THE leader of Worcester City Council is backing Chancellor George Osborne's funding overhaul - urging him to stick to his guns.

Councillor Simon Geraghty says he "absolutely agrees" with the idea that cash-strapped councils should get to keep all of their business rates.

Last month Mr Osborne signalled the biggest change to local government funding for a generation, saying by 2020 they would keep all of the £26 billion which is currently sent to Whitehall.

Under the move, the current yearly Government grant would be scrapped completely within five years in return for allowing them to keep "100 per cent" of the taxes levied on businesses.

It means the areas that oversee more business growth and jobs creation in their patches stand to benefit the most - effectively pitting towns and cities against each other to be more competitive.

At the moment local authorities get to keep 50 per cent of the business rates raised locally, and the rest is sent to Whitehall before it gets re-distributed back out depending on national priorities.

In recent weeks some councils around the country have voiced concern over the tactic, saying some areas already in decline could suffer further.

During a full council meeting, Councillor Geraghty was asked by Green Councillor Neil Laurenson for his view on "grants from Whitehall being phased out".

He said: "Obviously, we will want to see what details emerge - but the principle of 100 per cent retention of business rates is one I absolutely agree with.

"Councils should be able to raise and spend more of their own money, rather than passport it over and then get some back.

"We will need to see more detail, that will be very important but I think the principle is right."

During the debate Councillor Laurenson cited incoming cuts to the yearly grant, mentioning fears of a "£10.5 billion knock-out blow to cherished local services" if the funding to councils goes down by 40 per cent.

Councillor Geraghty cited the recent announcement from the Treasury that the Department for Communities and Local Government (DCLG), which funds councils, will seek to reduce spending by 30 per cent by 2019.

More details are expected in the Chancellor's Comprehensive Spending Review this coming Wednesday.

Mr Osborne has said the change in business rate retention would mean towns and cities will no longer have to go to the Government "with a begging bowl".

Under the plans, councils will be able to cut the rates to attract new investment and jobs.

Elected mayors in big cities such as London, Manchester and Sheffield will be allowed to add a premium - expected to be capped at 2p - to pay for major infrastructure projects.

A system of tariffs and top-ups designed to support areas with lower levels of business activity is expected to be maintained in its present state.

Councillor Geraghty is also the deputy leader at Worcestershire County Council.