Tens of millions of pounds in EU funding earmarked for the West Midlands could go to waste, MPs have warned.
They urged the government to intervene to ensure cash designed to promote economic development in the regions of England was spent.
The West Midlands has been offered £345 million from the European Regional Development Fund between 2007 and 2013, but 40 per cent of the cash has still not been allocated to specific schemes.
Under EU rules, the money must be contracted by the end of 2013 and spent by the end of 2015, otherwise it returns to the European Commission.
But the rules also state that projects receiving European Regional Development Fund cash must also have a matched funding from another source. In the past, this usually came from Advantage West Midlands, the regional development agency set up by Labour, which was abolished by the Coalition government.
It means it has become much harder for local councils to bid successfully for EU funds. But Birmingham City Council has warned MPs that the money made a massive contribution to the city’s economy, when it was easier to obtain.
Advantage West Midlands also used to manage the region’s European Regional Development Fund allocation - but this responsibilty has now transferred to civil servants in London, who are reluctant to agree to deals.
Concerns were raised by the Commons Communities and Local Government committee, which includes Midland MPs James Morris (Con, Halesowen and Rowley Regis) and Mark Pawsey (Con, Rugby).
It followed an inquiry in which the MPs received evidence from Birmingham City Council and other West Midland local authorities.
The MPs warned in a report: “The abolition of the Regional Development Agencies removed the main source of match funding for European Regional Development Fund projects, and the economic downturn has reduced the options for match funding even further.
“The Government does not seem to appreciate the problems that projects are facing in securing the match funding needed for them to go ahead.”
Ministers had promised to make it easier for councils to use a new national fund - called the Regional Growth Fund - as a source of the matched funding they needed, the MPs said.
But they warned that the Government had “not delivered” on this promise.
The MPs said: “All these factors, together with the pressing need to spend each region’s European Regional Development Fund allocation before 2015, increases the risk that value for money will suffer and European Regional Development Fund will not make the impact it might have done.”
Projects were now assessed by officials in the Department for Communities and Local Government in London, while they were previously assessed by staff in regional development agencies, such as Birmingham-based Advantage West Midlands, the MPs said.
A written submission to the committee from Birmingham City Council warned that this had made it harder to obtain funding.