The leader of Medway Council has warned that a government proposal to allow councils to retain all their business rates will cause bigger problems.

Chancellor George Osborne announced at the Conservative Party conference this week that councils would be able to keep the proceeds from business rates in their areas from 2020.

Across the country, councils will hold on to £26 billion, which Mr Osborne called the “biggest transfer of power” in recent history.

At the moment, councils keep up to 50% of the rates and the rest is sent to Westminster.

The government takes around £11.5 billion in business rates and redistributes £9.4 billion in grants.

Cllr Alan Jarrett, council leader and finance chief, has warned that these grants will be taken away.

He said: “On the face of it, it’s a good idea. The problem is the government have also said government grants will disappear by 2020.

“We have already seen that reduction every year. It’s going to be a question of timing.

“If the two things don’t correlate we are going to have a bigger problem then what we’ve got.”

Gary Porter, chairman of the Local Government Association, said: “While this is good news for councils and businesses, local authorities will face almost £10 billion of cost pressures by 2020, so we will now seek to work with government about how this proposal can be introduced more quickly.

“Councils currently have to fund half of all business rates refunds, but by 2020 they will be liable for 100% under this new system.

“This makes reform of the appeals system even more urgent to protect councils from the growing and costly risk and appeals and to ensure businesses are happy with what they pay.”

During what was Rochester and Strood MP Kelly Tolhurst's first Conservative party conference, she told Boris Johnson that Medway is off limits for his airport plan when she attended her first Conservative party conference.

Miss Tolhurst, who was elected in May, attended the London Mayor’s speech and said to him that people didn’t want an airport in Medway.

“I told him to keep his hands off the Medway Towns. He knows what’s coming when I walk towards him,” she said.

Miss Tolhurst said she received hundreds of invitations for meetings and speeches and accompanied the Prime Minister to the Chancellor’s speech.

She spoke to the Children’s Society about making sure young people had a safe place to live, and also met a Parkinson’s sufferer to see what she could do in Rochester and Strood to help people with the disease.

Ms Tolhurst said: “It’s my first conference. I went up on Sunday and have been there for the whole of the conference. The atmosphere’s been really good. Everyone was pleased to see me. We had a huge amount of people from Medway at the conference. I spent a lot of time with them.”