Councils given power to set business rates in Osborne's 'devolution revolution'

Local authorities will keep all the £26bn raised each year from business rates under new devolution plans announced by the government.

George Osborne revealed the surprise move at the Conservative Party Conference in Manchester.

With business rates continuing to be a thorny issue as several groups, including Enterprise Nation, push for reform, the chancellor said by 2020 the government intends to give councils control.

"Today I am embarking on the biggest transfer of power to our local government in living memory," he announced. "We're going to allow local government to keep the rates they collect from business. That's right, all £26bn of business rates will be kept by councils instead of being sent up to Whitehall."

Since 1988 local authorities have been forced to charge a set national tax for business rates and although they have since 2013 been able to keep up to half of the amount, demands for flexibility have come from across the business world.

Under the changes councils will be have the power to cut rates and in areas where there's an elected mayor such as London, Bristol and Manchester, rates could be raised if the move has the support of local businesses.

"This is what our plan means," Osborne continued. "Attract a business, and you attract more money. Regenerate a high street, and you'll reap the benefits. Grow your area, and you'll grow your revenue too."

Emma Jones, founder of Enterprise Nation, commented: "Enterprise Nation will be working with Enterprise Champions in 12 regions of the UK to make the case to local councils for extra relief for small businesses when it comes to business rates.

"From our experiences in hosting retail and business support pop-ups across the UK, we can see business rates is what puts businesses off from going onto the high street and it can also injure cashflow for a growing concern.

"With power and responsibility at a local level, we are in a much stronger position to make the case for local small businesses to be eased onto the high street through pop-ups and business rate deals."