NEW figures reveal the region’s biggest council was deprived of £11.5m this year under a “broken” funding system – while the richest county of England enjoyed a £62m top-up.

Durham County Council received £11.5m less from the Government than ministers calculated it required, according to its population size, tax base and level of deprivation.

Nearly all other town halls in the region also lost out, while Surrey County Council – recognised as the richest part of England with an average income topping £33,000 a year – received £62m more than its level of need.

Sedgefield MP Phil Wilson described the figures as disgraceful, adding: “This shows that everything the Government says about what councils are getting is smoke and mirrors.

“At a time when Durham County Council is having to make £66m of cuts this year, we find out that Surrey – with all its wealth – is seeing its funding increase by an equivalent amount.”

The figures were revealed as part of an inquiry by the Commons Public Accounts Committee (PAC), which demanded an end to a system that led to councils “getting the wrong amount of money”.

Margaret Hodge, the committee’s Labour chairwoman, said: “It is essential that this money is distributed fairly, consistently and transparently, but we found that this is not always the case.”

Last night, the Department of Communities and Local Government (DCLG) admitted that the “formula funding”

system it inherited from Labour was “broken”.

However, it insisted the likes of Durham would have been hit even harder if it had not made changes to the system of “damping”, designed to reduce sudden drops in funding.

Under Labour, there was a single “floor” to limit the effects of year-on-year changes, but the Coalition had introduced four bands which “capped the reductions in grant for more needy authorities”.

Bob Neill, Local Government Minister, said: “The local government funding system inherited from the last administration is broken. It is confusing, arbitrary, complex, fails to support growth and is widely seen as unfair.”

The minister said moves to allow councils to retain business rates would “end their demoralising dependence on government handouts, finally start rewarding economic growth and support local firms and new jobs.”

The Northern Echo revealed last year that council cuts were hitting some North- East councils 14 times harder than many wealthy parts of the South.

However, the DCLG figures – revealing how it is “damping”

that punishes Durham and rewards Surrey – have only been made available as a result of the PAC’s inquiry.