STRUGGLING small firms in rural areas are set to be told they must continue paying business rates while neighbouring multi-million profit-making mobile network operators are given a seven-year “holiday” from the charges.

Despite raising concerns over treating firms differently, the leaders of councils serving North Yorkshire have shown support for a move to exempt new rural phone masts from rates charges, after hearing it would help resolve “not-spots” – areas with no network coverage.

Should district councils ratify the move, to firms such as EE, Three, O2 and Vodafone it will be worth up to £31,500 for each mast which otherwise would not have been commercially viable.

A meeting of Local Government North Yorkshire and York heard the network operators were “unlikely to put masts in rural areas” without the incentive, as rates were about 40 per cent of masts annual cost.

However, the committee was told expectations of reliable and complete phone coverage were now similar to those for water supply.

Officers told members without intervention, the dire coverage situation facing many rural areas in the county would become increasingly polarised from urban areas. Members were told councils would not be losing any business rates they would have received.

Selby District Council leader Councillor Mark Crane replied: “That’s a circular argument. Any business could come to me and say I won’t build a business here unless you give me four years free.”

His Richmondshire counterpart Councillor Yvonne Peacock told the meeting while it was frustrating to have to give up the potential business rates, the main issue was the lack of coverage.

She said: “We are not getting these masts and we have been screaming and shouting for them for 15 to 20 years. This affects literally everybody.”

Complete coverage for most rural business has “become a must”, North York Moor National Park Authority chairman Jim Bailey added.

After the meeting, county council leader Councillor Carl Les admitted the rates relief proposal was not a perfect solution.

He said: “There is a dilemma there, but equally whatever size of business you are in you make commercial decisions. We know these multi-million pound businesses are not going to put masts in rural areas where they can’t make money on them.

“We either accept that and leave it as it is or alternatively try and intervene in the market place and give them a rate reduction of £4,500 and then our residents and visitors get the benefit of a mobile phone mast they wouldn’t otherwise get.”