The Chancellor has handed local government a brief respite with a promise not to cut again for those introducing another council tax freeze.
George Osborne used his Autumn Statement yesterday to signal another £3bn of departmental cuts.
The North East has repeatedly suffered the brunt of such savings, with funding cuts hitting the region’s councils far worse than those in the South.
Mr Osborne said: “We will not apply these additional savings to local government, because we expect them to freeze council tax next year.”
The statement raises the possibility of sanctions for those not accepting a Government grant to freeze local taxes.
There was a mixed message for North East housing, with London taking a £70m housing pot paid for from cash reclaimed from councils across the country.
Mr Osborne insisted that a £1bn housing loan fund would help kick -start delayed housing schemes in, he said, “Leeds, Manchester and elsewhere”.
It was unclear last night if the fund would be available to Newcastle, which has a commitment from Government to help find funding for 15,000 brownfield houses. Councils will also be encouraged to sell off their most expensive properties to fund more cost-effective homes.
Mr Osborne said: “Aspiration isn’t only for people who can afford their own home. We want to regenerate some of our most run-down urban housing estates.
“Councils will sell off the most expensive social housing, so they can house many more families for the same money.
“We are going to give working people in social housing a priority right to move if they need to for a job.
“Right to Buy applications have doubled under this Government and we’ll expand it more.”
Durham Council leader Simon Henig, set to chair the North East’s proposed combined authority, said councils had already being hit with multi-million pound budget cuts.
“We have already taken the largest cuts of any area in the public sector,” the Labour leader said.
In South Tyneside, one of the worst hit in the country, leader Iain Malcolm said the Chancellor was an expert in “smoke and mirrors”.
He added: “We have gone years without increasing council tax, that means our financial basis is much lower than it should be, before you take into account for us £90m of cuts with £18m more to come, so the long term damage is already there, and getting worse every year we do not increase it. Sooner or later that will have to be addressed, and he has to cut us some slack.”
Last night Newcastle East MP Nick Brown said the statement was a missed opportunity for the region.
The former regional minister said: “It was very disappointing. We need a strong voice for the North in the coalition Government and it is not there today.”
Beth Farhat, Northern TUC regional Secretary, said: “The Chancellor failed to deliver the bold action we need on living standards. While growth appears to be getting better, pay is getting worse.
“Wages in our region have fallen in real terms by around £2000 since 2010. Our living standard squeeze is getting tighter, which proves that the recovery is passing most ordinary people by.”
But Liberal Democrat peer Lord Shipley praised the Autumn Statement, saying: “The economy is getting stronger under this Government and the creation of 1.4m jobs in the last three years is clear evidence of that.
“I welcome the extra help being given to businesses and young people. Holding down business rates is very welcome as is the extra support for housing.
“Businesses in the North East will benefit from the abolition of National Insurance contributions for the under 21s to the tune of around £20m. That’s good news for getting young people into jobs.”
In Berwick, MP Sir Alan Beith welcomed a freeze in fuel duty until 2015 and said he will continue his campaign to have the rural fuel duty rebate scheme extended to Northumberland’s rural garages.