THE Government last night quashed hopes that it was to redraw the funding formula which has created a billion-pound divide between the North-East and Scotland.

Commons leader Robin Cook said Labour had no plans to revisit the Barnett Formula - the 23-year-old equation drawn up to help the less well-off parts of Scotland, and Wales.

Critics of the formula say places such as the North-East are now in greater need of cash help.

Speaking in the Commons, Mr Cook did, however, hold out new hope to campaigners for a North-East regional assembly, by strongly backing the idea.

Replying to a question by Derek Foster, MP for Bishop Auckland, County Durham, he said: "We have put forward proposals by which regions such as the North-East can have their own regional assemblies, which will allow local people to decide best on the delivery of local services.