BURNLEY Council has agreed to spend nearly £120,000 - to stop losing £8million of European cash.

The council's executive has agreed to spend £117,000 from its reserves after a blunder in drawing up the budget for the authority's Urban2 programme left it with a shortfall.

The eight-year scheme was launched in 2000 and the council was given £8million of European cash to tackle crime and disorder, stop young people offending, get people back to work and improve health and education standards.

The mistake was in the level of grant the council received for helping staff the scheme and was made by consultants working on behalf the authority, a report says.

It was not picked up by the Government Office for the North West (GONW) which was responsible for distributing the cash, the report says.

The error was discovered when the council recently applied to GONW for its next grant instalment.

Despite appealing to GONW and the European Commission, the two bodies refused to change the rules on increasing the amount of cash Burnley Council could spend on staff.

As the body responsible for the project this meant the council would either have to find the money itself or end the scheme early and face having to repay the £8million.

Hugh Simpson, the council's head of regeneration and economic development, said: "There are enormous risks for not completing the project we signed up for. It is regrettable we need to take this action."

Projects the Urban2 programme has funded include the £1.6million Burnley Drug Street Agency, in Westgate, the Teenzones scheme to improve sports facilities, community and park wardens and an anti-social behaviour team.

Coun Peter Doyle, executive member for resources said: "We believe we have found the best solution."