Local authority leaders are urging the Government to work with councils to ensure that the country can take full advantage of newly available European cash. The Local Government Association wants to co-operate with Whitehall after lobbying successfully to bring forward plans to free-up more than a billion pounds of EU funding to help councils and other local bodies fight the recession.

The European Commission is proposing a temporary measure that would allow funding from the EU to be spent this year and next without the need for additional funding from public bodies. The LGA says once the step is agreed it will guarantee investment to help keep people in jobs and for training those who are out of work. At the moment any council bidding for European money has to match fund any cash from Brussels.

News of the proposed change follows lobbying by the LGA for more flexibility for councils in spending EU money. It argued that the lack of match funding was stopping hundreds of millions of pounds being invested in local projects. The proposal covers money from the European Social Fund but details of similar changes for EU funds for regeneration will be published shortly.

The LGA now wants the Government to work with councils to ensure the UK is able to make the most from this flexibility and it is warning that match funding which has already been set aside by the Government must still be spent at the local level. Richard Kemp, the Association’s vice chairman, said: “It’s good news that Brussels has listened to what the LGA has been saying for a while, and it must now follow through with these proposals,” and he added: “The Government must also use this opportunity to allow councils the freedom to target investment to kick start local economies and retrain people for the upturn.”