18 February 2008: Funds to Newcastle

A town in Staffordshire is refusing to pay back over a million pounds in grants after government officials confused them with another English city.

The Department for Communities and Local Government mistook the market town of Newcastle-Under-Lyme for the industrial city of Newcastle-Upon-Tyne when calculating funding budgets, resulting in a 1.1 million pound overpayment to the market town.

Newcastle- Under-Lyme council described it as "an astonishing error", and now says it is unable to pay back the money because it has already been allocated to business development projects.

A red-faced government spokesman said: "This is a regrettable error."