EC regional policy commissioner Bruce Millan has written to the government asking for talks, after British local authorities have complained that Whitehall is not 'matching' EC grants for depressed industrial regions.
The Department of Trade and Industry says the EC funds will be matched but the details have yet to be worked out between government departments, the FT reports.
This latest move follows the controversy last year when the EC withheld funding for coalmining areas because of disagreements over additionality. The row was supposed to have been resolved when the government accepted the EC rules and agreed to provide matching funds to regions in order to secure grants from Brussels.
There is concern that if the UK cannot take up the European funds, it will lose them.