The UK government has decided against providing financial assistance to the SNP administration's plans to replace the council tax with a local income tax.

The SNP had hoped to retain the current £400m a year which the Scottish Government receives in council tax rebate from Westminster. However, James Purnell, UK work and pensions secretary, said there was no justification for Westminster to fund the radical reform, The Scotsman reported.

It has been claimed a 3p local income tax rate would leave councils almost £1bn short of the funds they currently take from council tax. The SNP had been hoping the £400m Westminster rebate would help fill the gap.

A spokesman for the Scottish Government's finance secretary, John Swinney, said he hoped once Purnell read the consultation document on local income tax, he would understand the issues.

Further reading:

Glasgow gets better council tax system

Read story in The Scotsman