GOVERNMENT funding for a £125m scheme to replace street lights has been scrapped under the spending review, it has emerged.

Durham and Stockton councils had provisionally secured £125m of Government cash to set up a Private Finance Initiative (PFI) project to replace more than 90,000 street lights over five years.

Supporters said the project, which would have resulted in eco-friendly lights being installed and tied to a 25-year maintenance contract, would save taxpayers up to £70m.

Steve Keetley, the head of technical services at Durham County Council, said: “The council has received confirmation from the Department for Transport that they are withdrawing support.

“We must now face the impacts of the Comprehensive Spending Review and review how these challenges can be met when managing our assets such as street lighting.”

Roberta Blackman-Woods, the Labour MP for Durham City, said Lib Dem Transport Minister Norman Baker had told her councils would have to find the money themselves.

Ms Blackman-Woods said: “To suggest that the day after the Government announced 30 to 40 per cent cuts in local government financing and when it is struggling to find the money for its many statutory functions is rather beyond belief.

“I am afraid we will simply not see any significant improvements in our street lighting for many years thanks to the Tory-Lib Dems.”

The scheme was one of six street lighting projects for which funding was withdrawn, in a move the Government said would save £1.1bn