The European Commission has warned ministers in writing that it will not sanction EU funding for one-off Millennium projects which "distort" long-term economic regeneration strategies negotiated with Brussels.
"The climate is a complete squeeze on public expenditure in the UK but it is a bit depressing that there is lots of millennium money floating around yet local regeneration seems to be the last priority," said one Commission source privately. Brussels is poised to unveil plans to phase out its own spending in many UK regions, but officials voiced fears that priority will be given to celebrating the millennium rather than using available national money to replace lost EU funds.
Under the EU principle of "additionality", European grant aid must be "matched" by the national government. Increasingly, officials complain, local communities are finding it difficult to secure the matching cash they need to trigger Brussels money.
The Government has secured European cash for three Millennium projects: Doncaster's "Earth Centre" costing a total of pounds 130m, another called "Magna" in Rotherham, and Hull's "The Deep".
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