A SPOKESMAN for Prime Minister Tony Blair provoked outrage last night when he dismissed a financial crisis that has left thousands of North-East families facing hefty council tax increases.

Tom Kelly condemned North-East councils' pleas for more Government cash as ''one of those annual rituals".

The comments come after The Northern Echo exposed the crisis facing local authorities in the region. County Durham, which covers the Prime Minister's Sedgefield constituency, has been given a grant increase of only five per cent, compared with more than seven per cent in other parts of the country.

The authority has said council tax could rise by 17 per cent this year because of a shortfall of £22m to pay for local services.

Other councils in the North-East have warned of rises of between ten and 17 per cent.

Mr Kelly said: "These stories arise at this time of year. They always come at this time."

He said they came on the back of a generous local government grant settlement, which meant an average rise in grants of seven per cent.

When it was pointed out to him that County Durham's grant was only five per cent, he said: "Local councils can be relied on to argue their own case - it is one of those annual rituals."

A final decision on the grant settlements for English councils will be published on Monday, and pushed through the House of Commons two days later.

Last night, Durham County Council leader Councillor Ken Manton and chief executive Kingsley Smith were in London discussing the problem with Stephen Byers, Secretary of State for Transport, Local Government and the Regions.

Mr Smith said: "There is no way that we are scaremongering. The financial situation we face is a very serious issue that needs to be aired in public. It is a national issue and simply dismissing it out of hand won't make it go away."

His comments were endorsed by Kevan Jones, Labour MP for North Durham, who said: "For the PM's spokesman to dismiss the council's pleas is insulting."

He and other MPs from the county privately met Local Government Minister Nick Raynsford two weeks ago to plead the council's case for extra money.

With Derek Foster, MP for Bishop Auckland, and Gerry Steinberg, MP for Durham City, they had a sympathetic hearing, he said.

"Following the meeting I hope our case will be met," he added.