TWO areas of England will share about £500m of European aid likely to be denied the North-East - despite them being richer.

Statistics released yesterday revealed that the North-East's poorest area is more deprived than either Merseyside or South Yorkshire.

Yet those two areas are in line for the £500m regeneration cash from Brussels between 2007 and 2013, to attract new businesses and create badly-needed jobs.

In contrast, as The Northern Echo revealed yesterday, the County Durham and Tees Valley area is likely to miss out on the aid package altogether when the details are thrashed out in Brussels next month.

Furthermore, County Durham and Tees Valley has slipped even further behind Merseyside over the past 12 months.

Last night, North-East Euro-MP Stephen Hughes pledged he and his Labour colleagues would redouble their efforts to ensure the North-East was included in the aid package.

At issue is whether "extra-regio" offshore oil and gas revenues should be included in calculations of the North-East's relative prosperity.

The British statistics exclude the revenues, making County Durham and Tees Valley poorer than Merseyside and South Yorkshire. But the European Commission wants to include them.

Mr Hughes said: "There is no doubt those revenues should be shared equally across the nation's statistics and not simply included in the North-East's.

"We now have employment in the North-East, but we still have a lot of inequality and we desperately need this round of European funding."

The official statistics revealed that County Durham and Tees Valley is England's fourth most deprived sub-region, ahead only of Cornwall, West Wales and the Scottish Highlands.

Its gross value added (GVA) per head in 2003 was £11,600, compared to Merseyside's £11,800, which was one place higher. County Durham and Tees Valley also had the second smallest growth in GVA from 2002 after outer London, at only £500 per head.

The threat posed by "extra-regio" revenues is separate from the issue of the EU's shrinking budget for structural funds, which could also squeeze out the North-East.

Mr Hughes predicted a tough fight in the European Parliament, where MEPs will oppose slashing £28bn off spending on poorer areas across the EU.