Cash-strapped nuclear power giant British Energy has asked Lancaster City Council if it can defer payment of its business rates.

At a closed cabinet meeting on Tuesday the city council agreed to the move, which will cost local taxpayers £ 18,000.

The company, which owns Heysham power stations, asked to defer its November business rate payment of £1,775,240, due on Friday, until February next year.

Local environmentalists are outraged that a private company can be allowed to defer business rates payments.

But the council felt it would continue good relations with the area's biggest single rate payer.

Prof John Whitelegg, of Lancaster Green Party, said: "I am genuinely appalled.

Lancaster and Morecambe have thousands of people employed in small businesses and they would all be delighted to receive an £18,000 grant.

This would be far better than pouring money into the black hole of a near bankrupt industry."

A report by Roger Muckle, the council's corporate director (central services), of which the Citizen has obtained a copy, recommended agreeing to delay the payment.

The report said: "The cost of granting this deferral as a one-off agreement can be borne by the anticipated improvements in cash flow and associated investment interest.

The continued goodwill between the council and its largest ratepayer would be augmented.

"Agreeing to this request is a reasonable course of action.

By underlining the point that this is a one-off gesture during an unprecedented period of financial difficulty for this ratepayer, the council would be acting in the best interests of the residents of the district."

Because of the implications for the council's cash flow and investment interest, the report says the rescheduling will cost an estimated £18,000.

A British Energy spokesman said: "British Energy is currently in discussions with the Government about the financial restructuring of the company and this request is part of that exercise."

The company has already received £650 million in government loans to help it through financial difficulties.

It has suffered due to a fall in electricity prices and has also been forced to close Torness nuclear power station in Scotland,which was found to have a design fault.

A city council spokesman said the council could not comment on issues discussed in private.