A COUNCIL chief today called for an independent inquiry into a town hall bust-up with market tenants which could cost council taxpayers £500,000 in compensation.

Burnley Council this week lost a county court test case which opens the door to around 70 indoor market stallholders claiming large payments for losses caused by disruption to trade during improvement work in the Market Square area.

And today the traders, who said their association faced going broke had they lost the case, revealed they had withheld £300,000 in market management charges during the row - and claimed their council landlords had done nothing to recover the money. The traders, whose £30,000-£40,000 legal costs will also have to be met by the council, said the long-running dispute should never have gone to court because the principle that compensation was owed had already been decided by a court three years' ago.

They also claimed the council could face a new compensation battle over loss of trade caused last year by the demolition of the market car stack, which removed a vital direct shoppers' link into the market area. Tenants' spokesman Paddy Brady said the two-day compensation case, heard by Judge Philips in Burnley and Lancaster, had revealed the council made a £7million profit on a centre lease deal before the £12.5million central area improvement work got under way in 1995.

Today council Independent group leader Harry Brooks called for a full and independent inquiry into the whole situation. "I want to see a truly independent investigation into what has been going on and not an inquiry by the council chief executive or other council officers. It is clear there are many questions to answer. It is clear there is cause for concern here."

Mr Brady said service charges amounting to up to £10,000-a-week had been withheld since March as a protest to the lack of progress on compensation.

"Nobody has even asked us to pay up," he said.

"But that is typical of the council which simply will not discuss issues with us."

Mr Brady said indoor tenants were angered by the fact that outdoor market traders were given compensation for disruption caused, but they had not.

"We established in court that Burnley had made a £7million profit on the lease/freehold deal, so they had a lot of money in the kitty to pay what we believe they owed us."

Burnley council today refused to comment, saying it would be inappropriate to do so at this stage.

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