MPs' report: Time to devolve tax policy

They recommended that local councils should be independent of central government and have powers to raise tax, to ensure vital public services are properly funded.

Members of Westminster's constitutional reform committee said devolution had been successful in Scotland, Wales and Northern Ireland, adding that England should no longer be "the odd one out."

The report comes just 24 hours after Tory Local Government Minister Eric Pickles claimed councils which do not hold referendums before raising council tax are "dodging democracy."

But the committee's chair, Labour MP David Allen, told the Star that Mr Pickles and Whitehall should stop "micro-managing" councils.

And responding to claims that local government can not be trusted with further powers, Mr Allen said: "As far as I know, it's not local government that has led this country into recession.

"Local government has proved itself to be much more prudent and economically responsible than central government, so why not allow English local government to do what local government does in every other Western democracy and run its own affairs?

"We should stop holding out the begging bowl, get off our knees and ask for genuine independence for local government."

Welcoming the report, Local Government Association chairman Merrick Cockell said that the proposals would create a "balanced relationship between Whitehall and town halls."

He added: "To see the true benefits of local decision making, particularly around creating the right environment for stimulating economic growth, we need the freedom to make independent decisions about local issues."

Tory Local Government Minister Brandon Lewis dismissed the proposals, claiming they would see the introduction of a "barrage of new local taxes."

He said the government had already allowed a "dramatic shift in power away from Whitehall," which means 70 per cent of council income will now be raised locally.

But Labour MP Paul Flynn said councillors have "a clear idea of the needs of their constituents, unlike somebody remote at Westminster making savage cuts without ever being aware of the consequences."