Up to #10 million granted to the Rover Task Force following the car manufacturer's collapse has been returned to the Treasury.
The cash was part of a #175 million grant to the region following the closure of the Longbridge plant last year. But it was given back to the Government after it was judged not to be needed.
Birmingham MP Richard Burden (Lab, Northfield), whose constituency covers Longbridge, said it was important budgets were flexible enough to be used for the benefit of the region. He raised concerns in a House of Commons debate on the state of the motor manufacturing industry.
The #10 million includes #5 million earmarked for supporting companies in the supply chain. It was not spent because component manufacturers did not suffer as much as feared, with only 11 firms closing out of 100 which were considered at risk.
Another #5 million was earmarked for capital investment in the Longbridge site. However, private investment has been greater than expected.
Mr Burden said: "There may be sensible reasons why this money was not used. My concern is that we make sure budgets are flexible enough that funding is available where it is actually needed."
The MP is campaigning for a new employment centre in Longbridge to provide career and financial advice to residents.
Trade Minister Margaret Hodge, speaking during the debate, said she would meet Mr Burden, adding: "I hope I will have good news for him."
The task force was led by Advantage West Midlands, the regional development agency, which has now taken over its work.
A spokesman for AWM said: "No money that was earmarked for employees or for the community has been returned."
