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Local Taxation

Part of the debate – in the House of Commons at 4:00 pm on 4th July 2005.

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Photo of David Miliband David Miliband Minister of State (Communities and Local Government), Office of the Deputy Prime Minister 4:00 pm, 4th July 2005

I am sorry, but this £1 billion cost for inspection is completely erroneous. As I said to the hon. Lady, the figure is based on a local government information unit study that ascribed £400 million of savings to increased morale. I am happy to pursue the point, but I think that I should bring my remarks to a close. [Hon. Members: "Yes."] I am sorry that Conservative Members have not been able to enjoy the past 20 minutes, but there is more to come.

The Government are determined to balance the commitments to spending on front-line services, a strong efficiency drive and a prudent council tax policy as part of a balanced package to support local government. The balance of funding review, which reported last July and included senior figures from central and local government, the academic world, business and professional bodies, found a strong case for shifting the balance towards more local funding. But that case depended on the feasibility and desirability of any measures to achieve it. It concluded that a variable local income tax might increase local accountability, but that a more complex funding system might be harder for taxpayers to understand, and there were potentially serious risks and disadvantages that would need to be considered in great detail, including the additional costs and burdens that the system would impose and the complexities of administration. That is notwithstanding the further point that, for dual-earner households, a local income tax presents, by any stretch of the imagination, a significant tax rise. Opposition Members must explain that.