§ Mr. HaywardTo ask the Chancellor of the Exchequer what would be the impact on income tax levels of transferring the full cost of fire and police services to central Government.
§ Mr. Norman LamontThe impact on income tax of any transfer of local authority functions to central Government would depend on the extent to which revenue support grant was reduced. If grant were reduced by the 859W amount of expenditure transferred, there would be no impact on income tax. But if grant were left unchanged, central taxation would have to rise. If local authorities spent in line with total standard spending in England and Wales, and total current expenditure in Scotland, the total cost of the fire service (including civil defence) and the police service in 1990–91 would be around £5,900 million. If this expenditure were transferred to central Government, and specific grants withdrawn but no adjustment made to revenue support grant, this would imply an increase of about 2p in the basic rate of income tax.