It is all down to the Barnett Formula, used to adjust spending in other nations of the UK when money is allocated to England. Researchers at the House of Commons set out the details in a briefing paper prepared for MPs.

And it has sparked fresh calls for a review of the system, with English MPs and business chiefs claiming Scotland does not need the money - unlike the North East - because it already enjoyed major competitive advantages.

Blaydon MP Dave Anderson blasted the Government's economic strategy and backed a review of the Barnett Formula.

"They deliberately ran down the regional development agencies out of political spite, which had been successful in our area. The regional growth fund is almost worse than nothing," said the Labour MP.

"And then money is going north of the border when they don't need it. We desperately want it in this part of the world."

He added: "It is just more evidence of the incompetence of this Government and people are becoming more and more aware of just how incompetent they are."

Mary Glindon, MP for North Tyneside, claimed that the coalition was desperate to show its support for Scotland in a bid to win the upcoming independence referendum.

"Scotland is going to get soft-soaped by this Government. I fear that the North East is going to miss out," she said.

The Labour MP also attacked the Barnett formula, saying: "It is seen as unfair by so many people in this country."

Andrew Tebbutt, executive member for corporate resources on Northumberland County Council, said: "We really do struggle in relation to our neighbours over the border already because they get other benefits.

"We just don't get as generous a deal in relation to Barnett [formula] as our Scottish neighbours."

The senior Liberal Democrat added: "At least let us compete on a level playing field."

North East Chamber of Commerce director of policy Ross Smith said: "It is difficult to understand why the Barnett Formula is still in place as its many inconsistencies have been repeatedly highlighted for well over a decade.

"This latest anomaly in the way the formula is applied only serves to highlight further that this system must be changed if the Government truly intends to rebalance the economy."