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BLAIR RULES OUT RAYNSFORD'S PLAN

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By our Parliamentary correspondent, Matthew George ...
By our Parliamentary correspondent, Matthew George

Prime minister Tony Blair ruled out replacing council tax with a local income tax just 24 hours after local government minister Nick Raynsford said the option was being studied.

The government was accused of being hopelessly confused following Mr Blair's comments, which come after a U-turn on a pledge not to cap the best-performing councils (LGC, 19 September).

Mr Raynsford told MPs a meeting of the balance of funding review had agreed to look at a number of options and stressed: 'The issue of a local income tax is one we have considered worthy of consideration.'

But a day later Mr Blair told his monthly Downing Street press conference: 'We are obviously going to look at the whole issue of local taxation, to deal with that point first, but I'm not in favour of a local income tax.

'I think if you look at what that would mean for the average taxpayer, it is something like 6p on the standard rate of income tax. I don't think people would want me to do that at all.

'And what we have got to look at is what is driving the rises in council tax, given the fact - and this is a matter of record - that the government is giving more money to local authorities.'

Edward Davey, Lib Dem ODPM spokesman, said: 'Mr Blair's astonishing defence of the unfair council tax reveals confusion at the heart of his government.

'His attack on local income tax is in direct contrast to his deputy only yesterday.

'The prime minister has condemned pensioners and people on low incomes to paying ever-increasing council tax.

'On one of the key issues of the day, the prime minister's inaccurate figures show a worrying lack of knowledge.'

Mr Raynsford has rejected Liberal Democrat suggestions that up to £500m could be saved by scrapping council tax and replacing it with local income tax. He accused the party of not working out the details.

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