Ministers have accused North East councils of sitting on unused land and property which they could sell to protect services.
But local authorities facing massive spending cuts of more than £240 million ridiculed the claims – and pointed out that there are strict rules preventing them from selling the land to fund services.
And the comments provoked an angry reaction from Labour, who accused the Government of imposing higher cuts on urban councils in the North East than wealthy parts of the country.
Ministers launched the attack on councils which are reducing services and raising council tax, claiming that they had nobody to blame but themselves.
The Association of North East Councils has warned that crucial services such as care for vulnerable children are in danger of collapse as massive cuts in council funding wipe almost quarter of a billion pounds off budgets across the North East this year.
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