As LGC revealed last week, Mark Lambirth, director of local government finance at the Department of the Environment, Transport and the Regions, told the environment select committee's inquiry into local government finance that ministers did not believe allowing councils to raise more of their own funds would strengthen local autonomy.
The statement surprised committee members and led to speculation that Mr Lambirth may have drifted 'off-message'. In February Ms Armstrong said: 'We will change the local government finance system itself. Local councils must raise more of their own finance and be less dependent on central government. That is the way to real subsidiarity and genuine local autonomy.'
But a DETR spokesman said: 'We don't think [Mr Lambirth] went off-message. We don't believe there is some kind of magic ratio between central and local funding which must be achieved.'
The spokesman pointed out that Professor Gerry Stoker, chair of the influential New Local Government Network, had made the same point as Mr Lambirth in his written evidence to the committee.
Professor Stoker is to give oral evidence to the committee next week. He told LGC he anticipated some tough questioning but complained that the debate on local funding had acquired an 'almost theological nature'.
Local Government Association chairman Sir Jeremy Beecham is writing to ministers demanding an explanation for what amounts to a fundamental shift in Labour policy.