EMPTY businesses in East Lancashire are costing taxpayers an average of £1.3 million in lost rates each year as part of a national relief scheme.

Over the past five years, almost £40m of potential business rates income has been lost due to empty premises in Blackburn with Darwen, Hyndburn, Burnley, Rossendale, Pendle and Ribble Valley, according to information obtained by the BBC's Shared Data Unit.

Figures show Blackburn with Darwen has missed out on the highest total, with an average of more than £2.7 million in rates relief being handed out from 2014/15 to 2018/19 - 4.72 per cent of potential rates income.

Meanwhile in Ribble Valley, an average of just £352,063 in rates relief has been handed out over the same period.

In Burnley, lost rates income has cost taxpayers more than £1.3m on average over the last five years compared to more than £1.8m in Hyndburn, £913,605 in Pendle and £730,013 in Rossendale.

No rates have to be paid on empty business units for three months, such as when they close down or move.

The aim of the tax relief is to allow for property investment and give landlords time to find a new occupant.

Some local authorities however lose out on up to 6 per cent of their business rates income through this tax relief, analysis found - more than £1bn a year across England and Wales.

The system pits councils' interests - who want stable income - against the business community, experts say.

There are calls for urgent reform to the system in the wake of closures of major high street retailers and businesses migrating from shop premises to operating solely online.

Cllr Richard Watts, Chair of the Local Government Association’s Resources Board, said: “Business rates are an extremely important source of income for local government and with an overall funding gap of £8 billion by 2025, the Government must commit to moving forward with vital reforms, which include addressing business rates avoidance and the impact of reliefs, such as empty premises relief.

A HM Treasury spokesperson said: “Empty property relief strikes a balance between incentivising property owners to put vacant properties to use, while not penalising those who lose a tenant at short notice.

“Whilst the rate of business rates collection varies between individual authorities, the local government finance system has been designed so that business rates income is redistributed across the country according to the needs of local areas.

“We will announce further details of the business rates review in due course.”