The European Commission has suspended funds to five regional authorities in England over 'a lack of proper controls over paying agencies'.

The authorities involved are north-east England, north-west England, Yorkshire and Humberside, London and West Midlands.

No indication of the sums involved was given, but in 2005 the European Regional Development Fund (ERDF) pumped euros 2bn into the UK, so the loss of money will be substantial.

In Whitehall, John Pratt, spokesman for the office of Communities and Local Government (CLG) hoped the suspension would only last months: 'We’re confident we’ll be able to address the Commission’s concerns by the summer,' he claimed.

He said the Commission had 'asked us to improve a number of on-site checks' and after lengthy 'intensive and constructive dialogue with the Commission,' the department had put in place a 'robust' action plan. The Commission had been making threats to suspend payments last November if controls were not improved.

Brussels has now given the CLG three months to provide evidence of compliance, and will resume payments if this is forthcoming.

John Pratt said there was no question of ongoing projects being cancelled, as claims to Brussels were made in arrears and the CLG was continuing to make the necessary payments.