CIVIC chiefs have welcomed government plans which will allow them to control millions of pounds raised from Winchester businesses.

Winchester City Council could be in for a huge cash boost after the chancellor, George Osborne, announced that local authorities could keep all their business rates.

But the Conservative deal includes further cuts to central grants which pay for services including council housing, planning and refuse collection.

Winchester collected £55 million in business rates in 2014/15 but paid back more than half to the Government and £4.7 million to Hampshire County Council.

Cllr Stephen Godfrey, leader of Winchester City Council, said: "I am delighted that the Chancellor has acknowledged the benefits of our long-held desire for funding of public services being controlled nearer to where the money is raised and spent.

"Winchester City Council, like other local authorities, is looking at many different ways to fund and deliver the services that its residents need in the most efficient way possible. We look forward to receiving the details of this proposal in due course."

But Liberal Democrats have voiced fears that the government is "blackmailing" town halls into accepting devolution by the threat of further grant cuts.

Cllr Lucille Thompson, Lib Dem group leader, said: "It's good news so far as the city council's concerned because it's always great when councils can take control of their own finances.

"I think where the danger lies is with the devolution package that the council is going for."

She said it's unclear whether the money will go to Winchester or bosses at a Hampshire combined authority, which could redistribute money raised in the city to poorer areas.

"The government's blackmailing councils to sign up to the deal," Cllr Thompson said. "They're saying 'the carrot is that you will get all your business rates, and if you don't sign up to the devolution deal we're going to cut your rate support grant.'"

It is unclear how much freedom the Guildhall will have in spending the money, but it is expected the rules will be looser than current grants, often given for specific services.

Council finance chief Alexis Garlick said the deal is currently expected to be "fiscally neutral".