Lyons Inquiry into Local Government
Lyons Inquiry final report and associated documents
This section of the website provides links to all parts of Sir Michael's final report on the form, function and funding of local government, and to documents from launch of the report.
Lyons Inquiry conference: Final Report and Recommendations, 27 March 2007

Launch of the final report, 21 March 2007
Printed copies of the final report can be purchased from The Stationery Office, quoting ISBN: 978-0-11-989854-5

Final report contents
Executive Summary
Preface by Sir Michael Lyons
Executive summary
(Adobe Acrobat file, 2,962kb)
Part I: Background to the Inquiry
1. Local government: a continuing debate
Context for the Inquiry
The history of local government
(Adobe Acrobat file, 696kb)
2. Local government in the 21st century: what is it for?
Theories of local government
The modern role for local government
What do we want from local government?
(Adobe Acrobat file, 224kb)
Part II: Problems and solutions
3. What is limiting modern local government?
High degree of central control
Lack of flexibility
Expectations and pressures on services
Confused accountability
Public attitudes
Poor incentives in distribution of national resources
(Adobe Acrobat file, 275kb)
4. Central government's contribution to reform
Improving accountability
Protecting flexibility
What this means for services
(Adobe Acrobat file, 408kb)
5. Local government's contribution to reform
Place shaping - the challenge for local government
Improving local accountability
Innovative, local solutions to public service challenge
(Adobe Acrobat file, 280kb)
Part III: Funding
6. Funding reform: an introduction
Objectives for reform
Framing a package of reform
(Adobe Acrobat file, 163kb)
7. Household taxation and local charges
Council tax
Council tax benefit
Local income tax
Local service charges
(Adobe Acrobat file, 419kb)
8. Business taxation
Business rates
Section 106 and planning gain supplement
Taxes on tourist pressures
(Adobe Acrobat file, 279kb)
9. The funding system and incentives
incentives, equalisation and grant
Shared revenues to support local services
(Adobe Acrobat file, 266kb)
Part IV: Conclusions
10. A developmental approach
Changing behaviours
Legislative and policy changes
Options for future governments
Underpinning the developmental approach
(Adobe Acrobat file, 163kb)
Summary of recommendations
(Adobe Acrobat file, 126kb)
Terms of reference and acknowledgements
(Adobe Acrobat file, 171kb)
(Adobe Acrobat file, 101kb)

Download full report, excluding annexes
(Adobe Acrobat file, 5,521kb)

Annexes to the report
Annex A
Understanding the current grant distribution system
(Adobe Acrobat file, 121kb)
Annex B
Introduction to the modelling used in the report
(Adobe Acrobat file, 108kb)
Annex C
Background to support Chapter 7
(Adobe Acrobat file, 342kb)
Annex D
Background to support Chapter 8
(Adobe Acrobat file, 136kb)
Annex E
Background to support Chapter 9
(Adobe Acrobat file, 148kb)
Annex F
Summary of submissions
(Adobe Acrobat file, 167kb)
Annex G
Stakeholder views on Barker, Eddington and Leitch
(Adobe Acrobat file, 133kb)
Annex H
Research and stakeholder engagement
(Adobe Acrobat file, 156kb)
Supplementary tables and charts
(Adobe Acrobat file, 119kb)
Research published alongside the final report
Lyons Inquiry survey 2007
(Adobe Acrobat file, 1,853kb)
Lyons Inquiry:
Lyons Inquiry Final Report and Recommendations
Lyons Inquiry Press Notice: 21 March 2007
Sir Michael Lyons today published the much anticipated final report from his independent Inquiry into the future role, function and funding of local government - Place-shaping: a shared ambition for the future of local government.
Sir Michael argues that local government is an essential part of our system of government today. Its place-shaping role - using powers and influence creatively to promote the well-being of a community and its citizens - is crucial to help improve satisfaction and prosperity through greater local choice and flexibility.
Sir Michael calls for a new partnership between central and local government. This needs to be based on changes in behaviours from all tiers of government to achieve a stronger relationship creating a shared ambition for the future. He calls on central government to leave more room for local discretion and recognise the value of local choice; while local government needs to strengthen its own confidence and capability, engage more effectively with local people, make best use of existing powers, and stop asking for central direction. He also concludes that council tax is not 'broken', but is seen as unfair and has been put under too much pressure.
Sir Michael presents a mosaic of reforms which tackle a complex set of problems. They include essential reforms in the short-term to tackle the most urgent problems and more radical reform options for future governments.
Short term recommendations include:
In the medium term the Government should:
In the longer term, future governments could consider more radical reform options such as local income tax or re-localisation of the business rate, but these reforms may require greater public support and understanding than currently exists.
Some of these changes can start immediately, building on current changes to the performance framework and Local Area Agreements; others can be taken forward in the Comprehensive Spending Review; whilst some require primary legislation. This package of reforms is designed to set out a developmental approach towards a more devolved and ambitious future for local government, based on improving relationships between central and local government, better local choices, more effective management of pressures, and greater public trust in the system as a whole.
Notes for Editors
  1. Further details of the conference can be found at:
  2. Sir Michael was commissioned in July 2004 by the Deputy Prime Minister and the Chancellor to make recommendations on how to reform the local government funding system, by December 2005.
  3. On 20 September 2005 the remit of the Inquiry was extended to enable Sir Michael to consider issues of function before finalising his conclusions on funding.
  4. On 15 December 2005 Sir Michael issued a consultation paper and interim report. A further paper was published on 8th May 2006 entitled "National Prosperity, local choice and civic engagement".
  5. On 6 December 2006 the Chancellor announced a short extension to Sir Michael's Inquiry for him to consider the implications of the Eddington, Barker and Leitch Reviews before finalising his report.
  6. Copies of reports, submissions, research commissioned and the terms of reference for the Inquiry can be found on the Lyons Inquiry Website at, and also at
Issued on behalf of the Lyons Inquiry by GNN London. For further information contact Nicola Croden, Lyons Inquiry - 07785 975 226.
Contact details
The Lyons Inquiry has now closed. Please direct your queries to Communities and Local Government or HM Treasury.
Communities and Local Government general enquiries helpline: 020 7944 4400
HM Treasury Correspondence and Enquiry Unit: 020 7270 4558
Further contact details are available on their respective websites

Quick links

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