THE North-East could end up losing out if regional European grants come from London instead of Brussels, local authorities have warned.

Chancellor Gordon Brown announced in March that the Government favoured a new approach for handling EU grants for Europe's poorer regions.

The grants pay for things such as skills training, infrastructure and regeneration. Britain and other member states contribute to EU funds, from which payments are made to the regions.

But Councillor Michael Davey, lead member on Europe with the North-East Assembly and Association of North-East Councils, said he was concerned at Government plans to pay them directly from London.

He said that the association supported changes aimed at simplifying access to EU funding, cutting red tape, and reforming farm subsidies.

But the North-East could lose out if funding came from London rather than Brussels.

"The current relative flexibility of EU funding might not be replicated at national level, with less of a say in the region on what was funded locally and how," he said.

"The EU funding programme runs for seven years, which allows for a degree of long-term planning that might not be possible under a shorter-term central government programme."

He said that a response was being prepared in the region to the European Commission's own proposals on regional policy, which would be published later this year as the Third Report on Economic and Social Cohesion.