A TROUBLED council facing widespread cuts could be ordered to pay back a £100,000 grant it was given almost five years ago, it was revealed today.

Cash given to Rossendale Council for a town centre redevelopment scheme in Rawtenstall is to be the subject of a review by the European Court of Auditors.

The grant, issued by the European Regional Development Fund, was for town centre redevelopments between 1995 to 1998. How it was spent is now being challenged after a district auditor was asked to review the case.

Colin Lythe is taking the action against the council after he carried out a refurbishment scheme at the former Heritage Arcade which was situated next to Rawtenstall bus station. After extensive negotiations with the council Mr Lythe carried out work thinking that the money he spent on the building would be match funded by the council.

A work colleague of Mr Lythe's, Cathy Fishwick of Rawtenstall Civic Society, said: "This has been going on for a number of years. Colin believed that some money was due to him from the council.

"He commenced with his project but did not receive that money and has been pressing the matter ever since. I do not know who is right or who is wrong but I am sure it will all be worked out soon."

This argument is now in dispute and the European Court of Auditors -- the auditors of the European Union -- will review the whole scheme.

The council is already trying to save around £400,000 from its budget by axing five popular leisure facilities in the borough.

Today borough treasurer Richard Hargreaves said any extra money would also have to be found from council coffers.

If the court rules the money was not spent appropriately then Rossendale Council could be ordered to pay it back.

Opposition leader Coun Neil Smith said the public had been kept in the dark about the situation for years.

He said: "When I questioned officers about this issue there was stunned silence in the council chambers.

"I sincerely hope this is not going to be another shock find for Rossendale but it looks like a can of worms has been unearthed.

"It is a good job this was spotted, because this has been going on for years and I have never heard anything about it."

Borough treasurer Richard Hargreaves said: "We are hoping it can be resolved in the near future so it can be taken off the accounts."

"Lets see what the courts rule first before we go jumping to any conclusions."

Last month the council announced the closure of the popular Astoria Ballroom and Rossendale Museum, Rawtenstall, Whitworth Baths, Haslingden's Public Hall and the AB and D Centre, Bacup.

They were originally due to close in October but in a meeting attended by more than 400 protesters on Wednesday councillors said they would do all they could to keep the facilities open.

The council's new interim chief executive James Gravenor, who has been brought in as a troubleshooter to try to turn the council around in six months, was not available to comment.

Leader of the council Graham Pearson said: "Two sets of auditors have already been called in and were perfectly happy with how we spent the money.

"It has now gone to Brussels to be dealt with which we are hoping will be done sooner rather than later.

"If we were ordered to pay back the grant it would be detrimental as it would be to any other council."