GEORGE Osborne’s plan to allow local authorities to keep the business rates they collect has been welcomed by Dorset's Conservative council leaders.

The chancellor announced the “biggest transfer of power to local governments in living memory” at the Conservative Party conference this week.

Under the proposals, set to come into force in 2020, town halls will be able to keep 100 per cent of the revenue generated from business rates.

They will also have the power to cut the rates if it is thought by doing so the authority will be better off as a result of new enterprises coming to their area.

It comes as local authorities in East Dorset explore the idea of forming a "super council" in a bid improve efficiency by merging services and finances.

Asked for his reaction to George Osborne’s plans, Bournemouth council leader John Beesley said: “If it is the next stage of devolving to us locally so we manage our own resources rather than the government, then it is to be welcomed.”

He added, however, that the biggest issue facing councils is meeting the increased pressure of financing areas such as adult social care and children’s services, which are demand-led and the authority is obliged to provide.

Christchurch council leader Ray Nottage welcomed the chancellor’s announcement as “sensible”, citing local government grants being cut by more than half since 2010.

“I think the devil will be in the detail,” he said. “In general it is an absolutely excellent idea – something we have been lobbying for in Christchurch for a long time.”

Poole council leader Janet Walton said: “We will need to study the chancellor’s proposals in more detail before we know what this will mean for Poole overall. However, we would welcome any proposal which sees local government take on more responsibility in helping to support economic development in our borough.

“In addition, if we are able to retain the full business rates as we would hope, there may be the potential to reinvest this income into the town and our public services.”

Critics of the chancellor’s plan claim it could leave businesses with bigger bills.

The British Chambers of Commerce has expressed surprise that the chancellor had announced the changes without prior consultation with businesses.

And TUC general secretary Frances O'Grady warned that ''regional inequalities will get wider'' unless safeguards are introduced for councils in disadvantaged areas.