SUNDERLAND is set to be stripped of almost £3m of Government housing funding.
The city will miss out on £2.9m under the controversial New Homes Bonus Scheme (NHBS), with the cash used to subsidise housing in wealthier parts of the country.
The Department for Communities and Local Government claim North East councils have enjoyed a £29m windfall thanks to the programme.
But it appears the two different figures are a result of the way the funding is collected and distributed, with councils in the region estimated to lose a total of £13m in 2014-15.
Coun Paul Watson, leader of Sunderland Council and chairman of the Association of North East Councils (ANEC), said: “These figures published by the Department and Local Communities suggest that North East local authorities will benefit financially from the NHBS.
“In reality, because of the way in which the scheme is designed, rather than a ‘bonus’ it is estimated that the North East will actually be worse off by £13m in 2014-15 due to cuts in other grants made to fund the NHBS.”
Under the NHBS, local authorities get extra cash if they succeed in increasing council tax revenues by ensuring new homes are built or by bringing empty properties back into use.
But the funding actually comes from councils in the first place, with a proportion of their grants from central government “top-sliced” and put into a pool of money which is redistributed to authorities.
The initial grant is based partly on levels of deprivation in a local authority area.
It means that when money is taken to fund the scheme, the councils serving poorer communities tend to pay more.
The Government says North East councils will gain £29,318,614 in 2014-15, with Sunderland receiving £2.2m. Durham will also be handed £6.7m, Newcastle £3.6m, and Gateshead £1.4m.
But calculations by a local authority shows that the region is actually paying out £42.3m - which means it makes a loss of £13m.
On balance, Sunderland misses out on £2.9m of funding, with Durham also losing £887,000, Newcastle £1.8m and Gateshead £2.2m.
The only council in the region to enjoy a net gain is Stockton, £697,000.
Coun Watson said: “A further flaw in the way this funding is allocated also means that areas like the North East with high levels of needs and weaker housing markets lose out while more affluent areas gain.
“The flaws in the design of the NHBS and its re-distributional impact are some of the key issues ANEC is raising with the Government.”
Housing Minister Kris Hopkins said the policy meant councils were not being forced to authorise new housing based on plans drawn up by regional bodies.