Chancellor George Osborne has announced plans to allow councils to set business rates and keep the money collected.

Speaking at the Conservative Party conference in Manchester, Mr Osborne revealed that, in what he described as “the biggest transfer of power to local government”, councils will be able to keep the £26bn in rates collected, rather than it being “sent up to Whitehall”.

The Chancellor also confirmed that, as part of his plans, all authorities would be allowed to reduce business rates. However, only cities with an elected mayor would be allowed to raise them.

“We are going to abolish the uniform business rate entirely. Any local area will be able to cut business rates by as much as they like to win new jobs and generate wealth. It’s up to them to judge whether they can afford it. It’s called having power and taking responsibility.”