The West Midlands is in danger of having to hand back £101 million to the Government because councils aren’t spending the money quickly enough on vital improvements to roads.

Although the region was allocated £275 million for the first stage of a 10-year investment programme, more than a third is likely to be unspent at the end of the first three years. The Department for Transport has given the councils six months to get the programme back on track or lose the money.

A critical scrutiny inquiry by the regional assembly blames the lack of progress on a “parochial” approach by the region’s 38 councils, the passenger transport authority Centro and the regional development agency Advantage West Midlands.

The inquiry said it had “significant concerns regarding the lack of coherent strategic planning and forward thinking” demonstrated by individuals and organisations giving evidence.

At the centre of the row is the £1 billion Regional Funding Allocation – money allocated by the Government from 2006 to 2016 to fund better transport, housing and economic development. Most of the cash is earmarked to improve West Midlands roads.

The money is meant to pay for major highways schemes, other than motorways, deemed by the councils to be important.

But the scrutiny report hits out at a “bottom up” approach where councils promote their own “pet projects” rather than take a strategic view.

The report was written by former Birmingham airport managing director Brian Summers, a vice-chairman of the Regional Transport Partnership.

It warns: “Another limiting factor has been the need to achieve consensus amongst partners. This has led to trade-offs, decisions based on the lowest common denominator and concentration on less contentious issues.”

The inquiry, chaired by former Staffordshire County Council leader Terry Dix, found “fundamental weaknesses within the region’s transport infrastructure” which were not being addressed.

“We were struck by the extent to which parochial views appear to affect transport provision”, the document added.

West Midlands Regional Assembly chairman David Smith said an independent review into the underspending had put forward 15 recommendations for “steps to be taken urgently to take this work forward”.

Coun Smith (Con, Lichfield) said councils were working hard to get the transport programme back on track, but admitted it was possible Government funding would be withdrawn.