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Mr. Allen: I need to make it clear that, as my hon. Friend has grasped, I am not suggesting that local authorities themselves should have any ability to vary

8 Dec 2003 : Column 892

the rate—certainly, not initially—but that the amount of national income tax that gets diverted to local services follows a more direct route that would aid accountability. In a sense, since it does not alter the payments made by the individual taxpayer, it is a fairly modest proposal, but the symbolism of assigning that money as a local income tax would be a tremendous boon to accountability. It need not necessarily stop there, but I am conscious of my hon. Friend's blandishments about not doing anything too radical. This proposal is radical enough—I hope that it would encourage local government to think further about its options in a decade or two.

Phil Hope: My hon. Friend makes a good point. He talked about creating a new independent commission of elected members who would distribute that ring-fenced money. I can see advantages to his proposals as well as a great many disadvantages—that is why the balance of funding review is considering all the issues. Some advocates of local income tax suggest that its administrative costs are minimal, but that is frankly not credible. The review will need to hear a great deal of evidence about that.

I am aware that time is running out, Mr. Deputy Speaker. My hon. Friend also suggested the re-localisation of business rates. We have a predisposition against re-localisation because we fear that a postcode lottery may occur where businesses are allowed to go down that route.

I welcome my hon. Friend's contribution to this important debate. His paper certainly reflects the importance of getting it right, and it is admirably detailed in its proposals. These are complex issues. There is no easy fix and no magic formula: we need to plan for the long term. We are firmly committed to the new localism, as well as to providing new freedoms to local government and exploring options on how it is financed, although I have to say that the Government's considering how such options might work does not mean that we endorse or intend to adopt them, whatever newspapers might say.


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