COUNTY Durham will suffer under the Government's flagship plans to rebuild the North-East economy, a committee of MPs was told yesterday.

The county council's chief executive attacked the policy of concentrating efforts to win badly-needed investment and jobs on the "city-regions" of Tyneside and the Tees Valley.

Mark Lloyd said the drive - to be outlined further by Chancellor Gordon Brown in his Budget speech tomorrow - threatens to leave largely-rural County Durham behind.

As examples, he pointed to plans to create a renewable energy village in Weardale and efforts to market Teesdale as a tourist destination.

The Treasury will publish a paper tomorrow paving the way for new powers to be handed to "city-regions", possibly to be overseen by elected mayors.

They could be allowed to borrow money to fund infrastructure projects, build more houses and control skills and economic development, to help them catch up with their continental rivals.

Newcastle-Gateshead and Middlesbrough-Stockton- Darlington are in line to control their own purse-strings, although Birmingham and Manchester are almost certain to go first.

But Mr Lloyd told the select committee shadowing the Office of the Deputy Prime Minister (ODPM) that it was better for local authorities - both urban and rural - to collaborate to build success.

He said: "I see towns not in the core of this urban policy being disadvantaged. They will be peripheral towns. We need a combination of urban and rural policies so the success of cities won't be at the expense of other policies. We need a balance."

Mr Lloyd said city-regions had "fuzzy boundaries", depending on the issue in question, which might be the travel-to-work area, shopping trends, or recreation habits.

The drive to boost city- regions flows from evidence that, across the North, they are home to 90 per cent of the population and account for 90 per cent of economic activity.