London’s Mayor has missed an opportunity to spend a £50 million fund set aside by the UK government to create a public building dedicated to both technology startups, events and public education around technology.

The Prime Minister’s office has confirmed an earlier report that the large sum of money it had allocated to City Hall to create a building which would serve tech startups and local people would now go back into general government spending.

A spokesman told us: “Given that a permanent solution for the roundabout will be technically difficult and some way off that money has gone back to general expenditure. It is normal practice for any money that hasn’t been spent to return to the Treasury to help reduce the deficit.”

TechCrunch understands the Mayor’s team are now “seeking alternative funding for a landmark proposal in Tech City and are collaborating on alternatives that might achieve the original objective over a shorter timeframe.” No further detail appears to be available.

The Greater London Authority, over-seen by Mayor Boris Johnson, was put in charge of the £50 million fund in late 2012 to create a new “civic space” dedicated to start-ups and entrepreneurs in East London.

The project was also set out by the Tech City Investment Organisation, which oversees London’s high tech cluster on behalf of the government.

The building was to have hosted “classrooms, co-working spaces and workshops equipped with the latest 3D printing technology, for use by both the local start-ups and the wider community”. It was to train 10,000 (growing to 50,000) students in coding and enterprise; house a 400-seat auditorium, boardrooms, labs and workspaces and provide access to super-fast T4 broadband.

Initial drawings placed the building directly on the Old Street roundabout, known locally as Silicon Roundabout, but at the time of the announcement the Mayor of London’s Office told TechCrunch that the building would not be situated there because it houses “a big electricity substation”.

The GLA was, however, charged with “finding a suitable site” with the start date and details of the exact location being worked out in the feasibility study.

At the time, the Mayor of London Boris Johnson said: “Our new centre will provide not only a vital resource to nurture upcoming technology and creative superstars from around the world, it will drive huge investment into the capital and help create thousands of jobs.”

However, it would appear that City Hall could not come up with a cohesive plan of what to do with the money allocated to it by central government.

Instead, what we have is a vague commitment to “a landmark proposal” but no further detail.

As for the Old Street roundabout, Transport for London is set to begin work on environmental improvements including landscaping of the and improvements to the subway and station.

Meanwhile, a local campaign has been launched against a high-rise development in the area which could – say campaigners – further drive up rents for startups and benefit overseas property investors more that the local area.

The “TECH CITY SAYS NO!” campaign says “Tech City is becoming a home for the wrong sort of developers”. Specifically they say the Bishopsgate Goodsyard, the last undeveloped commercial site in the Shoreditch area, will be re-developed in a manner which will not accommodate startups or the local character of the area.

Developers Hammerson and Ballymore have formed a joint venture to ‘build out’ the site, creating a mixed use development with residential and business properties co-located on the site, and which features a high-rise building of 47 storeys housing 600 luxury flats. The development would house 400,000 sq ft of commercial space, 200,000 sq ft of retail space.

Also this week, the City of London Corporation mounted the #SquareBroadband campaign in protest at the lack of super-fast broadband in the City, saying they are unaffordable for the 13,000 small and medium-sized enterprises in the Square Mile alone.

• Earlier this year I was asked to join the London Tech Ambassadors Group set up by City Hall to promote London as a startup hub. I have now decided to step down from that role.