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So, we're going to get to hear later today what Dave means by "localism":

BBC NEWS | Politics | Tories offer votes on council tax:

Councils should hold referendums if they want to bring in "high" council tax increases, Tory leader David Cameron is due to say. If people voted against a rise, they would get a rebate the following year, he will add in a speech in east London. This would replace the current system of central government "capping" bills in England and Wales...Mr Cameron is expected to say he wants to improve "democratic accountability".

Under the plan, there would be a "trigger threshold", above which councils would have to hold a referendum. In England this would be set by Parliament, with the Welsh National Assembly deciding the level for Wales. Bills sent out to households would ask whether they supported any "excessive" increase, with a referendum form attached. In his speech in east London, Mr Cameron will say: "All politicians in opposition talk about giving more power to local councils. But all governments seem to end up centralising power.

Right - so how are we going to reverse that, I wonder? Oh yes, we'll decide at Westminster what's excessive and force local government to hold a referendum. Like that's decentralizing? Not only that, but a post hoc referendum which will, it appears, do nothing to tell a local authority what it ought and ought not to be spending money on, and after the budget is set.

It seems to me that this is a man making a bid for power on behalf of his party. Power which, in this country, will allow him more or less to do as he pleases with local government. And yet not only is he not making any visible attempt actually to do something about what he describes as and the Taxpayers' Alliance found in summer polling to be the most hated tax, but he's taking the current system and adding another layer of Westminster control over it.

Dave, it's this simple - you cannot make local government more accountable without making it raise more of its own money. The very fact that your Westminster cronies set the levels of central funding that goes to councils means that council up and down the country have to make up for shortfalls with disproportionate council tax changes. If you want to set them, and local people, free, you need to trust them to raise their money and trust local people to boot them out of power at local elections on the whole of their record.

This has got to be one of the most inept, unimaginative, populist policy pronouncements yet from Dave, displaying a fundamental misunderstanding of something he has repeatedly said is at the centre of Tory policy - localism. I do hope the speech is better than the press release.

Having been a bit behind the mood on Charles Kennedy's resignation, I quickly made up for it getting ahead of the game by encouraging others to urge Chris Huhne, MP for Eastleigh to think about putting his name forward...

What a sad weekend of intrigue and at times farce it's been. Anyway, as no doubt people are going to be trying to move quickly I thought I'd drop you a note to encourage you to contact anyone you can in the first instance to ensure that there should be a leadership election. If our parliamentarians were annoyed on Thursday night that CK was going over their heads as the news suggests, their position will be no more tenable in the view of many members if they engineer a stitch up for one candidate. So please, tell anyone you can that we need an election!

And there will be one. I've been in contact all weekend and emailing privately one or two MPs and one for sure is intending to stand to make a contest of it if nobody else comes forward (I would actually like John Hemming to win and I've offered to work on John's campaign assuming someone else doesn't stand).

That someone else, I'd like to lobby you to encourage, is our own former MEP, Chris Huhne. He's either only just back from holiday yesterday or today so I have not heard from him but have written to him encouraging him to think about it. Here's why:

1. Europe. With Blair having failed to make much of his EU presidency and Brown more anti- due to succeed him, and with Cameron anti- and likely to take the Tories that way, there is room for us to be the party of Europe and internationalism as we should be, I may not agree 100% with Chris about the Euro (I prefer James Robertson's idea of a "Common Currency" to a single currency at the moment), but it would be a first to have a former MEP as a party leader at Westminster. Both he and Nick Clegg, who I think has ruled himself out and is supporting Ming, have a full term at Strasbourg/Brussels under their belts and we should be prepared, as a pro-European party, to count that for what it is - parliamentary experience. It might even make a refreshing change to have someone who has cut his parliamentary teeth on something other than the yah-boo of Westminster (though watching the European parliament does not look all that different at times!). Let's get him in there now while he has more MEP experience than MP experience. He is in the ideal position, having done it himself, to explain and develop how we scrutinise and criticise Europe positively compared with the other positions seen to be either plain anti-Europe, or, on the other side, the "Europe can do no wrong" type pro-Europeans.

2. PR. I am disappointed that we quietly dropped PR as "unattainable", and didn't get terribly involved in the campaign after the general Election last year led by the Independent. Chris is not only committed to PR but of course is one of our two parliamentarians who has actually been elected under a PR system, of sorts. He was a director of Electoral Reform Ballot Services. We should be pushing PR right now in view of the probability that Labour will be waning in the run up to the next election and the dissatisfaction with the present situation.

3. International Development. Chris's economic interests have focussed on International Development. If we are to believe Cameron and Brown and their "save Africa" type rhetoric, Geldof Groups and so on, this is to be the foreign policy and humanitarian agenda for the next few years. Chris is a real economist who has made real studies of different mechanisms for International Development. Gordon Brown's naive sounding "drop the debt" type measures will not be sufficient in the longer run and we need someone who really understands these issues to promote better solutions.

4. Radical economics. Chris is President of Lib Dems ALTER (Action for Land Tax and Economic Reform). Personally I have not met him yet in that context, having only been Secretary of ALTER for less than a year and not having attended any of the conference events yet. So I don't know if he is a passionate proponent of LVT or simply someone who recognises the benefits of being open to unconventional economic and fiscal ideas. But either way, we do need to be open to radical economic solutions and need someone to promote that openness. If memory serves he was also supportive of our earlier attempts to set up an Association of Lib Dem Co-operators and supports mutual solutions to delivering public goods where appropriate.

5. Meedja. Chris is of course a former journalist. I do think we need someone whom the media can feel is "one of their own". But he also has strong credibility in the city - writing for the Economists and at times the FT as well as the economics pages of the Guardian and Independent.

Yes, he's likely to be an outsider. But that didn't stop some of us previously supporting David Rendel (who I would nominate again if we hadn't lost Newbury). But he's "different", "fresh" in all sorts of ways. He may feel that he's too new in Westminster but that's not been too great a barrier to Cameron for example (who would have recognised him this time last year if we weren't Oxfordshire activists?). I feel it is time to make use of the great strides we have made at Westminster over the past five years and skip the generation that seems lining up to arrange a succession (Simon/Ming/Mark etc). However he is being spoken of very positively as someone who would make a very good leader, so there is some momentum behind him.

The "other side" of my interest in Land Value Tax is the role of land values in the money supply. Remember the money supply? We kept a close eye on it through most of the eighties, thanks to the notion that the inflationary pressures of the seventies were caused by government creating too much "base money" - the cash created, at virtually nil cost, by the Bank of England.

It became the prime target of the monetarists - control the money supply and you control inflation - that song again comes to mind from the 1979 General election campaign - "We'll count our blessings if we apply/Tight control to our money supply".

So who do we think creates the money in our economy? The crinkly stuff we increasingly rarely keep in our pocket or wallet of course is created by the Bank of England. Nowadays it doesn't have any backing in gold. But still, it's in quite short supply. In fact, there's only about £45bn of it in existence. It's the "M0" figure in this table.

So, how do we maintain an economy that turns over nearly 27 times this in GDP? Where is the money, the units of account that actually account for all this economic activity? Well, they're a fiction, existing merely as data in one or other of our banks' computers and pixels on a screen. In fact, there is nearly £1.5 trillions (thousand billions or million millions) of this debt money in the system at any one time. How did it come about? It's all borrowed into existence. All except that M0 figure of about £45 billion.

So only about 3% of the money, the units of account, at any one time existing in bank accounts is this base money. Who creates the rest? Even though you expect it to be converted, if you will, on demand into real green and crinkly stuff, it is actually simply created when someone borrows money from a commercial bank.

So there's the first anomaly. We may believe that the money in the economy is created for us, for nothing but the administrative cost of doing so, by the Bank of England, actually 97% of it is created by private commercial bodies. Banks. And for the privilege of having them create our money instead of the Bank of England, we pay anywhere between about 4% and 20%+ for it each year, in interest. And even though it is created effectively in our name (because it's convertible, seamlessly, with the real stuff), we have virtually no control and certainly no accountability over who it is created for or for what purpose.

Ah, many people cry, but surely the banks' balance sheets balance - they have as much in deposits as they have in loans don't they? Well, on paper they might, but there has to be at least 97% of those deposits themselves that came in turn from someone, somewhere, borrowing. Well, all that tells us is that most of that money supply is in fact permanent. You may borrow it for a few months or years, you may repay it at the end of that period, but in order to maintain the required number of units of account to oil the economy, someone somewhere has to go on borrowing it.

And this is where the speculative value of land comes in. Most of that borrowing is down to us, individuals, and in particular those with mortgages. Mortgage debt makes up about two thirds of this total money supply. And, the sharp eyed amongst you will realize that in order for us to maintain that level of borrowing, over time land values must increase so that we end up being paid more than we have borrowed when we sell our homes. Otherwise we'd all soon be bankrupt. Because vendors have, even if they don't appreciate it, a monopoly on the location they want to sell, the purchasers can be induced into bidding it up - basically in order that the levels of borrowing meet the demand for money in the system.

Yes, you are right, it is a house of cards. More than that, it is a confidence trick. We believe our money is created by the Bank of England, against the "full faith and credit" of the people and economic activity of the UK. In fact, the price we pay for housing, being mostly land value, is talked up in order to ensure there is enough borrowed money in the system. There was a seventeenth century Scotsman, John Law, who was outlawed across half the known world, for trying to pull the same confidence trick on the people of France who needed a new way of backing money in a financial crisis - it was ultimately all tied up in the foundation of New Orleans, incidentally - Law's land based money was used to develop Louisiana.

Why mention this now? Well, in today's Times there's a report that the Bank of England is now a little concerned about the amount of this lending in the economy. That it is likely to fuel inflationary pressures - more money, based on land rather than production, chasing the same amount of production, is inflationary. The requirement to repay that money stock over and over again with interest means that ever more has to be created.

Debt money is more inflationary than base money. Base money used, in the sixties, to account for more than 20% of our money supply. Now its just 3%. All the complaints in the seventies and eighties about money supply growth were focussed on the nasty Labour government creating base money not for funding more production, but for funding more demand by paying workers, mostly public sector ones, higher wages to cope with existing inflation. But the real problem is that creating more base money, in this devil may care world where the commercial banks use that effectively as margin to lend however much they like, means that exponentially more debt money can be created. Which is the real threat to inflation and stability? The debt money of course. There's vastly more of it. It grows faster, both in percentage terms and in absolute terms, and it costs much much more to service. Because base money only costs what it costs to produce - a half a percent for printing if notes, even less for administration if it could be done, as the commercial banks do it, electronically. As opposed to the annual 4% and more for commercially created money.

This debt money erodes our futures. It is why we have to relentlessly pursue growth. And finally, the Bank of England is showing some sort of concern about it - it's grown four times faster than the economy this year alone. But what could they do? This is where Land Value Tax comes into it for me.

If you tax land values, if instead of expecting people to pay 100% of the value of land up front to the previous owner, who did nothing to create that value as a landowner, which creates a need for this vast borrowing just to give us the basics of shelter, and instead collect that value annually over the lifetime of someone's occupancy of that land in the form of land value tax, you would deflate land values, vastly reduce the amount of debt money that has to be created to finance it, and leave a gaping hole in the money supply. A gaping hole that the Bank of England could fill with cheaper base money.

It already does all the sums required to make sure that it doesn't create too much. What does it do with those calculations at the moment? Well, it tries to moderate the amount of money in the system by tinkering with the interest rates at which it is borrowed into existence - the base rates. It is tackling a symptom and not the cause. And in doing so it acts against the economy - just when the economy needs a bit more liquidity in the system to finance "good borrowing" to prepare for the next phase of growth in real economic production, it has to tighten the supply - so companies and others investing before they make new wealth from the results of that investment have to pay more for it. It's quite bonkers really. But it makes a lot of people rich and creates a lot of vested interests. So it goes unchallenged. But it is us that pay for it ultimately, in higher goods prices, in higher land prices, and in all the interest that this debt mountain accumulates.

They could instead use those sums to actually inject real base money into the system, if they would only have the balls to set limits on the commercial banks so that they did not simply take that new money and create 30 times the amount in debt money. None of this would harm the commercial banks particularly. They would have to shift from being creators of money, our money, to being brokers of money, moving it from people who had it to people who needed to borrow it. All stuff they used to do much more of before we set them free to write their own pay-cheques at our expense.

Land Value Tax could be used then to fine tune that system, since any excess would likely find its way into uplifts in land values.

It's a multi-step process:

1. Bank of England works out, as it does now, the total amount of money required for the economy to function, to reflect the liquid wealth of the nation as a whole.

2. Instead of letting the commercial banks do it all, the Bank of England creates that money, and allows the government to spend it into existence. Either as infrastructure or supply side spending, or perhaps as a citizens' dividend - a lump sum entitlement each year to every citizen or resident in the country to spend as they want. Of course one would likely want them to do simple things like pay off the national debt first.

3. Bank of England uses interest rates as now and bankers' reserves as previously to moderate how much of that base money can be used to create more debt money by commercial lenders. All their other lending business has to be financed by matching savers against borrowers, as the building societies had to do until 20 years ago.

Result - we have a more stable monetary base, better controlled, and less speculative land value growth. Putting publicly created money and land value tax side by side, we could probably whittle away at the requirement for taking our earnings off us in the form of tax, such that we could probably quarter, in the end, the overall tax take.

Now, with that on offer, why does nobody want to listen?

Mortgages fuel surge in supply of money - Business - Times Online:

Mortgages fuel surge in supply of money
By Graham Searjeant, Financial Editor

BRITAIN’S money supply is growing at its fastest rate for 16 years, the Bank of England revealed, as mortgage approvals return to boom levels and consumers start to borrow more on credit cards again.
Annual growth in M4, the broad money measure that includes bank lending, reached 14.5 per cent in September, up from 13.7 per cent three months earlier. The surge comes only a week before the Bank’s Monetary Policy Committee (MPC) meets to consider a new Inflation Report and decide whether to raise interest rates for the first time since August.

The MPC ignored money supply for the first eight years of its existence. In recent months, however, some members seem to have become anxious that the relationship between money growth and inflation will reassert itself.