A green mep has welcomed a decision not to give tea firm Twinings a £10.5m EU grant pledged to it after it announced plans to relocate from the UK to Poland, resulting in the loss of almost 400 jobs.
AB Foods, which owns the company, plans to open the new £27m (€43m) site in Poland later this year and close a plant employing 260 workers in North Shields.
More than 100 employees in Andover, Hampshire, are also expected to lose their jobs as the site halves its workforce over the coming months.
Following the announcement of job losses in November 2009, Twinings claimed the grant would be used to open new state-of-the-art packing facilities rather than relocate existing equipment.
But the European Commission launched a review of its decision after accusations that the company's use of the £10.5m (€12m) grant breached EU rules.
Critics including Keith Taylor, Green MEP for South East England, claimed Twinings should give the money back because it was supposed to be used to open new investments rather than relocating existing facilities overseas.
A spokesman for Twinings confirmed that it has now learned it has not met the criteria for the grant.
Mr Taylor described the news as a "victory" for Twinings employees who had lost their jobs and spoke of his concerns of a "loophole" in European Union regulations.
He said: "I've been challenging this grant for over a year now.
"Today's decision to cancel it is a victory for Twinings staff who've lost their jobs and the campaigners who supported them.
"EU regeneration cash should be used for genuine regeneration, and not simply for corporations to move jobs to lower wage economies and then get taxpayers to foot the bill.
"That Twinings decided to move was entirely their own decision, taken for commercial reasons, and it is deeply regrettable that jobs have been lost.
"That they very nearly got the taxpayer to fund part of their relocation tells me there is a loophole in EU regulations that needs closing to stop this happening again."