I've always understood the argument about poscode lotteries to be one about the relative wealth of different areas. If you give a local area more power, it will benifit richer areas as they find it easier to raise revenue, can raise more and (generally speaking) have fewer problems and so less to spend the money on. Conversley however, poorer areas, which have far more problems, are faced either with taxing their (poorer) people more or giving them lower quality services. Thus localism is the enemy of social justice, or so the argument goes.

I think the solution is to couple local empowerment with national redistribution. Thus I would devolve decision making power and conrol over budgets to a local level as much as possible (and I believe a great deal of devolution is possible) but I would keep the taxation system fairly centralised (if maybe not as extremely centralised as currently) to enable redistribution across nations from areas of wealth to areas of need. So whilst I would be all in favour of giving more power to local authorities, I wouldn't rush to demand that a significantly greater share of the money is raised locally. Instead I'd argue for looking again at the way the Local Authorities central Government settlement is calculated with a view to encouraging greater cross-national redistribition.