EAST Hampshire District Council has given a “cautious welcome” to George Osborne’s plans for a “devolution revolution” in local government.

The announcement, made at the Conservative Party Conference last week, promised to let councils retain millions of pounds in business rates instead of handing them over to Government.

Chancellor of the Exchequer Mr Osborne described the plans as “the biggest transfer of power to our local government in living memory”. He said the changes will fix “the current broken system” of financing councils.

“We’re going to allow local government to keep the rates they collect from business,” Mr Osborne said. “That’s right, all £26bn of business rates will be kept by councils instead of being sent up to Whitehall.”

This would mean that “money raised locally” will be “spent locally” with “every council able to cut business taxes” to attract more trade to an area.

Last month East Hampshire District Council leader Ferris Cowper announced that the council had decided to support the Hampshire and Isle of Wight devolution bid.

He said that, while the district council remains supportive of the scheme, the exact benefits to residents and businesses in the district are still “unclear”.

This week Mr Cowper said: “The headline proposal, that local councils can retain 100 per cent of business rates, has to be set in the context of a 100 per cent sacrifice of all central Government grants,” he said.

“If true, in the case of East Hampshire District Council, there could be a small surplus but the gains match the losses almost pound for pound.

“However, the national press reported that the ‘tariff’, which is a further payment to the Government on top of the 50 per cent widely reported, will stay in place. If correct, then East Hampshire, and all district and borough councils in Hampshire, will be out of pocket by a very large sum and, of course, we would reject that proposal.”

The chancellor also announced that business rates could not be increased by local councils unless they chose to have an elected mayor.

“Local businesses will be pleased to note that the full council of East Hamp-shire was completely opposed to having an elected mayor for Hamp-shire and the Isle of Wight,” Mr Cowper said.

“However, as the value of retained business rates closely matches the loss of grants and may even leave councils worse off, the chancellor’s observation that local councils would be able to cut rates where appropriate would have a very limited effect at best.”

The district council explained that to be part of this “devolution revolution”, local councils are required to agree to an “acceleration” of the planned housing-delivery programme and, in the case of Hampshire, an additional housing programme of 500 dwellings per year spread across the whole of the county.

At this stage, East Hampshire said it visualises “no material change” in its existing forecast.

The reforms will see local government retaining all revenue from business rates for the first time in decades because, since 1990, rates have been set uniformly by Whitehall.

This is collected locally, then transferred to central Government to be distributed back to local areas in the form of grants. Since 2013, councils have been able to retain 50 per cent of the proceeds of rates so that, according to the Conservatives, when local areas take steps to boost business growth in their community, they “see the benefit”.