The North East faces an isolated and cash-starved future as more evidence of North-South funding raids emerge.
Across the region, the Joseph Rowntree Foundation said, councils are losing hundreds of pounds per head more than their southern counterparts.
Much of the money taken from them comes from grants previously handed out to deprived neighbourhoods and since axed by the coalition Government.
The think tank warns of an unwelcome burden on better-off tax payers across the region who feel they are having to cover the cost if councils continue funding work with vulnerable groups.
It follows a report by a council lobbying group which said the North East is to lose twice as much funding as the South East over the next five years.
Last night Durham Council leader Simon Henig, who is set to chair a new regional authority, said the Government was “failing to represent the entire nation.”
The Labour leader added: “We have been saying this here for years, this is a consistent, long term policy from the Government of withdrawing funding and support from the North East.
“We have said it through the Association of North East Councils, the Sigoma council group has said it and now the independent and respected Joseph Rowntree Foundation has said it.
“The Government of the UK needs to represent all parts of the country fairly, and right now they are just not doing that. They are governing in the interests of the South East.”
The urban councils group Sigoma said councils in the North East will lose £665 per head, compared with £305 per head in the South East, by 2018.
The Government has denied targeting the North and said that there is still far more money spent by councils in the region than those in the South.
In a move set to infuriate Northern councils, local government minister Brandon Lewis said that Newcastle, for example, this year had a spending power per household which is £300 more than the national average and £700 more than Wokingham.
Leader of Newcastle City Council, Coun Nick Forbes, said: “This is a thorough and very revealing report which independently verifies that the poorest people are being hardest hit by the Government’s cuts.
“It shows that despite the massive financial pressure that councils are under, Newcastle City council is doing its best to support the most vulnerable, and investing to save so we can promote economic growth in the long run.
“However, the inescapable truth is that the unfairness of the cuts means services are being axed and this is creating a more divided society – and that’s a concern to everyone.
“Local government is going through massive change to meet the challenges it has been set, but budget cuts of up to 40 per cent have had, and will have, a devastating effect on public services.
“Faced with no alternative, councils are being forced to stop providing some services altogether, and cut into others to such an extent that they are being irreparably damaged. At Newcastle we will continue to take effective steps to protect the poorest, but this will not be easy as the cuts get deeper.”
Former council leader Lord Beecham said the Government was cynically trying to detract attention away from the impact of its funding cuts.
“The North East has the highest rate of unemployment, Newcastle is the 29th highest in the country, while in Wokingham they have the 640th. It is a ridiculous comparison.
“What the Government is doing is constantly changing the grants system away from one that reflects need to one that is based on population.
“It is happening in local government and it is happening in health and it is very worrying.”
The Joseph Rowntree Foundation said its assessment of council grants from 2008 to 2015 showed an increasingly divided society.
Policy manager John Low said: “This is an important and very timely report which provides graphic illustrations of how spending cuts are playing out on the ground.
“As we approach the fourth austerity settlement for local government in December, it is clear the cuts are biting deep into the poorest and most deprived communities.
“Unless we can muster the national will to correct or mitigate the unacceptable divergence of resources between more and less affluent authorities, we are slowly but inexorably creating a more divided society.”
Local Government Minister Mr Lewis said: “The JRF (Joseph Rowntree Foundation) report is wrong – the independent House of Commons Library has already shown that deprived areas continue to receive and spend far more funding per household than other parts of the country.
“Councils should be making sensible savings, such as through joint working, cutting fraud, better procurement and tackling tax evasion.
“Rather than the doom and gloom peddled by the JRF, the latest independent polling shows that the public are more satisfied with town hall services than ever before.”
“The reality is that the economy is now growing, jobs are being created and council tax bills have fallen in real terms, despite the need to tackle the deficit left by the last administration.”