Flood damage millions 'carelessly' and 'meanly' lost MP claims
About £15m of funding intended for UK communities hit by floods last winter will instead be used to cover a "fine" for misspending a previous grant.
Liberal Democrat leader Tim Farron called Labour "careless" for spending European Union (EU) money on ineligible projects and the Conservatives "mean-spirited" to use flood relief money to repay the wrongly used funds.
The government blamed Labour's "mismanagement" of the money.
Labour has been approached for comment.
Local government minister Andrew Percy, revealed in a written statement that £15m EU Solidarity Funding received in respect of the winter 2015-16 floods would be "offset" by the £14.5m repayment.
The UK was "legally obliged" to make the repayment because there had been "ineligible spending under the Labour administration" of 2007 funding.
The remaining £500,000 was "only eligible to reimburse" the government for financial support given to affected areas, he said.
Westmorland and Lonsdale MP Mr Farron said the two parties had "combined to deprive flood-hit areas of much needed funds".
"Labour's overspending has hurt the North and all those affected by last year's floods," he said.
"But it is the Conservative's mean-spiritedness which means they have chosen to use this money to pay the fine, instead of passing this money on to flood-affected areas and paying the fine from Treasury coffers."
In response, Mr Percy said the government had delivered £300m to help flood-hit communities.
"Liberal Democrats are misleading the public by suggesting there's some EU magic money tree," he said.