AN ambitious project to regenerate Hatfield town centre has been dealt a crushing blow with a bid for vital Government funding refused.

Welwyn Hatfield Borough Council's plans to rejuvenate the dilapidated town centre suffered an almighty setback yesterday when a Kickstart boost for the project was turned down.

The council will use a £3.1 million Government grant secured for the scheme, but had applied to its Kickstart programme, which has helped councils to improve local services amid the economic recession, to bridge the shortfall in funding.

The news is just another calamity for traders and residents whose aspirations for a brand new town centre have once again been thrown into doubt.

Council leader John Dean said: "This is yet another bitter blow for the people of Hatfield and for all of us who are working so hard to make this redevelopment happen. However, given the current state of the nation's finances, I am not entirely surprised that our funding bid has been turned down."

The scheme to develop a new town square, bus interchange, taxi rank, public toilets homes and a central High Street will now take a phased approach, starting with the redevelopment of the Bill Salmon Centre site.

Councillor Dean added: "The good news is that we did make sure the new scheme was designed in a way which meant it could be progressed on a phased basis, to cover the eventuality that we did not receive any government or other external funding. In view of this latest disappointment, I am determined to ensure that we make an immediate start on facilitating the commencement of phase one of the scheme, which entails the redevelopment of the Bill Salmon Centre site."

The council and developers St Modwen will continue to review the redevelopment scheme in order to bring forward other phases at the earliest possible opportunity as funds become available.

In the meantime the council has promised to continue working with its partners, the town council and local businesses to improve the footfall and vitality of the town centre.