COUNCIL chiefs have been accused of turning their backs on shops and other small firms needing help with high business rates.

A Conservative MP hit out at town halls in the North-East and North Yorkshire for failing to exploit new powers to cut bills for companies in trouble.

Just one of 17 authorities in the region – Stockton-on-Tees – said they had offered discretionary rate relief, a survey by Margot James revealed.

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Six said they had granted separate ‘hardship’ relief, for a short period, but only one - Harrogate – has helped a significant number of firms (94).

Ms James, an MP in the West Midlands, said: “It is very concerning that so few authorities are using these powers.

“The few authorities that have used the powers have used them selectively, to regenerate town centres and support small business growth in defined areas.

“The Government has extended the powers available to local authorities to discount the rates in their area. Businesses need the help.”

But Durham County Council – which has only offered hardship relief, to two firms, at a cost of almost £84,000 – hit back, disputing that such help made a big difference.

The authority said it had received “very few” applications, adding that its policy was to offer relief to charities and community groups.

Paul Darby, Durham’s head of finance, said: “Although we have the power to give business rate discounts, we have limited funding.

“We can only award discounts on the merits of each individual case. This includes whether or not the award provides value for money to the taxpayers of County Durham.

“Our experience shows that, where we have received applications for hardship relief, the rates element of the business is not a significant inhibiting factor, representing a relatively small percentage of operating costs.”

The region’s authorities were far from alone in spurning the scheme, which was introduced as part of the 2011 Localism Act, strengthening existing limited powers.

Eric Pickles, the Local Government Secretary, argued it would provide local authorities with a powerful mechanism to encourage entrepreneurs.

But the big catch was that councils are required to fund any business rate discounts from their own finances, amid huge cuts in Whitehall grants.

Of 191 councils that responded to Ms James, only 23 had offered business rate discounts, while 168 never had.

Meanwhile, Mr Pickles appears to have accepted his scheme is a flop by announcing a fresh initiative to scrap rates for 300,000 small shops – funded by his department.

Brandon Lewis, his deputy, said: “This Government will now meet half the cost of any local discounts offered, as a further incentive for councils to back small shops.”