Extraordinary leaked video shows Rishi Sunak bragging that he could funnel public cash from "deprived urban areas" and give it to more affluent towns.
A clip taken in Tunbridge Wells, Kent, at the end of last month shows the former chancellor saying Labour formulas targeting poorer parts of the country "needed to be undone".
He told Tory Party members that he had started to change these formulas, to ensure "areas like this are getting the funding they deserve".
According to RightMove, the average house price in the leafy town 30 miles outside of London last year was £498,933 - compared to £281,161 across the rest of England.
Labour's shadow levelling up secretary, Lisa Nandy, branded the revelation "scandalous" and said the Tories were "showing their true colours".
She added that public cash should not be used as a "bribe" to Tory voters, but Mr Sunak's team said it had been taken out of context.
The video, shared with The New Statesman, shows the Tory leadership candidate tell members in Tunbridge Wells, which has had a Tory MP since the constituency was created in 1974: “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.”
Foreign Office minister Lord Zac Goldsmith said: "This is one of the weirdest - and dumbest - things I've ever heard from a politician."
Mr Sunak's allies claimed the clip had been taken "out of context", and said he was focusing on ensuring rural areas got their fair share.
They confirmed he had made changes to Treasury guidance.
After the video was shared online, Ms Nandy wrote: "This is scandalous. 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…"
A campaign source 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.
"That's what he changed in the Green Book and he will follow though as Prime Minister. Travelling around the country, he's seen non-metropolitan areas that need better bus services, faster broadband in towns, or high quality schools. That's what he'll deliver as Prime Minister."
The Green Book is guidance issued by the Treasury on how to appraise policies, programmes and projects.
The document also gives guidance on the design and use of monitoring and evaluation before, during and after implementation.
Supporter Ben Houchen, the Tory mayor of Tees Valley, posted on Twitter: "They should post the full clip, which would show @RishiSunak talk about the local council funding formula and how it discriminated against non metropolitan areas in favour of cities - by giving them less money for things like adult and children services, highways and fire."
And MP Richard Holden, also a follower of Mr Sunak, added: "@RishiSunak tore up HMT orthodoxy with GreenBook changes & sees areas like Co Durham, #Teesside, South West etc re-prioritised"
Last summer The Mirror reported that shameless Tories have handed 83% of a £610 million boost for struggling towns to areas that only have Conservative MPs.
Ministers have been repeatedly forced to deny funnelling ‘towns fund’ cash into their own seats and target constituencies in a bid to bribe voters.
In a list of 26 towns benefiting from the fund, only four are represented by MPs of any other party.
In March Mr Sunak was forced to deny “pork barrel politics”, after the previous list of 45 towns getting £1 billion in communities cash, included 40 with at least one Tory MP.
And a National Audit Office report released in July revealed 61 of the 101 towns in the first list, announced in 2019, were chosen by ministers led by Communities Secretary Robert Jenrick - and all but one of these were either Tory-held seats or targets.
Meg Hillier, chair of the powerful Commons Public Accounts Committee, accused the Government of "cherry-picking" which areas received funds.
After the leaked video was shared online, the SNP's Shadow Chancellor Alison Thewliss MP said: "Rishi Sunak has been honest with Tory party members about his plans for the future, but not with the general public.
"Beyond the rhetoric, it's clear that regardless of who becomes the next Prime Minister, their goal is to make the rich richer and the poor poorer.
"With the Westminster government failing to properly tackle the cost of living crisis, it's clear that Scotland needs the full powers of independence more urgently than ever, to properly protect households and build a fairer and more prosperous society."
