The public must end its obsession with "postcode lotteries" and accept greater variation in local services, Sir Michael Lyons, head of the inquiry into the future role and financing of local government has said.

That, he acknowledged, would be a big challenge given the growing demand for common services and standards and the increased willingness of ministers to take responsibility for local issues. But it was essential to "create the space" for local government, working with business, to improve local prosperity, he said in an interview with the Financial Times.