately reflects pressures."