Industry groups have largely welcomed chancellor George Osborne’s promise to give "power to the people" by handing local authorities control over £26bn in revenues from business rates, fuelling speculation that Osborne is the front-runner to be the next Conservative leader.
In a surprise announcement in his speech at the Conservative party conference in Manchester yesterday, Osborne vowed to spark a "devolution revolution" by allowing local governments to keep the rates they collect from business.
Councils currently collect business rates, which are sent to Whitehall and then redistributed back to local authorities - but only after a significant cut has been taken for the national government.
The chancellor said that the government will scrap the practice altogether.
In a further effort to devolve power, Osborne also said that the government was going to abolish the so-called uniform business rate - a fixed national tax rate imposed on every council - entirely, so that smaller areas could cut rates to boost competitiveness and larger cities could add a premium to generate revenues to pay for infrastructure and other building projects.
Federation of Small Businesses (FSB) national chairman John Allan said the announcement presented a “huge opportunity for local authorities and business to work together to boost local growth, develop a fairer tax system and create the jobs of the future.”
ICAEW chief executive Michael Izza said the plan was a “good win for champions of devolution” and “could help to pave the way for greater competition”, while Institute of Directors (IoD) director general Simon Walker said businesses were “excited about the prospects for devolution”.
Osborne’s speech -- on the same day as a new poll showing that he is the favourite among Conservatives to be the party’s next leader -- revived speculation that the chancellor is the most-likely successor Prime Minister David Cameron.
The poll, conducted by the Conservative Home website, found that 32 per cent of Tories support Osborne, compared to 17 per cent backing business secretary Sajid Javid. Meanwhile 15 per cent of respondents said they would support home secretary Theresa May, followed by 14 per cent for London mayor Boris Johnson.