The Department for Communities and Local Government (DCLG) has turned down the European Commission’s offer of an extra six months to spend£671m worth of unallocated EU funding in England.
The Local Government Association has called for ministers to allocate this money to projects that would help to bolster local economies and shore up employment in some of England’s most deprived regions.
The LGA is also warning that projects waiting on EU funding may have to be scrapped because of the Government’s decision.
While Wales, Scotland and Northern Ireland will receive£143m of funding, the money for English regions will not now be spent and instead will be deducted from the UK’s future contribution to the EU.
Deputy LGA chairman Richard Kemp (Lib Dem) said: “It’s pretty surprising that the Government feels in a position to turn down hundreds of millions of pounds that could be used to help stimulate the economy.
"Funding from Brussels can offer small local businesses a lifeline and help to bring in much needed investment at this time of recession.
“People and businesses are suffering with the effects of recession and every effort possible needs to be made to ensure that they are getting all the help and support that they need to get through tough times.”