THE referendum on an elected regional assembly in the North-East is expected to cost taxpayers £10.5m, the Government has said.

Latest figures show the No campaign is edging in the lead, but with days to go only a quarter of the ballot papers have been returned.

Two million people are eligible to vote but only 500,000 have done so.

The £10.5m is being spent as follows: £184,000 for ministerial campaigning by Nick Raynsford and John Prescott; £3.9m for the Local Government Review; £3.2m for the Government's Your Say document; £2.9m for postal votes; £200,000 in grants to the campaigns and £88,500 for publishing the White Paper Your Region, Your Choice and other Government literature.

Yesterday, the Office of the Deputy Prime Minister, which is leading the move to devolve power from Westminster, confirmed how much the scheme is costing and defended the spending.

But the amount of taxpayers money being spent was criticised by campaigners opposed to the new body.

John Elliott, chairman of North East Says No, said: "People can see that it would just be an expensive white elephant and I am confident that it will be a No vote on Thursday.

"However, people should get their votes in over the next couple of days to make sure that it is a No."

Ross Forbes, campaign director for Yes4TheNorth-East, said: "The response from the No campaign is typically negative. Throughout this campaign they have failed to come up with any valid reasons why there should not be an elected regional assembly, relying only on scare-mongering and lies."

Yes campaigners also said new research shows that regional Government would help close the North/South divide. The State of the nation 2005 has concluded that the North-East is socially excluded from the rest of England and found people in the region earn less than elsewhere in the country.