Thames Gateway one of the regions to lose out on European regional development cash bonus

The UK Government has refused an invitation by Brussels to extend the spending deadline for unused European regional aid programmes.

According to Regeneration & Renewal magazine, England's poorest regions will miss out on up to EUR 712 million, after the Government refused an unprecedented European Commission offer to extend by six months the 31 December 2008 deadline for all countries to spend unused 2000-06 European Regional Development Fund (ERDF) cash.

The extension offer was made in December as part of a EUR200 billion fiscal stimulus package from the European Union that was designed to enable all regions receiving ERDF funds to spend the unused money on tackling the recession.

The large UK underspend was in part due to the fall in the value of the pound against the Euro.

The UK Government accepted the extension for Scotland, Wales and Northern Ireland, but declined to accept it for England.

A Department for Communities and Local Government spokeswoman said the Government had decided against the extension because a cost-benefit analysis found it did not represent "best value for money".

She said: "It is not free money and would incur additional costs." She added that the EC requires its funding to be matched by private or public resources, and that this could not be found in such a "little time".

According to the EC figures, England's poorest regions will lose out on EUR 285 million through the ERDF Objective 1 programme and EUR 414 million through the ERDF Objective 2 scheme.

Eight areas, including the Thames Gateway, Peterborough and Bristol, also stand to lose a total of EUR 13 million (£12 million) from the ERDF Community Initiative Programme, the EC figures show.

A spokesman for Danuta Hubner, the European commissioner for regional policy, said that almost every other EU member state had accepted the invitation and that she was "surprised" the UK Government had declined the extension for England. "There is a lot of money left in the pot for the English regions and that's money they now won't be able to get," she said.

And according to Regeneration & Renewal, the news comes as the UK Government faces paying a further £57 million in EC fines for "basic housekeeping" failures in its EC-funded programmes. CLG has already set aside cash for impending EC fines of up to £230 million.