Cornwall and Devon would be lavished with an extra £250 million of European Union regeneration cash if British taxpayers no longer funded rich European neighbours.

The Treasury will hand over £30 billion to Brussels to tackle the continent's most impoverished regions between 2007 and 2013, but is to get back only one-third of the money to ease hardship here.

The Open Europe think-tank contends the UK could save £4.2 billion by scaling-back money ping-ponging across the continent.

The aid, which would be channelled to hard-up areas in Britain instead, would come from no longer pumping cash into relatively well-off countries such as Italy, Spain and Greece.

Under the proposal, Open Europe says Cornwall and the Isles of Scilly would get £207 million more over the seven years, and Devon £36 million extra.

Reform could be vital as both Cornwall and Devon will be among a handful of UK areas to continue to get EU structural funding from 2014.

George Eustice, MP for Camborne and Redruth, backed calls for Britain to pay for its own regional policy, a move considered by the Labour government.

The Conservative MP, co-founder of the Fresh Start group of eurosceptic MPs, said: "We must remember that there is no such thing as EU money. We simply get some of our own money back.

"A successful regional policy is incredibly important to the far South West because action is needed to create new industries and higher paid jobs."

Pawel Swidlicki, lead author of the report, said there was a "strong case" for poorer countries in the former Eastern bloc to continue to get a leg-up. But not those countries whose wealth is 90 per cent or above the EU average. Despite the current eurozone crisis, 14 countries still fall in the well-off category compared to the likes of Latvia and Romania.

Mr Swidlicki went on: "Limiting EU regional spending to poorer countries would be a win-win situation for both Britain and Europe. It would channel more cash to the newest member states and allow the UK to spend exactly the same amount on its regions as it does now, with the option of adding the several billion that it would save from streamlining the structural funds. The coalition Government should match the pledge made by the previous Labour government and seek to bring regional policy back to the UK."

Open Europe says the £8.7 billion Britain gives to Europe – plus the £4.2 billion saved – should be ring-fenced in a second strand of the Regional Growth Fund, the Government's flagship £2.3 billion pot to create jobs outside London.

More than £1 billion of EU grants have been spent on Cornwall and the Isles of Scilly since the 1990s as it continues to be blighted by industrial decline.

The current Convergence programme, which has £556 million between 2007 and the end of 2013, has paid for getting Cornwall one of the fastest broadband connections in Europe and the development of Newquay airport. Previous programmes have spent money on the Combined Universities in Cornwall project and the Eden Project.

The parlous state of the Cornwall and Scillies economy is reflected in the fact that it is only one of two regions in Britain that are net beneficiaries of EU aid.

Open Europe found that for every pound of EU aid Cornwall and Isles of Scilly gets, taxpayers locally pay just 51p. But on the other side of the Tamar, each pound of investment in Devon costs them an eye-watering £6.58.

Devon would still be short-changed if regional policy was devolved to the UK as British taxpayers would continue to pay more than £17 billion to boosts jobs in Europe.

Proponents argue prosperity throughout Europe would benefit Britain through increased trading.

A Government spokesman said structural funds should be phased out in the richer member states altogether in the long-term.

But MEP John Bufton, UK Independence Party's regional spokesman, said: "There is no way that the UK will ever get the support of enough other countries to allow this to happen."