RELIEVED workers at Dr Kershaw's Hospice won't have to pay an £8,000 bill for business rates after Oldham Council admitted it had made a mistake.

The Royton-based charity was informed that it could have to foot a hefty bill because the council was withdrawing discretionary rate relief (DRR) award as of April 1 next year.

The hospice building, on Salmon Fields, and its three charity shops were previously exempt from paying building rates.

In a letter to council chief executive Charlie Parker, MP Phil Woolas said he found the decision "astonishing and harsh" and "completely out of touch with the wishes of the vast majority of the local population".

He went on to add: "I cannot understand the logic of your council setting aside money to help local companies and organisations through the credit crunch and then penalising vulnerable organisations in our borough ie local charities who are particularly hardest hit when money is tight, by imposing this rates bill on them.

"I cannot believe you taken a decision to tax our local hospice."

But the council says it now recognises that an administrative error was made in relation to recent decisions for DRR for charitable organisations.

Mr Parker said: "The DRR is part of a wide-ranging package of financial assistance that we provide for local businesses and charities, and the level is regularly reviewed.

"The decision to withdraw the award to Dr Kershaw's Hospice was incorrect. It has enjoyed this relief since 1988 and it will be reinstated with immediate effect."

A relieved Brian Hurst, appeals manager at the hospice, said: "We were in shock when we got the letter.

"£8,000 is a lot of money to us. Especially with the current economic climate that's a hell of a bill on top of everything else. It takes more than £4,000 a day to keep the hospice running so to get a bill like that wasn't very nice.

"We're glad it's been overturned and would like to thank all those who have supported us.

"We're very pleased and relieved that the council has had a rethink."

As a result the council is now reviewing its practices and will assess similar decisions before confirming the outcome with applicants.

Mr Parker added: "The work of local charities and our thriving voluntary sector is vital to our community. I would like to reiterate our support and goodwill for Dr Kershaw's, which has provided assistance for countless patients, families and carers for more than 20 years. Their work is absolutely invaluable."