ONE of Worcestershire's leading politicians has fired George Osborne a warning over the radical council funding overhaul - saying the county must have powers to increase taxes without putting an elected mayor in charge.

Councillor Simon Geraghty, one of the highest-profile decision makers in the county, says it would be "unhelpful" if the Chancellor handed 'super powers' to only some parts of the UK in his drive to make local authorities self-reliant.

As your Worcester News revealed yesterday, Mr Osborne has announced councils will be able to keep 100 per cent of business rates in the biggest change to funding for a generation.

The change will see the current core funding packages, known as the Revenue Support Grant (RSG), phased out by 2020 - with all councils able to slash business taxes to compete with neighbouring areas for companies.

Mr Osborne has also announced that councils can increase the rates if they wish - but only if they opt for an elected mayoral system of power.

The move would allow big metropolitan authorities like Manchester and Sheffield to up the tax by 2p for every pound, giving them powers like never before, but leave shires like Worcestershire only able to cut it.

Councillor Geraghty, who leads Worcester City Council and is the deputy leader at County Hall, said: "I very much welcome the announcement by the Chancellor, it's in line with what we've wanted in terms of being able to retain the funds from growth in the economy.

"It's a big shift and we'll need time to work through the detail and transition period, I welcome the principle of it.

"But we'll be collectively lobbying to make sure we can also increase the rates by 2p in the pound because I think having a 'two-tier' relationship (with only some councils having tax-increasing powers on businesses) is unhelpful.

"The LGA (Local Government Association) is saying that power should be given to all local government, there shouldn't be a need for a directly elected mayor and we'll be supporting that point.

"But the direction of travel is right, more local decisions made locally makes sense and reflects the reality of what services we're providing."

Councillor Adrian Gregson, who leads Worcester's opposition Labour group, said: "The principle is of increased financial control is good but my concern is if you rely mainly on one funding stream, if that reduces you suffer.

"The Government isn't looking at what 'shire' cities need.

"The real point about financial control is, the Government should put up the money and let us get on with it. But they will never do that, it'll always be 'do X, Y and Z'."

Mr Osborne has called it the "biggest transfer of power" in recent history, leaving councils to actively compete with each other for attracting companies and jobs.

But some other councillors say they are concerned about the consequences, including former Worcester Labour parliamentary candidate Joy Squires, who has used Twitter to warn about a "race to the bottom".

Judi Brazkiewicz, the chairman of the Federation of Small Businesses in Worcestershire, said: "The Chancellor’s surprise announcement is certainly not the Business Rate Review that was promised in his March Budget. 

"However on the plus side, when local authorities become accountable for setting, collecting and the allocation of business rates then business owners will be able to raise local issues, challenges and barriers directly with their councillors, which I hope will remove some of the bureaucracy. 

"I am though, very concerned that as Worcestershire is not a high yield business rate county the net monies collected under the new scheme may fall short of  the grant paid to local authorities in previous years."