TORY leadership contender Rishi Sunak proudly told party members that he had diverted funding from “deprived urban areas” towards more prosperous towns, according to a video published today.

The former chancellor bragged that he had started changing public funding formulas to ensure more prosperous towns receive “the funding they deserve.”

The New Statesman magazine, which obtained footage revealing Mr Sunak’s remarks, said they were made to grassroots Tories in Royal Tunbridge Wells, Kent, on July 29.

Labour said it was “scandalous” that the mega-wealthy MP for Richmond in North Yorkshire was “openly boasting that he fixed the rules to funnel taxpayers’ money to rich Tory shires.”

Mr Sunak’s campaign team defended the comments, claiming that he changed the Treasury’s green book setting the rules for government spending to help towns and rural areas also in need of investment.

In the video, 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.”

The revelation comes as the ex-chancellor tries to make up ground on Foreign Secretary Liz Truss, who is the favourite to replace Boris Johnson as prime minister when the Tory leadership ballot closes in early September.

Shadow levelling-up secretary Lisa Nandy said: “This leadership race is revealing the Conservatives’ true colours.

“This is public money. It should be distributed fairly and spent where it’s most needed – not used as a bribe to Tory members.”

In a sign of growing division within the Tory Party, Jake Berry, chairman of the Northern Research Group of Conservative MPs, said that Mr Sunak “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,” the supporter of Ms Truss added. 

A member of Mr Sunak’s campaign team said: “Levelling up isn’t just about city centres, it’s also about towns and rural areas all over the country that need help too.

“Travelling around the country, he’s seen non-metropolitan areas that need better bus services, faster broadband or high-quality schools – that’s what he’ll deliver as prime minister.”