Councillors have approved £1.5 million plans to build enterprise units on a car park – despite fears the scheme could harm existing businesses.

Newcastle-under-Lyme Borough Council will use part of Kidsgrove's Town Deal funding to redevelop the public car park on Meadows Road with three small business units.

Council bosses say the scheme will boost the local economy by providing purpose-built space for small businesses. But objectors, including the owners of existing nearby businesses, say the plans will have the opposite effect by effectively taking parking away from customers.

While the reconfigured car park would still provide 18 spaces, there are concerns that the new units will increase demand for parking in the area. But members of the borough council's planning committee voted to approve the application, in line with their officer's recommendation.

Josephine McLean, who runs the Fitness Collab, just next to the car park site, complained that there had not been enough consultation with local businesses. She told the committee that there was already a shortage of parking in the area.

There are concerns around parking in KIdsgrove. (LDRS)

Ms McLean said: "This proposal will take away essential parking. We are under-serviced anyway and it will take away our livelihoods. It will affect the local community – we serve the local community with health and fitness, including the elderly. If they can't park, they won't be able to come to us.

"I have to question what the rationale is and how they feel that it won't affect businesses. The High Street is dying in Kidsgrove, so the money would be better spent renovating what's already there. Why do we need three enterprise units?"

Each of the units would provide 27 square metres of floor space, along with a kitchenette, store room and toilet. Planning permission was previously granted for a shared services hub on the site, but the borough council scrapped this scheme after partner organisations pulled out.

The committee heard that the new plans would provide the same number of parking spaces as the permitted scheme. Planning officer Tom Cannon also explained that the new units would complement existing town centre businesses.

He said: "It was determined that this type of unit would provide an alternative use for the site that would provide a different offer to the town centre, because you're looking at enterprise units not main town centre uses. It was felt by that department of the council that there was demand for that type of unit and that it would complement the town centre and that the two would work together."

The existing car park is free with a two-hour time limit, but Kidsgrove councillor Gillian Burnett-Faulkner told the committee that there is no enforcement.

She said: "There is a sign and it says it's two hours parking. Nobody polices it, and people parking there instead of at the railway station and they're there all day, every day. So I would assume that it would they will still park there if it's going to be the same sort of car park."

Cllr David Hutchison suggested that workers at the new units could end up hogging most of the parking spaces. He said: "Those three new units, if they have four or five employees each, you could probably have most of the spaces taken by the people working there, and nobody else is going to get a look-in, because they'll probably arrive early for work."

But Councillor Mark Holland proposed approval, on the basis that the enterprise units would take up less of the car park than the previously permitted scheme. A majority of the committee members voted to approve the plans.