Too much money is being spent creating large buildings in rural areas while struggling businesses are failing to get vital funding, rural leaders have said.
Strict rules governing regional development agency Advantage West Midlands mean not enough funding can be spent helping people living in the countryside, according to a review by the West Midlands Regional Assembly.
The assembly is calling on the Treasury to change the rules which require AWM to split funding evenly between capital and revenue projects.
It believes that, unlike urban areas, rural parts of the region are crying out for more revenue projects and that capital projects, such as the creation of new community centres, were less important.
The assembly is also questioning whether AWM is addressing the needs of communities such as Staffordshire, Worcestershire and Warwickshire, which fall outside its designated Rural Regeneration Zones.
The RRZs, which are mainly in south Shropshire and Herefordshire, were created to address high levels of unemployment and social deprivation.
But many small businesses outside these areas are calling for more support from AWM.
The Reverend Nick Read, chairman of the Rural Affairs Forum and a member of the review panel, said: "We want to put pressure on the Treasury to change the rules because everybody is saying we need more revenue funding and AWM's hands are tied.
"We would like to see capital and revenue split 30/70 rather than 50/50."
Mr Read added: "There are also huge questions about what happens in rural areas not in the RRZ or not close to high-tech corridors. Many people outside these areas want benefits for rural business but can't get it."
The review is the latest in a series carried out by the West Midlands Regional Assembly as part of its role to scrutinise the work of AWM.
Questions raised included how effective AWM has been in responding to the changing rural policy and delivery environment since it took on the responsibilities of the Countryside Agency and the relationship between economic, social and environmental regeneration.
Evidence presented during several sub-regional hearings emphasised the need for local delivery that takes account of local needs. The panel questioned how far AWM, as a strategic regional organisation, should be involved in local delivery including its role in Local Area Agreements.
"Other issues are the extent to which AWM has certain economic targets - do you just fulfil these by promoting new jobs or do you have to have an understanding of the need for affordable homes and transport?" said Mr Mead.
"AWM has taken on some of these responsibilities from the Countryside Agency so we are looking at how it understands its new responsibilities."
The regional assembly will publish a draft report of its review into AWM in January with a final report due to be presented to the assembly in April.