Ed Miliband and Steph Peacock renew attack on Levelling Up Fund after Rishi Sunak's Richmondshire constituency is placed in top priority category

Ed Miliband and Steph Peacock cast doubt over the Chancellor's claim to want to help left behind areas of the country after his North Yorkshire district was among the areas prioritised for funding from the flagship Levelling Up Fund ahead of Barnsley and Sheffield.

And during a Commons debate on last week's Budget, Hull MP Diana Johnson Hull criticised the "unfair" decision to exclude her area from the controversial Towns Fund while Wolverhampton, which returned Tory MPs in the 2019 election, received £25m.

The Levelling Up Fund, first announced last year, will see £4.8bn handed out over four years for "impactful infrastructure projects" in areas where it will make the biggest difference.

A report last week revealed that all local areas have been placed in one of three categories, with the top category "representing the highest level of identified need". Preference will be given to bids from higher priority areas.

Former Labour leader and Doncaster MP Ed Miliband raised concerns around the allocation of funds to Rishi Sunak s constituency ahead of other areas.

He told MPs: "I fear they (the Conservatives) haven't learnt the lessons. You cannot grow the economy if you're giving tax cuts with one hand but cutting the services communities and businesses rely on with the other.

"The issue is not just about resources, but who spends them and where they are spent. We are the most regionally unequal country of any major developed economy and the most centralised. The levelling-up fund is a centralised pot of money to be determined by ministers.

"We're starting to discover where the money is actually going. Salford is the 18th most deprived area in the country, but not placed in the category of most need, category one, but in category two. Barnsley is the 38th most deprived area and is also in category two.

"Richmond is 256th out of 317th for deprivation, it happens to cover the Chancellor's constituency, so found its way into category one. The Government has said it is based on objective criteria, so what are they?"

He added: "If it's all above board, why haven't they published the criteria?"

Labour MP Stephanie Peacock told the Commons: "Ten harsh years of austerity has had a huge impact on areas like mine. Barnsley Council has faced some of the worst government cuts in the country, losing 40% of its income since 2010. So the concept of levelling up could be a very welcome one.

"The Government describe levelling up as their intention and I quote, 'to address inequality and level up underperforming and left behind parts of the UK'. But this is simply not what we have seen."

Comparing child poverty statistics, she added: "In Barnsley East, 25% of 0 to 15 year olds live in poverty, double the figure of 12% in the Chancellor's constituency of Richmond. If we move on to free school meals, there are over 3,000 children eligible in Barnsley East, double the figure of 1,500 in the Chancellor's constituency of Richmond.

"If we look at unemployment, in Barnsley it is 6.6%, again double the figure of 3.3% in the Chancellor's constituency of Richmond. Child poverty, free school meals, unemployment claimants, the list goes on and the statistics would continue to prove that Barnsley is clearly in greater need than the Chancellor's constituency, and yet Richmond is in line to receive funding ahead of Barnsley."

Earlier, Tory former chancellor George Osborne has warned that Rishi Sunak's decision to raise corporation tax in last week's Budget will have "consequences".

Mr Osborne, who used his time in the Treasury to drive down corporation tax rates, said the move risked sending a message that the UK was not "pro-business" just as it needed to attract new investment.

Mr Sunak, the present Chancellor of the Exchequer, announced that he was raising corporation tax from 19% to 23% from 2023 as he sought to rebuild the public finances following the coronavirus pandemic.

However, speaking at an Institute for Government online event, Mr Osborne warned that it could prove counterproductive and questioned whether it would actually go ahead.

"I don't want to criticise Rishi Sunak - he is doing a pretty good job in difficult circumstances," he said.

"But I would say the idea you can increase Britain's business tax by 25% and there will be no consequence - I don't think even he would claim that either - is a mistake.

"Tax increases have consequences and we will wait to see - if this tax increase does indeed go ahead - what impact it will have.

"I think you have got to be careful as a country what signals you are sending around the world to a world that certainly doesn't have much time to look into the UK tax code."

He said that was particularly the case if the "basic message" to come from the Budget was that the UK was moving to a "very high rate of corporation tax".

"You're just sending a message around the world that Britain is not a particularly enterprising or pro-business place at the very moment when you want to be encouraging that in a recovery," he said.