Regional assemblies 'may add to council tax bills

The future funding of regional assemblies is set to be investigated as part of a review of local government funding, it emerged today.

Until now, the government has insisted that only a small amount to help with the running of proposed regional assemblies would be raised via council tax, with the bulk of funding stumped up by central government from cash previously earmarked for unelected quangos whose responsibilities the new assemblies would assume.

But Sir Michael Lyons' review into local government taxation has incorporated regional assemblies in its scope, raising the spectre of more locally raised taxes in the future to help fund the devolved tier of government in the regions.

With the first referendum in the north-east due to take place in a month's time, interested parties have today been invited by the Lyons review to send in their contributions over the future funding of both local government, and to comment on "the implications for the financing of possible elected regional assemblies".

The independent inquiry into local government funding in England was announced earlier this year following the publication of the balance of funding review, chaired by the local government minister, Nick Raynsford, which looked at how much town hall finance should be raised locally and how much should come from central government.

The back to back reviews come amid growing protests over the council tax.

Sir Michael, who previously headed up a relocation exercise for the Treasury, can expect some forthright views from IsIt Fair, the pensioner-dominated movement which calls on government to "scrap the tax" and replace it with a local income tax.

Hundreds of supporters descended on London at the weekend to demonstrate against the council tax, which they argue disproportionately impacts on those with fixed income, such as pensioners.

Sir Michael has been given a strict scope in his one-man inquiry and is now calling on interested parties to send their views on a range of questions on future taxation.

Some may feel a reinvention of the wheel taking place within the Lyons inquiry, since the issues of local government funding already appear to have been thoroughly explored by the balance of funding review which concluded this summer.

These include:
· How should council tax best be reformed?
· What is the case for providing local authorities with increased flexibility to raise a larger proportion of its funding locally, or additional revenue?
· What other sources - including local income tax, reformed non-domestic rates and other local taxes and charges - could be used to raise supplementary revenue for local authorities?

Critics say the establishment of the review was an attempt by government to avoid making any final decision on local taxation ahead of a general election, widely touted to be scheduled for next May.

Sir Michael today vowed to hold meetings up and down the country to gauge views and see how existing means of funding councils affects different regions and communities.

"I would encourage anyone with an interest in this important issue to contribute to the debate," he said.

"A lot of valuable work has already been done, not least in the balance of funding review. I want to take this work forward and I am determined that this inquiry will provide real answers to some long-term problems which affect all of us. The first step will be to listen to the experts and those affected by the issues."