New move on local tax

Moves to replace council tax with a new levy partly based on a local income tax have taken a big step forward, it emerged today.

Ministers set up a "technical group" to study how the new scheme could be introduced. The Treasury, the Office of the Deputy Prime Minister and the Local Government Association and the Chartered Institute of Public Finance and Accountancy will all be represented.

The move delighted supporters including the Lib-Dems, who claim it will be fairer than the council tax, but will be an embarrassment for Tony Blair, who last month appeared to rule out such a tax.

A hybrid tax based partly on income tax and partly on property values is now the firm favourite to be announced by Local Government Minister Nick Raynsford in the summer.