The district of Richmondshire, which includes Rishi Sunak’s Richmond constituency, was placed in the highest preference category for regeneration funding along with other areas such as Bradford, Wakefield, Scarborough, Leeds, Doncaster and Rotherham.
But Mr Sunak said tonight that the formula was “based on an index of economic need, which is transparently published” and “a bunch of objective measures”.
Areas were divided into one of three priority categories and have been invited to put together proposals for funding.
And although the ranking did not represent eligibility criteria, Treasury documents said “preference will be given to bids from higher priority areas”.
Other areas of Yorkshire such as Barnsley and Calderdale appear in category two, while York and Harrogate are in category three.
Shadow Communities Secretary Steve Reed said it raised “big questions marks over the fairness of the Government’s regeneration funding schemes”.
And he added: “Just months after the Government was criticised for diverting funding away from towns that desperately needed it, we discover that Cabinet Ministers’ own constituencies now stand to benefit ahead of more deprived areas.”
But Mr Sunak said: “No area is excluded from bidding, it’s just that those areas on the basis of this formula might need a bit of extra help. So we’re giving those local areas some money to put that bid together, to help them.”
He told a news conference at Downing Street: “We have announced the location of our eight freeports in England today.
“They are spread in eight English regions – from Southampton to Teesside to Liverpool – across the country. And all of those areas are actually represented by a mix of both MPs and local authorities.
“Because what we are interested in is making sure that wherever you grow up, wherever you happen to live, that this Government is helping to provide opportunity for you and creating jobs in your area.
“I firmly believe that whether it is the levelling up fund, or our freeports initiative, or any of the other things we are doing, we are delivering and making good on that promise.”
According to the prospectus for the Levelling Up Fund released by the Treasury, "funding will be allocated to local authorities most in need of levelling up in England".
It said the priority levels were decided "based on a combination of metrics including need for economic recovery and growth, need for improved transport connectivity and need for regeneration".
Local authorities will bid for the funding and the number of bids they can make will depend on how many MPs are in their area. MPs are invited to be involved in lobbying for funding but can only back one bid they see as a priority.
Sheffield City Region mayor and Barnsley Central MP, Labour's Dan Jarvis, said: "A cursory glance the Government’s criteria for the levelling up fund is symbolic of their divide and rule approach. The Chancellor has identified his own Richmond seat as ‘category one’ and relocated his Treasury office to a neighbouring constituency, but has labelled places like Barnsley and Sheffield as ‘category two’ – pushing them to the back of the queue for economic support.
"Ministers must change their approach, or they will put the country on course for a deeply divided recovery.”
But Don Valley Conservative MP Nick Fletcher welcomed the fund and said it "will go a long way in bringing prosperity and jobs to the North".
Mr Sunak said in a report that the new fund "brings together the Department for Transport, the Ministry for Housing, Communities and Local Government and the Treasury to invest £4.8bn in high value local infrastructure".
He adds: "In doing so, it removes silos between departments, allowing areas to focus on the highest priority local projects rather than shaping projects to fit into narrowly defined pots of funding."
Meanwhile, Yorkshire and the Humber is to get nearly £200m to help towns in the region transform their economic prospects as the Government released the first tranche of funding from its controversial Towns Fund.
In total 45 places across the country have had their funding confirmed for regeneration plans focusing on transport, broadband connectivity, skills and culture.
At the press conference, Mr Sunak was asked why 40 of the 45 towns were represented by Conservative MPs and if this was a case of “naked pork barrel politics”.
In Yorkshire and the Humber, Whitby will get £17.1m, Grimsby £20.9m, Wakefield £25m, Scunthorpe £20.9m, Stocksbridge £24.1m, Morley £24.3m, Goldthorpe £23.1m, Castleford £23.9m and Scarborough £20.2m.
The total investment in Yorkshire and the Humber is £198m, representing a fifth of the funding handed out across England.
A further 56 places are yet to find out how much funding they will receive as part of the scheme, which was criticised for appearing to favour seats the Conservatives were looking to win in the 2019 General Election.
Scarborough council leader Steve Siddons said of the funding for Whitby and Scarborough: "It is a massive shot in the arm for both towns, and the borough as a whole, especially when it comes to our economic recovery from the coronavirus pandemic."
The Treasury says the Levelling Up Fund will in future take the place of the Towns Fund and the Local Growth Fund, both of which have seen hundreds of millions in regeneration funding into Yorkshire.