DURHAM'S MP has criticised the city council for scrapping grants to businesses.

The Liberal Democrat-controlled authority ended the grants when it made £900,000-worth of budget cuts, after it was given "disappointing" Government funding.

Gerry Steinberg, who will stand down as the city's Labour MP at the next General Election, said the move would hamper efforts to attract firms and jobs to the area and affect the economy.

He said: "I am dismayed at such an ill-conceived and blinkered approach.

"It seems incredible that the city council does not appreciate the detrimental effect this policy will have on both new and existing businesses and, indeed, the impact it will have on the city's economy generally.

"This policy is completely counterproductive and certainly will not help efforts to attract new business to Durham or assist established businesses wishing to expand.

"I know of at least one business which is having difficulties as a result of the council's strategy and has informed me that, in its view, Durham is now closed for business.

"The local authority's stance will do nothing to encourage the creation of jobs and prosperity throughout Durham. There is simply no justification for such a policy and, therefore, I have urged the city council to reconsider its short-sighted approach on this important issue."

He said he believed that if the decision was not reversed, new businesses would be attracted to other areas where financial help was available and that the Durham area and its residents would suffer as a result.

City council leader Sue Pitts rejected the Mr Steinberg's claims.

She said the council had to make spending cuts because Labour, before it lost power in last year's elections, set the council tax too low and that grants provided by the Government for this financial year were too low.

She said the fund for business grants was relatively small and only one aspect of the help the council gave to new and existing companies.

She said: "It is ridiculous to say that Durham is closed for business. We are still supporting businesses.

"We have been helping Peter's Cathedral Bakers find new premises after the fire, and we have new companies coming to the city.

"We have the Sunderland Mutual Marine Insurance moving to new headquarters at Aykley Heads because they were impressed with the help they were given."