NORTH-EAST councils were yesterday urged to think radically as they prepare for another bout of reorganisation.

They were told to find new structures that will save money and provide strong leadership with directly-elected mayors, such as Middlesbrough's Ray Mallon, again coming to the fore.

Other interesting ideas were floated, such as North Yorkshire becoming a "federation" of councils, or Stockton's entire cabinet becoming directly electable.

Local Government Minister Phil Woolas met council leaders from Tees Valley, County Durham and North Yorkshire to discuss the Government's White Paper on local government reform which is due in the early summer.

It will again stress the need for councils to become unitary - in North Yorkshire and County Durham, the district and county councils are separated into two tiers of government.

"It is all about value for money," said Mr Woolas, between meetings in York and Newcastle.

"We also feel the system is confusing at the moment."

For Durham, this signals a re-run of the bitter in-fighting between the seven districts and the county that characterised the regional government referendum.

But the unitaries of the Tees Valley may not be immune from the shake-up.

Mr Woolas said: "Some people say a population of 125,000 is the minimum you need to get value for money from a unitary authority, but rural areas say that geographical size is as important as population, so we have deliberately not said what is the optimum."

This might imperil Hartlepool (population: 90,000) and Darlington (98,500). Redcar and Cleveland (137,800), Middlesbrough (140,000) and Stockton (180,000) appear large enough to survive.

Mr Woolas wants the new-look unitaries to have a powerful voice.

"We want council leaders to become the leaders of the city, town, county or district, not just of their council," he said.

"Everyone recognises a mayor like Middlesbrough has as the leader of Middlesbrough, and he has influence over police, health, regeneration. We want leadership like that."

Mr Woolas urged "radical" thinking. Stockton has proposed a directly-elected executive, while in North Yorkshire there is talk of the districts merging with county.

He said: "You get the hundreds of district councillors to elect the cabinet of the county council, so the county becomes a federation of district councils."