A LOOMING big hike in rates is poised to punish North-East businesses and should be stopped, Labour has said.

Ed Miliband attacked plans to increase business rates by an average of £360 next year, accusing David Cameron of “ignoring” the pain ahead.

And he vowed that Labour would cut rates if it was in power, paid for by halting a planned tax reduction for giant firms.

Business rates are tied to the September rate of RPI inflation, which means they will rise by 3.2 per cent next April.

In County Durham, that means an average hike of £260, Labour said – but larger rises are heading to Stockton-on-Tees (£530), Hartlepool (£480), Redcar and Cleveland (£480), Middlesbrough (£330) and Darlington (£320).

Increases will be slightly lower in North Yorkshire, in Hambleton (£230), Richmondshire (£170) and Ryedale (£190) – but not in York (£510).

Mr Miliband said: “Small businesses are the lifeblood of communities, right across the country.

“Business rates are going up. But David Cameron’s Government stands up for big business and ignores the needs of small business.

“So many small businesses are now paying more in rates than they are in rents. They are on an ever-raising escalator and that is bad for those businesses - and our High Street.”

But Brandon Lewis, the high streets minister – while acknowledging the looming 3.2 per cent rise – insisted small firms were receiving help.

He said: “A new employment allowance will mean 450,000 small businesses no longer have to pay national insurance contributions.

“We have doubled small business rate relief for the past three years, helping an estimated half a million small firms who are at the heart of our national economy.

“That means 300,000 had no rate bill to pay at all. Latest figures show that a total of £900m was paid out last year.”

Mr Miliband’s attack follows his pledge, last month, to axe any hike in business rates earmarked for 2015 and to freeze rates in 2016.

The Labour leader said the move would be the “centrepiece of the first Labour budget”, to prove it planned to “champion the High Street”.

The policy sets up a sharp divide with the Conservatives, who plan to lop 1p off corporation tax in 2015, at a cost of £1.1bn over two years.

Mr Cameron described stopping that cut as “the most damaging, nonsensical, twisted economic policy you could possibly come up with”.

The level of business rates is set by the Treasury, although the revenue is collected locally. Rates have risen by £1,500 since the 2010 election.