LOCAL COUNCILS have long been more adept at financial blackmail than delivering efficient services. And they have been at it again recently, giving warning that unless the Government hands over an extra £2.2 billion, council tax bills will have to rise by more than 10 per cent next year.

In making such lurid threats, local authorities are seeking to exploit the mounting unpopularity of the council tax system, which has seen average bills go up by four times the rate of inflation in the last decade. Such are the levels of public anger that even mild-mannered pensioners are now willing to go to prison in protest.

So far, most of the outrage has focused on the Government for supposedly failing to provide sufficient resources for town halls. But if councils were properly managed, they could greatly reduce their tax demands. Waste, low productivity and bureaucracy are endemic in local government. Since 2000, for instance, the size of the municipal workforce providing direct services to the public has actually declined, yet the number employed in so-called “corporate functions ” has gone up by 17 per cent.

The cocktail of mismanagement and crippling tax increases should be ripe territory for the Tories to attack. Yet they have been strangely muted on the issue. This is because the Conservative Party, shell-shocked by three election defeats, is now talking the fashionable language of localism, urging greater freedom for local authorities as a counterpoise to Labour’s perceived centralism. “It is time to rein back the sprawling Whitehall state and restore faith in local accountability and local democracy,” said Caroline Spelman, the Shadow Local Government Minister, at the last Tory conference. A full-blooded condemnation of municipal ineptitude does not sit easily with this earnest rhetoric. And any call on the Government just to throw more cash at town halls would smack of the fiscal irresponsibility in which the Liberal Democrats often indulge.

The council tax problem also reflects deeper concerns within the Tory party on taxation and spending. Because high levels of state expenditure have become equated in the public mind with compassion and quality services, any attempt to cut Government funding — and hence taxes — is seen as an act of cruelty, favouring the self-interested affluent and hurting the vulnerable. As Environment Secretary in 1990, Chris Patten was exasperated at the way the decision to cap municipal budgets was always met by “a parade of bleeding stumps”.

That mentality prevails even more strongly today, and it is one that terrifies the Conservatives. But I have a modest plan that could provide a way forward. My idea would allow for the introduction of council tax cuts without any taint of selfishness or bias against the poor. Indeed, this scheme, far from undermining the civic infra-structure, would actually strengthen it by promoting active citizenship. The Government should introduce a system of graduated council tax discounts in return for doing voluntary work in the community: the longer the hours volunteered, the greater the municipal discount. These would be the first tax cuts in history that actually demonstrated solidarity with the community. A virtuous circle would be established, where the biggest gainers would also be the biggest givers.

I have to admit that I have some past form in dreaming up unorthodox tax plans. In 1992 I was working as an aide to the Labour MP Harriet Harman, who was then the Shadow Chief Secretary to the Treasury under Gordon Brown. Just as today the Tory party is trying to come up with ways to cut taxes without damaging services, so in the early 1990s, Labour was trying to think of new ways to raise money without hikes in income tax. One evening, I was working late in Harriet’s office, and, as an exciting diversion, I started to read the 1992 annual report of Thames Water. As I pondered its vast profits, it dawned on me: why not impose a windfall tax on the profits of the recently privatised utilities? I rang Harriet that night. The next morning I was summoned to see the terrifying, bullish Gordon Brown, who uttered not one word of approval. I thought I may have been talking rubbish in front of the brooding Scot, but pretty soon, after the number crunchers had got to work, the windfall tax was official Labour policy.

I have not had any number crunchers working on this council tax discount plan. But I would envisage some sort of graduated scheme, whereby there could be a 5 per cent reduction off the monthly bill in return for voluntary work with a recognised charity of three hours a week or less, rising to a maximum 25 per cent discount for 15 hours’ volunteering. These discounts would apply on an individual basis, so an adult couple, with each of them doing 15 hours a week could halve their municipal tax bill.

There would, inevitably, be some objections, such as the potential for fraud, the burden on charities for administering the scheme and the principle of an indirect financial reward for volunteering. Councils, too, would squeal about the loss of revenues, though in the short term they could be compensated by the Government, which already supplies more than 75 per cent of municipal funding. But there are also huge advantages as well. The system would be simple and comprehensible, could reinvigorate the voluntary sector and attract new numbers into charitable work. A new era of volunteering could beckon.

This is the perfect Tory tax cut, both local and socially responsible. If David Cameron wants to show that he is man of substance rather than substances, he will surely see its appeal.

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