BILLIONS of pounds of Government money have failed to reach the poorest parts of the region, leaving some communities cut adrift with sub-standard education and healthcare.

That is the conclusion of a study of the North-East's public services, published today by IPPR North, a leading independent think tank.

The study says the region has seen massive increases in public spending since 1997 - the Government spends more per person in the North-East than anywhere else in the UK, outside London.

But the North-East remains the country's poor relation because pockets of poverty remain.

IPPR North calls this the Hexham-Hartlepool divide.

While people in towns such as Hexham score top exam results, find secure jobs and enjoy good health, Hartlepool has more teenage mothers, suffers more crime and residents can expect to die younger.

Sue Stirling, director of IPPR North, said: "Inequalities within the North-East are the biggest challenge facing public services and holding the region back."

The picture of a divided North-East is revealed on the day IPPR North launches a high-powered commission to come up with proposals for reducing public service inequalities.

The Commission on Public Sector Reform, which counts among its members Cleveland Police Chief Constable Sean Price, former Education Secretary Baroness Morris and broadcasting boss Sir George Russell, will come up with proposals for cutting the inequalities.

Sir George, the commission's chairman, said: "Some of the findings of this audit are astonishing. For example, our primary school results are ahead of the national average but, by the time kids reach 14, we hit rock bottom.

"One of the things I will be looking into is: what is going wrong to allow that to happen?"

Ms Stirling, the commission's deputy, said: "There has been a lot of investment and progress in key areas that matter in people's lives.

"But we also have to face the reality that the gaps remain, because every other region has also been getting better."

Baroness Morris, who was Education Secretary from 2001 to 2002, said: "It's important not to get into the mindset that nothing has happened in the past ten years. This is about being more ambitious - not settling for what we've got."

The audit will be the first report given to the commission, which will make recommendations at the end of next year