Durham County Council has asked the government to repay the £1.2 million it spent on five failed levelling-up bids.
Council Leader Amanda Hopgood revealed the local authority has written to the government after the five bids failed in both Round Two and Three of the Levelling Up Fund.
The Liberal Democrat councillor said officials were also told that County Durham had been “removed as a priority one status area” before Round Three was decided.
News of the latest setback came as a shock to County Hall bosses in November when the government announced the latest winners. The Department for Levelling Up said bids earmarked for funding were chosen from a pool of bids that were unsuccessful in the second round, avoiding the competitive bidding process seen previously
But, the council claims it was left in the dark regarding feedback from the second round and before the latest announcement.
The County Durham projects detailed plans to regenerate town centres, improve transport connectivity, and create new cultural attractions in Stanley; Horden; Newton Aycliffe; Willington, Crook and Tow Law; and Bowburn.
A rule change, later admitted by the government after Round Two was awarded, meant that any successful areas in Round One would not benefit in the next round. This particularly affected the County Durham bids after the Bishop Auckland constituency received funding in the first round.
Cllr Hopgood said: “We wrote to the government requesting a reimbursement of our costs. The response we received to this request was that we could resubmit bids in Round Three, on which further guidance would be provided.
“On the announcement of successful Round Three bids, once again after the event we discovered the criteria had been changed yet again without anyone’s knowledge.
“We understand that County Durham had been removed as a priority one status area, therefore reducing the likelihood of any success.”
The £1.2 million spent on external consultants to help prepare the bids would have accounted for around one per cent of the funding received, the council said.
Cllr Hopgood added: “As a result of being made aware of this, and there being no more bidding rounds, a further letter has been sent to the government requesting full reimbursement of the council’s costs.”
Meanwhile, Labour councillors have proposed potential legal action against the government. Cllr Kevin Shaw told a council meeting: “Will the leader of the council agree with the Labour group that this council should take every possible step, including if necessary exploring legal options to get our communities’ money back from what has been a failed Tory beauty pageant?”
Members heard how Cllrs Hopgood and Richard Bell, cabinet member for finance, both shared their concerns with the Levelling Up Secretary of State Michael Gove following the announcement.
“He was told in no uncertain terms by us both personally what we thought of the whole procedure and how disappointed we were, and we will be challenging it,” cllr Hopgood added.