Judges have today rejected a legal challenge to how EU funding was shared - which South Yorkshire leaders say made the county lose £50 million.
Four of seven Supreme Court judges agreed with the Government allocation of money, which favoured Scotland and Wales instead.
But three believed South Yorkshire missed out in a flawed allocation process that did not take into account the needs of deprived areas over wealthier ones in an agonisingly close ruling.
One judge was understood to have changed his mind near the end of the lengthy process - he considered the decision to be lawful but ‘unimpressive’ in some respects.
Another, who was minded to allow the appeal, felt the decision was ‘manifestly inappropriate.’
Nine local authorities in South Yorkshire and Merseyside challenged the Government’s decision.
Coun Julie Dore, leader of Sheffield Council, said it was a ‘disappointing’ ruling and such funding was used to transform economies.
The £50 million would have made a ‘huge difference’ to South Yorkshire, she added.
Coun Dore said:“The funding allocation process was unequal, disproportionate and irrational, with many other more affluent areas getting higher levels of funding proportionately than South Yorkshire and Merseyside.”
The Supreme Court hearing was last year.
Overall it decided that the allocation of funds fell within a margin of discretion afforded to ministers and was lawful, although they recognised the perceived unfairness of it.
The nine authorities which challenged the decision will bear the cost of the appeal, although that amount is not yet confirmed.
Coun Dore added: “We believe we needed to stand up and challenge the decision, to fight for the huge amount of funding at stake - over £50 million for South Yorkshire and over £100 million for Merseyside, which would have made a huge difference to our regions.
“Today’s result of the Supreme Court hearing in October reveals just how divisive this issue is.
“The Government’s approach of taking funding away from South Yorkshire and Merseyside to redistribute it to wealthier parts of the country is shameful.
“We have seen a lot of talk from the Government about wanting to grow the economy in the north of England, but we know that actions speak louder than words and the actions of this Government are abolishing the Regional Development Agencies, targeting council cuts to councils in the North of England and now this taking EU funding away from the areas most in need of it to give to far wealthier areas.”
Wentworth and Dearne MP John Healey and Yorkshire MEP Linda McAvan have been among those leading the campaign to challenge the Government’s allocation
Mr Healey said: “In the last weeks of this Parliament, the Government have got away with doing damage to our region that will be felt years from now. They may have won on a point of law, but the Government’s decision to divert £50m of funding from our area to richer parts of the UK remains an outrage.”
During court proceedings, the Government said that if English regions had been treated the same, South Yorkshire would have been allocated at least an additional £20 million.
The original allocation from the EU was said to be over £50 million higher for South Yorkshire.
Oliver Coppard, Labour candidate for Sheffield Hallam, described the decision as a ‘real blow’ which would damage the region’s ability to support small businesses and charities, develop infrastructure or reduce its carbon footprint.
He said: “While the judges may have found that it wasn’t illegal for the government to have slashed our money – albeit on narrowest of margins – their comments are telling; they’ve called the decision making process both ‘unimpressive’ and ‘manifestly inappropriate’.
“Like everyone else in Sheffield Hallam, I am at a loss to explain why Nick Clegg not only continues to support a decision that so clearly disadvantages our region, but why his Government cut our money so dramatically in the first place.
“He now has real and difficult questions to answer as to why he has so completely failed to stand up for this community, this city and this region.
“The government’s own figures show that we should have received £24 million more from the £8.3 billion available, even using their own formula, while the EU says we should have been given £58 million more.”