More than £3.5m intended to alleviate child poverty and homelessness is at risk of being wasted because the government has failed to spend it, says a House of Lords committee.
Peers have written to the Home Office saying it is “extraordinary” that the EU funding has not been used.
They warn that some of the cash has already been forfeited and are worried about the rest being handed back.
The government said there had been “barriers” over spending the money.
But peers have written to complain that after almost six years, the government has failed to deliver spending aimed at addressing “the worst forms of poverty”.
About £580,000 of unspent cash has so far been taken back – and a further similar amount is at risk of being deducted at the end of the year.
“The government had an opportunity to help support the most disadvantaged people in the UK but has instead wasted over half a million pounds,” said Lord Jay, chairman of the EU Home Affairs Sub-Committee.
He said it was “astonishing” that so long has been taken in deciding how to use the money – and said having to give back some of the funding was “unbelievably inept”.
The UK was allocated more than £3.5m for 2014 to 2020 from the Fund for European Aid to the Most Deprived, to be used in projects such as child poverty, homelessness or food banks.
There were initial plans in the UK to use this for school breakfast clubs in deprived areas, but these were not eligible for the funding.
But the House of Lords committee criticised the government for not finding “an alternative use for this money”.
And the peers are concerned that in the event of a no-deal Brexit all the remaining money might have to be returned.
Lord Jay said “all the other EU countries have found ways to spend this on some of the most deprived people – apart from us”.
He said the committee found it “frankly unbelievable” when public services faced budget pressures that money “had to be given back because a way hasn’t been found of spending it”.
Lord Boswell, chairman of the Lords EU Committee, has written to the Home Office saying it is “extraordinary” that this failure has wasted so much of the UK’s allocation of funding.
Elsewhere in the EU, about 13 million people received assistance from this funding, with the most common support being in food aid.
The Home Office, responding to the committee’s concerns, said the original plan to use the money for school breakfast clubs had faced “barriers” from eligibility rules and “extensive audit requirements, procurement requirements and administrative costs”.
The Home Office says there are now plans to use funding for projects for young refugees or “potential victims of modern slavery, some of whom are unaccompanied children and young people”.
Lord Jay said this was a “very good idea” – but he wanted assurances that it would be delivered.