12 December 2003
Local income tax should go hand in hand with a constitutionally independent local government, a Labour backbencher said this week.
Graham Allen MP told the Commons that his proposal – to make councils legally and financially independent – would amount to the 'largest denationalisation ever undertaken in the UK'.
Allen said that a local government independence Bill would protect councils from central interference. Authorities would deliver services under an inspection regime and would be accountable at the ballot box.
But he added that political independence would mean little without financial autonomy, and called for a local income tax to be collected by the Inland Revenue and distributed by an independent commission.
But local government minister Phil Hope immediately quashed the idea.
During the debate on December 8, he reiterated Nick Raynsford's earlier speech at the Local Government Association, stating that the government was strongly against a local income tax but would consider it as part of the current Balance of Funding Review.
The review is also to consider reform of council tax and the re-localisation of the business rate.
'I have to say that the government's considering how such options work does not mean that we endorse or intend to adopt them,' Hope warned.
At the earlier LGA conference, Sarah Wood, strategic director of resources at Birmingham City Council, said councils needed to deliver fair and flexible changes to the funding system 'to our agenda and not to central government's.'
PFdec2003
