The leader of North Devon Council says they have been "led up the garden path" after a bid for millions of pounds to transform the most deprived area of Ilfracombe failed.
Cllr Ian Roome (Lib Dem, Barnstaple with Pilton) said the news came as "a huge blow" after officers and councillors had been "optimistic" that the £24 million application for levelling up cash would be successful.
The council was requesting an "exceptional" or "bespoke" fund for the North Devon town where life expectancy is 10 years below some other areas of Devon.
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Following a visit to Ilfracombe by levelling up minister Jacob Young in January, Cllr Roome said the signs had been good.
He said: "We were under the impression that this would be a priority for the Department of Levelling Up, Housing and Communities (DLUHC) and were encouraged to submit this particular type of bid.
"We showed him the challenges and presented a very detailed bid with statistics to back it up. I think we were led up the garden path."
He said nearly 20 per cent of households were in poverty, there was a lack of housing especially for key workers and a high level of private rented properties. There were houses of multiple occupation (HMOs) that were in a "squalid state" and the area around the high street was very deprived.
Cllr Roome said: "£24 million would make a tangible change, it would transform the area around the high street, instead the government gives London's Canary Wharf £424 million for what?"
There were plans by North Devon Council to bolster health initiatives to address inequalities, invigorate the private rental sector, carry out public realm enhancements to revitalise the town centre and build more homes.
The minister said in a rejection letter to the council that his department was not able to support a bespoke intervention and that measures in the Renters Reform Bill, intended to redress the power balance between renters and landlords by scrapping no-fault evictions and other reforms, will be a way of improving housing in Ilfracombe.
At a meeting of North Devon Council members said there should be a fair allocation of levelling up funding rather than making councils bid against each other.
They said no matter how hard they tried the problems of Ilfracombe were not being recognised by Westminster.
Cllr Caroline Leaver (Lib Dem, Newport) said money should be allocated on the basis of need. She said it was absolutely appalling that residents in areas of Ilfracombe could expect to live ten years less than people in parts of Teignbridge.
Cllr Frank Biederman (Lib, Dem, Fremington) said the council was "going after scraps" and levelling up was a "tick box exercise".
Councillor Paul Crabb (Con, Ilfracombe East) said the council had chosen to use its own funds for projects like purchasing Green Lanes shopping centre in Barnstaple and now it needed to do what it could "within its own gift" to help Ilfracombe.
Members agreed to have a brainstorming session at a strategy and resources meeting.
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