ONE of England's leading industrialists last night branded Scotland a subsidy junkie and called for the Barnett formula, which guarantees Scotland's favourable share of UK public spending, to be scrapped.

Sir George Russell, chairman of National Lottery organisers Camelot, claimed that Scotland received an unjustly high level of public funding and had benefited from pro-Scottish favouritism by successive governments for years.

Sir George, who is chairman of the Northern Development Company, immediately found himself in the middle of a political row. SNP leader Alex Salmond accused him of mounting an ''an anti-Scottish tirade of distilled ignorance'' which bore no relation to the facts.

The high-profile businessman, who is also a former chairman of the regulatory Independent Television Commission, claimed Scotland received far more than its fair share of National Lottery funds and public money for roads, tourism and sport.

He cited the rebuilding of Hampden Park, the Skye Bridge, spending on Gaelic language television and the budget of the Scottish Tourist Board as evidence that Scotland had for years enjoyed the fruits of positive discrimination in public spending from the Government.

Sir George, in a speech to a North East Chamber of Commerce dinner in Newcastle, claimed the Barnett formula, introduced in 1978, was ''a bizarre mechanism'' which was ''no longer necessary or just'' and argued that: ''It seems true that it is a national pastime to focus funds in the direction of the Celtic areas of Scotland, Wales and Northern Ireland''.

A new Government policy, which directed public money away from Scotland to the English regions, was needed to correct 20 years of ''bias'' in government spending, he said. ''There should be a conscious effort not just to create a level playing field but to tip the playing field in our direction. We are 20 years behind''.

In a speech that will reopen the often-heated debate about Scotland's true level of subsidy and renew fears of an anti-Scottish ''English backlash'' after Home Rule, Sir George claimed that Westminster's alleged favouritism towards Scotland had made the North of England poorer.

''The North's level of unemployment and its deprived areas are the price we have paid for successive governments over the years satisfying other regions' political priorities.'' In a sideswipe at the role of inward investment agencies such as Scottish Enterprise, he continued: ''Over payments appear to have been made by Wales and Scotland to lure industry away from the North, and to encourage industry that would have come here, to settle elsewhere''.

Sir George's speech complained bitterly of Government ''discrimination'' against the North of England and urged business leaders in the region to lobby local MPs - which include the Prime Minister, Mr Tony Blair, who represents part of County Durham and the Chief Whip, Nick Brown, a Newcastle MP - to redress the balance.

In what may be seen as a warning of future political battles, the Camelot chairman proclaimed that people in the North of England should not sit idly by and let the ''covert discrimination'' continue. ''We now have 32 Labour MPs, many of whom are Ministers and Cabinet Ministers, who understand clearly the problems of the North. I believe that in time they will find a way to solve these problems.''

He also called on the Government to assume central control of all inward investment flowing into Britain ''so that we are all starting from the same point''.

Mr Salmond said that: ''As chairman of Camelot, Sir George Russell is already held in public odium the length and breadth of the country. This anti-Scottish tirade of distilled ignorance will reduce his reputation still further.''

The SNP leader claimed Sir George was ''obviously blissfully unaware of the Treasury answers from earlier this year which demonstrated beyond argument that there was a net surplus of #27bn flowing north to south, from Scotland to London, since 1979.''