The Chancellor announced in the Pre-Budget Report that Sir Michael Lyons’s final report will be published around the time of Budget 2007.
The terms of reference for Sir Michael Lyons’s independent inquiry established on 20 July 2004 were as follows:
“The inquiry will be led by Sir Michael Lyons and will report by the end of 2005 to the Deputy Prime Minister and the Chancellor of the Exchequer. The inquiry will:
consider, in the light of the report of the Balance of Funding review, the detailed case for changes to the present system of local government funding;
make recommendations on any changes that are necessary and how to implement them; and
take evidence from stakeholders.
In particular, the inquiry will:
make recommendations on how best to reform council tax, taking into account the forthcoming revaluation of domestic property;
assess the case both for providing local authorities with increased flexibility to raise additional revenue and for making a significant shift in the current balance of funding;
conduct thorough analysis of options other than council tax for local authorities to raise supplementary revenue, including local income tax, reform of non-domestic rates and other possible local taxes and charges, as well as the possible combination of such options; and
consider the implications for the financing of possible elected regional assemblies.
The inquiry will also consider, as appropriate, any implications that its recommendations have for other parts of the United Kingdom”.
On 20 September 2005, the Government announced an extension to Sir Michael’s remit. The extended terms of reference were:
“The Deputy Prime Minister and the Chancellor of the Exchequer have agreed with Sir Michael Lyons that he will extend his work so that he can consider issues relating to the functions of local government and its future role, as well as, and prior to, making recommendations on local government funding. His work will inform the Comprehensive Spending Review 2007.
In addition to his existing remit which is focused on local government funding, Sir Michael’s inquiry will:
consider the current and emerging strategic role of local government in the context of national and local priorities for local services; and the implications of this for accountability;
review how the Government's agenda for devolution and decentralisation, together with changes in decision making and funding, could improve local services, their responsiveness to users, and efficiency;
in the light of the above, consider in particular: how improved accountability, clearer central-local relationships, or other interventions could help to manage pressures on local services; and changes to the funding system which will support improved local services;
publish a report or reports, as appropriate, in time for the Comprehensive Spending Review 2007.
Sir Michael will work closely with local government as well as with central government in delivering his remit”.
In the Pre-Budget Report on 6 December 2006, the Chancellor of the Exchequer confirmed that the Government have asked Sir Michael to consider further the implications of the Eddington, Leitch and Barker reviews in order to ensure a coherent approach to the role, function and funding of local government. The Lyons inquiry’s final report will be published around the time of Budget 2007.