A local housing estate has been passed over for European subsidies because it is in the wrong place.

A cluster of seven wards in Brighton and Hove have been recommended by the Government to receive Assisted Area Status, which would mean xgenerous grants from the European Commission.

But a European guideline, which favours "compact, self-contained areas", means the Moulsecoomb and Stanmer wards have been left out because they jut out of the geographical block.

The Government applied to Europe last year for a stretch from Shoreham to New-haven to be given the status. The cash was due to be released on January 1 but a wrangle between Whitehall and the European Commission over which areas should be targeted delayed the scheme.

Now the Department of Trade and Industry has published a new map which does not include Moulsecoomb and Stanmer in Brighton and instead includes the Hanover ward. Moulsecoomb has higher levels of unemployment and crime than Hanover. House prices also show the difference between the two areas: a three bedroom house in Moulsecoomb costs around £65,000 while a similar property in Hanover is £160,000.

A Government spokeswoman said: "The original map submitted by the Government had a hole in the middle where Hanover was. The commission wanted it redrawn to fill the gap in the middle. The reason Hanover has been added is because it's in the centre. The commission wanted compact, self-contained areas."

Residents in the area are furious at the news. Dave Barnard, chairman of Moulsecoomb Tenants Association, said: "For an area which really needs this kind of help to be lopped off the map for these reasons is a real slap in the face for the community of Moulsecoomb.

"The area is continuously being left out when Government and European funding is being handed out, although it has the same problems and needs the same help as neighbouring areas like Whitehawk."

Des Turner, MP for Kemp Town, said: "It's an absolutely puerile reason and to include Hanover is silly. It's bonkers, a real piece of silly Brussels speak that we don't have to go along with."

Mr Turner is calling for a meeting with Trade Minister Richard Caborn to discuss dropping Hanover in favour of Moulsecoomb.

Coun Jack Hazelgrove, who represents Moulsecoomb, said: "We are very sorry to have been left out. It would have been very useful to residents to have this type of funding. But we are hoping to hear positive news from the New Deal so hopefully we will get our fair share of what's on offer."

An announcement on whether Moulsecoomb and Whitehawk's joint bid for £50 million under the New Deal for Communities scheme has been successful is expected later today.

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