Local government funding solution?

Direct Democracy: Gordon Brown's former special advisor, Chris Wales, made an unexpectedly radical foray into the jungle of local government reform this week in an article for the Daily Telegraph. Describing council tax as a seriously flawed funding system which encourages voter apathy and distorts decision making, he criticised the recent Lyons Review for avoiding taking the big decisions. And Mr Wales' remedy? Larger unitary authorities (with similar powers to the Scottish Parliament) which would be wholly funded through basic rate income tax with the power to vary the rate according to local needs. In a reciprocal national-local tax transfer, council tax would become a national property tax, capped by income. These proposals are significant for 3 reasons: 1) Genuine localism means devolved control over fianace, so this is a core issue for us; 2) Mr Wales' suggestion involves localising national tax revenue streams - something we suppoprt - although we think there are better and fairer ways of doing it (localising VAT receipts); 3) It raises the possibility that Labour and the Lib Dems could both go into the next election promising to change the status quo on local government finance. The key question then for Conservatives would be: are we willing to exorcise the ghost of the poll tax and join the debate with our own ideas on how to localise national tax revenue streams? If we are truly serious about localism and devolving power to individuals and local communities, we have no alternative but to answer in the affirmative.