BOSSES at a cash-strapped council have been criticised after they turned down a £2.8m offer for a piece of land - then tried to sell it for less than a fifth of its real worth.

Derwentside District Council planned to sell 4.25 acres of scrub land in Orwell Gardens, South Stanley, for £500,000 for a specialist health care centre that promised to create 100 jobs.

The decision may now be reversed after it emerged that a house builder had offered to pay £2.82m for the same site.

It has sparked a row between councillors over whether regeneration can be best led through employment opportunities or by building better housing.

Council leader Alex Watson, who is in favour of the care centre, said: "This could be the catalyst for the regeneration of South Stanley, which is the most deprived area in Derwentside.

"You have got to take into account what 100 jobs could do financially."

Healthcare company Paragon had intended building a centre on the site for people with complex learning difficulties, such as autism.

It promised the operation would create more than 100 jobs and would meet an identified service need for up to 60 families in the Stanley area.

The council's ruling executive body approved the Paragon deal at a behind-closed-doors meeting at the beginning of this month.

But the authority's overview and scrutiny committee has since pointed out that Paragon had not followed the correct tender procedure.

The committee also raised concerns that three builders had also put in conditional offers for the Orwell Gardens site. The highest, at £2.82m, came from Haslam Homes, in Gateshead, which wants to build 68 homes.

Councillor Watts Stelling, leader of the opposition Independent group, said the gap between the two offers was too big to ignore.

The scrutiny committee is recommending that full council accepts the Haslam offer when it makes its final decision later this year.