The batch of new powers will also allow the government to scrap the Uniform Business Rate, a national levy imposed local authorities.
Currently, small local pension funds “lack the expertise” to invest in infrastructure, the government said.
He used his speech at the Conservative Party Conference at Manchester Central to declare that the £26billion raised from business rates each year will be devolved to local councils. Giving the power to local authorities to set their own business rates should prove a catalyst for entrepreneurship across the country.
The Government has said if this had been enacted earlier Yorkshire and the East Midlands would have brought in a significant amount in revenue due to their substantial rates of business growth.
But concerns have been raised that areas with many company HQs such as Westminster in London which receive large amounts of business rates will benefit while other areas will fall further well behind.
Meanwhile, John Cridland, director-general, of the Confederation of British Industry (CBI), the UK’s biggest business lobby group, said the “devil would be in the detail”.
High business rates is a major concern for booksellers and the Booksellers Association has regularly lobbied the government for their fundamental reform.
According to the Chancellor, it means councils will have an incentive to help their local economy grow. The structure of the tax is unpopular with many high-street retailers as it falls most heavily on firms that occupy more expensive town centre property and takes little or no account of their profits or turnover.
“The problem is at the moment is that the money that comes back to the city does not get spent on business issues, it goes to fill the black hole in social care”.
WORCESTERSHIRE could fall foul of a post code lottery following Chancellor George Osborne’s announcement on business rates at the Conservative Party Conference. He added that the move was a “devolution revolution”.
Giving councils flexibility to frame deals and attract businesses is a good change but how good a change this is depends on how much flexibility the councils are given and then how well they execute new powers strategically.
The new NIC was part of government plans to “shake Britain out of its inertia”, said Osborne.
The independent National Infrastructure Commission, he will say, will start work immediately to establish “calmly and dispassionately what the country needs to build for its future”.