CONTROVERSIAL spending rules have meant that a £2.3bn bridge will be built in Scotland at the expense of the much poorer North-East, the Government has admitted.

Troubled plans for the new Forth Crossing, on the edge of Edinburgh, were rescued by funding allocated according to the much-criticised Barnett Formula, an inquiry was told.

Scottish Secretary Jim Murphy said there was a direct “read across” from the formula, which delivers much higher public spending to Scotland, to the Treasury grant allowing the road and rail bridge to be built.

The revelation is the starkest illustration yet of how the rules fund major projects north of the border that would almost certainly be blocked in the English regions, or forced to find private finance.

In the North-East, the 30- year dream of a £190m Metrostyle light rail scheme across Teesside has consistently been blocked by funding difficulties.

A business case will be submitted soon to the Department for Transport (DfT), but it has demanded a sizeable local contribution, either from councils or private backers.

In contrast, the Treasury has pledged £1bn to help build the new Forth Crossing and it has just been revealed that half of the money will only be delivered because of the Barnett Formula.

Last night, its author, Labour peer Lord Barnett, attacked the discrepancy in funding, saying: “It’s quite clear to me that the formula was never intended to work in this way.”

Dari Taylor, Labour MP for Stockton South, said: “When people hear about London getting Crossrail and a new £2bn bridge in Scotland, yet Teesside couldn’t get money for a Metro system, they think you’re joking.

“The North-East has some of the most deprived wards in Europe. We should be looking at scrapping the Barnett Formula, or changing it to one based on need.”

Anger has grown in the region because Scotland, in the past financial year, received £9,179 per head from the Treasury, while the North-East figure was only £8,505.

Yet Scotland is much richer.

Income per head north of the border was 95 per cent of the national average in 2006. In the North-East, it was only 81 per cent.

Meanwhile, the Scottish Parliament – thanks to higher funding from London – has announced eye-catching plans for free prescriptions, and free eye and dental checks.

To add insult to injury, the formula dictates that when there is Government spending on a large transport project in England, Scotland automatically and immediately receives a proportionate amount of money.

So when the Government pledged £5bn to the Crossrail project in London, the “Barnett consequential” was that Scotland automatically got £500m which it has allocated to the troubled Forth bridge project. And the English regions have received nothing, irrespective of their transport needs.

Mr Murphy pointed to the Forth Crossing as a tangible benefit of the Barnett Formula when he gave evidence to the current Lords inquiry into the funding rules, a transcript of which has been released.

He told peers: “The read across from that number one transport investment in London (Crossrail) to the number one transport investment in Scotland would be the Forth rail crossing. It is now confirmed.”

Mr Murphy gave evidence alongside Welsh Secretary Paul Murphy and Northern Ireland Secretary Shaun Woodward, all of whom insisted the Barnett Formula worked well and should be kept. Many of the peers on the committee were incredulous that none of the three Cabinet ministers recognised the argument that the formula – based loosely on population size – is blatantly unfair.

When Lord Barnett spoke to the inquiry, he warned that the UK could fall apart because the English were increasingly angry about better public services in Scotland.

The former Treasury chief secretary introduced the formula for one year only in 1978.

Only days before leaving Downing Street, Tony Blair virtually admitted that higher spending was a bribe to keep the Scots within the UK.