14 June 2002
Balls threw open the possibility of a dramatic shift in government policy, saying the group would consider 'all aspects' of the balance of funding debate.
Gordon Brown's right-hand man told Public Finance that the Treasury was finishing off an 'internal scoping' exercise to try to establish some of the issues that would need further exploration by the working party. But he insisted that no options had been ruled off limits: 'I don't think there are any issues that are ruled out in principle.'
Councils receive around 75% of their income from Whitehall and regularly argue that services can be improved only if they have the freedom to raise their own money and decide how to spend it.
If the working party were to recommend giving authorities the freedom to levy local taxes - a long-cherished dream for many in local government - it would massively boost local autonomy.
Neil Kinghan, the Local Government Association's director of economic policy, described Balls' comments on the Treasury's attitude towards a local income tax as 'very positive'.
'If the Treasury is serious about expanding the tax base of local authorities, then we would be very keen to talk to them about it,' he said.
Balls told delegates at CIPFA's annual conference in Brighton that the working group, which will operate under the aegis of the revamped Office of the Deputy Prime Minister, would consist of ministers and 'senior figures' in local government. He pledged that it would 'review the evidence and look at reform options'.
Balls repeatedly asserted the government's commitment to a 'new localism', which would combine 'devolution of power with accountability'.
'We are ready to go even further to enable local people to do more to make decisions about meeting local needs – and to consider further radical options to ensure that devolution of power and responsibility go hand-in-hand so that the public can get the best possible services,' Balls said.
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