THE distribution of government grants could have caused the Burnley riots, MPs said today.

An all-party Commons Committee said the way government money is distributed in the regions may have heightened racial tensions in parts of the North of England.

The fact that different groups and areas of Burnley, Bradford and Oldham were in competition for the same money from the Single Regeneration Budget meant there were winners and losers.

And where the boundaries of the neighbourhoods competing for the money matched those of ethnic groups, that led to anger and tension.

Today Burnley MP Peter Pike said he had always been concerned about the effect of distributing grants according to ward boundaries.

The House of Commons housing, planning, local government and the regions committee came to the conclusion in a report on "the effectiveness of government regeneration initiatives."

Mr Pike said: "I have always agreed that distributing financial resources according to ward boundaries created problems.

"In Burnley it is not true that some ethnic groups got government money and others lost out but the fact that in some cases neighbouring communities won or lost on the basis of ward boundaries made it seem that way.

"The distribution of money according to artificial boundaries from Whitehall does create problems and this is what happened in Burnley in 2001.

"We need a system where the problems are looked at on an overall basis locally to put the money where it is needed and not cause tension between communities."

The MPs report called on the government to devolve power over the handing out of grants and the boundaries of the area they went to and to keep a close eye on how the system worked.