Rishi Sunak under fire for claiming he worked to divert money from 'deprived urban areas' when chancellor

Rishi Sunak has been accused of "funnelling taxpayers' money to rich Tory shires" after he told party members he had been working to divert funding from "deprived urban areas".

A video obtained by the New Statesman magazine shows the former chancellor telling grassroots Conservatives that he had started changing public funding formulas to ensure other parts of the country receive "the funding they deserve".

In remarks made in Tunbridge Wells, Kent, last week he said: "I managed to start changing the funding formulas, to make sure areas like this are getting the funding they deserve because we inherited a bunch of formulas from Labour that shoved all the funding into deprived urban areas and that needed to be undone.

"I started the work of undoing that."

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Labour MPs have voiced their anger over the comments, with shadow levelling up secretary Lisa Nandy calling them "scandalous".

She has written to the Levelling Up Secretary Greg Clark, asking him to investigate the changes Mr Sunak is referring to and what justification was given for them.

She said: "Rishi Sunak is openly boasting that he fixed the rules to funnel taxpayers' money to rich Tory shires.

"This is our money. It should be spent fairly and where it's most needed - not used as a bribe to Tory members. Talk about showing your true colours."

Mr Sunak's campaign did not dispute the video and instead defended its content.

Tory MP Jake Berry, who is chairman of the Northern Research Group of MPs, also condemned the remarks as he attacked Mr Sunak's leadership campaign.

He tweeted: "In public @RishiSunak claims he wants to level up the North, but here, he boasts about trying to funnel vital investment away from deprived areas?

"He says one thing and does another - from putting up taxes to trying to block funding for our armed forces and now levelling up."

And Foreign Office minister Lord Zac Goldsmith said: "This is one of the weirdest - and dumbest - things I've ever heard from a politician."

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But speaking to reporters later on Friday, Mr Sunak said he was making the point that "deprivation exists right across our country".

Addressing the video, he said: "Well, I was making the point that deprivation exists right across our country and needs to be addressed.

"And that's why we need to make sure our funding formulas recognise that. And people who need help and extra investment aren't just limited to big urban areas. You find them in towns across the United Kingdom and in rural areas, too.

"And that was the point I was making, that our funding formulas that fail to recognise that are out of date, and they needed changing."

He continued: "It's right that those funding formulas are accurate, that they actually look at the need in different areas, measure that properly and reflect how things have changed from the past.

"And I think that's an entirely sensible thing to be doing, because it's not just big urban areas that require that extra investment.

"It's also people in rural communities, it's also people in towns and that's what we've done, both as a government in the past, what I want to do as prime minister in the future.

"Level up across the country so that no matter where people live, they feel incredible opportunities and pride in the place that they call home."

Allies of Mr Sunak have rallied around the Tory leadership contender.

Conservative Tees Valley mayor Ben Houchen argued Boris Johnson led the party to electoral victory on a pledge to invest in areas "that have been ignored at the expense of urban cities".

And Richard Holden, the Tory MP for North West Durham, attacked Labour for "dragging investment out of small cities, towns, suburbs, villages" while "splurging" in metropolitan centres.

Defending Mr Sunak he told Sky News: "Rishi Sunak tore up (Treasury orthodoxy) so that places right across from Cornwall to the Cotswolds to County Durham to Cambridgeshire were all basically benefiting from a total change in the rules."

Sky News analysis last year found the majority of Levelling Up funding was going to the most deprived parts of the UK. But many areas in need missed out in the first round.

The remarks come as Mr Sunak tries to make up ground against Foreign Secretary Liz Truss to win the backing of party members who will choose the next prime minister.

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Ms Truss has been consistently ahead in the polls, but last night saw Mr Sunak win over an audience of undecided voters following Sky News' Battle for No 10 programme.