Rate-capping rebellion
Encyclopedia
The rate-capping rebellion was a campaign within English
local councils
in 1985 which aimed to force the Conservative
government of Margaret Thatcher
to withdraw powers to restrict the spending of councils. The affected councils were almost all run by left-wing Labour Party
leaderships. The campaign's tactic was that councils whose budgets were restricted would refuse to set any budget at all for the financial year 1985-86, requiring the Government to intervene directly in providing local services, or to concede. However, all 15 councils which initially refused to set a rate eventually did so, and the campaign failed to change Government policy. Powers to restrict council budgets have remained in place ever since.
Rising local government spending had long been a concern of central government, but direct powers to limit individual council budgets were controversial and some Conservative Party members opposed them. While the measure was passing through Parliament, internal dissent within Liverpool
City Council led to prolonged delay in budgeting which only ended when Government grants were increased. Believing Liverpool to have forced a concession, left-wing Labour council leaders decided to emulate their approach, despite warnings by Liverpool that success was unlikely. Refusing to set a budget was illegal and the campaign was divisive: it did not unify the left-wing of the Labour Party in its support and the party leadership made it clear its lack of support.
Eight councils ended their campaign when the leadership proposed a legal budget, six when councillors from the majority group joined opposition councillors to overrule the leadership; Lewisham
conceded in unique circumstances. Two councils, Lambeth
and Liverpool
held out for longer than others and were subjected to an extraordinary audit
which resulted in the councillors responsible for not setting a budget being required to repay the amount the council lost in interest, and also being disqualified from office. Liverpool's delay in setting a budget caused a severe financial crisis which was denounced by the Labour Party leader Neil Kinnock
.
. Every property, whether residential or commercial, was given a rateable value which estimated the annual rent it would bring in. In the budgeting process the council would work out the total amount it needed to raise locally, and then divide it by the total rateable value within its boundaries to produce the proportion of the rateable value that each householder or business would have to pay. This proportion was known as 'the rate' for the year and the process was therefore known as 'setting a rate'.
Where there were two levels of local government, one of them (the lower tier) was designated as the principal local authority, with the higher tier authority setting its rate in the form of a precept
which was added to the rate levels set by the lower tier authorities it covered. The lower tier was responsible for collecting the whole amount and then passing on the proceeds of the precept to the authority which had set it.
came to power in 1979 committed to reducing public spending, and reducing spending by local authorities was part of this desire from the start. As early as November 1979 the Environment Secretary
Michael Heseltine
announced his intention to take powers to curb overspending local authorities. From the financial year 1980-81, councils which were deemed to be overspending had their central government grants reduced; in 1981-82, a system known as 'targets and penalties' was introduced.
However, the election of many more Labour councillors and Labour councils in local elections in 1981 and 1982, many of whom were associated with the left-wing, meant that more councils were explicitly committed to increasing public spending. Local government spending started to rise again in 1982-83. As councils found their grants cut, their response was not to cut their budgets, but to increase the rates even further to compensate. Pressure within the Government, especially from the Treasury
and Chief Secretary
Leon Brittan was applied to the Department of the Environment to take more effective action. On 16 July 1982 Brittan told the conference of the Society of Local Authority Chief Executives that continued overspending was "bound to cause central government to intervene ever more obtrusively and seek ever greater powers over local authority finances".
and his deputy Tom King
thought it would be too complicated and possibly unconstitutional, and the Attorney General
Sir Michael Havers
had to give advice. When the committee reported to Cabinet on 17 January 1983 against rate limitation, Margaret Thatcher
rejected its report and instructed Tom King (who had since been promoted to Environment Secretary) to come up with a foolproof system.
. The Conservative Party
manifesto
declared:
The Conservatives' victory in the election was followed on 1 August 1983 by a white paper
which put more details on the proposal. It stated that authorities would be selected on the basis of several factors, not only the absolute level of spending in comparison with the 'Grant Related Expenditure' (the notional level set by the Government needed to provide a standard level of service):
Identifying the local authorities which were spending significantly more than they received in grants and more than the government's targets, all were controlled by the Labour Party except for the City of London Corporation. The Government announced that it would aim to pass legislation in 1984, and then select a small number of councils to have their rates capped in 1985-86. The proposal to cap rates was controversial and many in local government were concerned where it would lead to; in particular the Audit Commission
, responsible for overseeing local government spending, was concerned that it might be drawn in to a political fight, casting doubt on its independence.
making it clear he would resign if he could not get it enacted. It was anticipated that the Bill would be highly controversial especially with members of the House of Lords
and Jenkin was said to have reminded them of the Salisbury Convention
which prevented the Lords from rejecting any Bill mentioned in an election manifesto. The Bill was soon under criticism in Parliament by Conservative MPs Geoffrey Rippon
and Anthony Beaumont-Dark
, and outside it by David Howell
.
When the Bill was debated on 17 January 1984, the opposition was led by former Prime Minister Edward Heath
who attacked the centralisation of power; Heath led a total of 24 Conservative MPs in voting against the Bill, while 11 more abstained including Francis Pym. With opposition MPs debating the Bill in detail, the Government was forced to move a guillotine motion
on 29 February, which was passed despite some Conservative protests. After making a minor concession exempting smaller councils from selective capping, the Bill went to the Lords where the Labour opposition moved an amendment asserting that it would "gravely weaken local democracy" and rejecting the Bill. The amendment was lost by 235 to 153, the Government regarding it as an issue of confidence which justified them summoning many Peers who rarely attended.
The main clause giving the Government power to cap rates was supported by the Lords with a majority of 10 votes despite some Conservative abstentions, and after some more concessions the Government saw the Bill through the Lords without a defeat. The Rates Act 1984 received Royal Assent on 26 June.
When the Labour Party won control of Liverpool City Council in the local elections of May 1983, the council leadership was under the effective control of the Militant tendency
, a group which had a majority of the active members of the Liverpool District Labour Party which directed the activities of the council group. The new leadership inherited a budget set by the Liberal Party
administration which preceded them, which it considered was insufficient to meet their commitments to the electorate to the tune of £25m. The council, under Militant's guidance, began in Summer 1983 a political fight to win more resources from the Government.
With no alteration in the Government's stance, there was already talk of the council adopting illegal tactics in its 1984 budgeting, and on 19 March the District Auditor Les Stanford wrote to every councillor warning that the consequences of not setting a legal rate was a budget crisis, with surcharge
and disqualification for councillors. A group of six Labour councillors under the leadership of Eddie Roderick declared they would not approve an illegal budget, but the majority of the Labour group thought the letter was a tactic to scare them into backing down. The council leadership put forward an illegal budget on 29 March; after an eight hour meeting, Roderick put forward an amendment to delay setting a budget until 11 April in order to let officers prepare a legal one. A suggestion that council leader John Hamilton
and chair of Finance Tony Byrne form an emergency committee to control finances in the interim was accepted but the delaying amendment fell: it had the support of the Conservatives and six councillors in Roderick's group but the Liberal councillors opposed it and supporters of the council leadership abstained. Instead the six Labour rebels, 30 Liberals and 18 Conservatives voted to postpone consideration.
A further budgeting meeting on 25 April saw the illegal budget again presented but owing to the opposition of the Roderick group it was defeated; the Conservative and Liberal groups could not agree on an alternative and the matter was allowed to drop; among the council leadership it was decided to delay setting a rate until after the results of local elections to one third of the council. In the event Labour gained seven seats, which gave a majority even if the Roderick Group opposed. A further council meeting was set for 15 May, but on 9 May Patrick Jenkin announced that he would be going to Liverpool on 7 June to look at housing conditions, and would be willing to meet council leaders while there. The council therefore postponed budgeting again until the outcome of these talks was known.
Nothing resulted from the meeting with the councillors on 7 June, with the council leadership still putting forward an illegal budget, but Jenkin agreed to meet with them again in London on 9 July. At this meeting Jenkin told the councillors that he could offer about £20m extra money for housing. This concession was treated by the leading members of Liverpool City Council as a major victory, and two days later the council set a legal budget.
printed a leader
which began "Today in Liverpool municipal militancy is vindicated" and argued that the Government had subverted "its whole local government financial policy of the past four years; it issues an open invitation to councils to say the caps don't fit and they won't wear them". Within the Conservative government the political impact was immense. While the Government had not wanted to engage in a major fight in 1984 at the same time as the miners' strike
, attitudes quickly hardened. Margaret Thatcher, in a lecture in November 1984 delivered a month after she survived an assassination attempt
that killed five senior Conservatives, referred to a spectrum of groups undermining rule of law: "At one end of the spectrum are the terrorist gangs within our borders, and the terrorist states which finance and arm them. At the other are the Hard Left operating inside our system, conspiring to use union power and the apparatus of local government to break, defy and subvert the law."
On the left, many thought that the outcome of Liverpool's budget dispute in 1984 had vindicated its confrontational approach.
to copy the Liverpool option and confront the Government with a deficit budget. At a meeting of Labour controlled London boroughs in mid-June, the idea of a united strategy of many councils refusing to levy a rate was introduced. The idea caught on, especially with the leaders of the four South London boroughs of Lambeth, Southwark, Lewisham and Greenwich, and with John McDonnell
, chair of the finance committee of the Greater London Council
. On 22 June 1984, they signed a statement published in Labour Herald which outlined the strategy.
The day after Labour Herald was published, left-wing council leaders met in Liverpool to discuss tactics. The strategy of many councils refusing to levy rates was heavily discussed: John Austin-Walker
, leader of Greenwich London Borough Council
was quoted saying that enough councils would join "sufficient .. to force the Government's hand". Especially in London the policy was approved by groups of Labour councillors, and by the Greater London Labour Party executive.
The Labour Party's official line was to oppose the strategy as it was illegal. Over the weekend of 7–8 July, Labour councillors met at a conference organised by the Party in Sheffield; as the invitations included moderate councils, the meeting was expected to endorse the official line. The host, leader of Sheffield city council David Blunkett
wrote a paper for the conference which said that "collective action, achieving Government retreat, and not martyrdom, is the objective". The meeting adopted an attitude of non-compliance, with many councillors willing to break the law; there were also hints from Liberal spokesman on local government Simon Hughes
that Liberal councillors may do the same. Non-compliance included refusing to use the system in the Rates Act which allowed a council to ask for a reassessment of its cap: to do so meant supplying any information the Secretary of State required, and gave the Secretary of State power to impose "such requirements relating to its expenditure or financial management as he thinks appropriate" on the council. Labour-run councils regarded this provision as inviting a Conservative minister to undertake detailed scrutiny of their policies with power to change them, which they refused to countenance.
, being joined by some uncapped councils (including Newham, Liverpool and Manchester) who decided to follow the same strategy because of the effect of grant penalties on their budget. Five strategies were under consideration:
Of these options, the first was heavily advocated by the rate-capped councils from south London. It was strongly opposed by Liverpool, where the deputy leader Derek Hatton
regarded it as "a totally negative strategy", and Militant supporting councillor Felicity Dowling complained that she had spent months arguing publicly against a formal 'no rate' stance which would have serious consequences. Liverpool felt obliged to go along with the other councils for the sake of unity although they felt sure that some of the leaders would not carry their groups in support and most of the other councils would soon drop out.
sought approval for a statement which endorsed non-compliance with the Government and called for unity, but did not explicitly support illegality. There were then two composite motions
; the first (composite 42), moved by the National Union of Public Employees
, followed the lines of the NEC statement but supported councils framing budgets "which can be defined as technical illegality". The second (composite 43) was moved by Derek Hatton on behalf of Liverpool Broadgreen
Constituency Labour Party
declared support for "any councils which are forced to break the law as a result of the Tory government's policies".
On the previous day, Neil Kinnock had told the party not to "scorn legality", but the General Secretary of NUPE Rodney Bickerstaffe
responded when moving composite 42 that the required cuts would force councils to break statutory obligations: "The question is not should we break the law, but which law shall we obey?". When summing up the debate on behalf of the NEC, David Blunkett
(Leader of rate-capped Sheffield City Council) did not make clear that the NEC asked for composite 43 to be remitted, meaning withdrawn for further consideration. On a show of hands from those in the hall, the NEC statement and both composites were carried. The result, supporting illegal budgeting, dismayed the party leadership.
The meeting on 4 February 1985 went badly for the councils, with Jenkin refusing to abandon rate capping and grant penalties; Jenkin declared his willingness to meet the councils again if they wanted to negotiate. Shortly before, Labour leader Neil Kinnock had made clear his opposition to the policy of not setting a rate; he declared at the Labour Party local government conference that what Labour supporters were saying was "Better a dented shield than no shield at all. Better a Labour council doing its best to help us than Government placemen extending the full force of Government policy". He saw the strategy as a gesture which would not help protect services. Notwithstanding his criticism, 26 councils were still considering defying the law.
Checking council activities was the responsibility of the district auditor who was appointed by the Audit Commission
; if the auditor found that financial loss to the authority had been caused by the wilful misconduct of councillors, then they were under a duty to issue a certificate to the councillors responsible ordering them to repay the money in a surcharge. If the sum to be paid was more than £2,000 each, the councillor would also be disqualified from office. Councillors were held to be 'jointly and severally liable' for the sum, meaning that the total amount was recoverable from each individually should others be unable to pay.
Most councillors contemplating delaying setting a rate considered that the crucial point would come at the point in the year when the first rate payments would have become due; if the council had not set a rate at that point, it would be unable to recover the interest on the payments due to have been made to it. The General Rate Act 1967 section 50 and schedule 10 gave ratepayers the right to pay by ten instalments which were to be paid at monthly intervals during the year. With a financial year ending on 31 March, the latest date to start the payment was 1 July; the council had to give ten days' notice of a payment being due, so the latest date for setting a rate without incurring irrecoverable debts was 20 June.
Jenkin decided to limit the 1985/86 budget of 15 of these councils to the cash level of their 1984/85 budget. In the cases of the GLC, ILEA and Greenwich, where budgets were over 70% above their grant-related expenditure, and had gone up by more than 30% since 1981/82, he placed the cap at 1½% below the 1984/85 budget. 16 out of the 18 councils were under majority control by Labour at the time they were designated. The exceptions were Portsmouth, where there was a Conservative majority, and Brent where no party had an overall majority. A Labour administration had held power but when Labour councillor Ambrozine Neil joined the Conservatives in December 1983, the Conservatives took control with Liberal support.
Portsmouth City Council's Conservative leader Ian Gibson called the decision to cap his budget "iniquitous", explaining that the reason for high spending was that the council had heavy debt charges from extensive rebuilding several years before. He pledged to use the appeal mechanism, but when the matter came to a vote on 25 September the council voted not to do so.
After the figures for the budget limitations were revised, Patrick Jenkin introduced the first order to limit budgets on the four precepting authorities (the GLC, ILEA, Merseyside and South Yorkshire) in the House of Commons on 6 February 1985. After a short debate the order was approved by 255 to 193 votes. The second order, covering the remaining 13 rate-making authorities, was set down for debate on 20 February, but on the previous day Jenkin had to agree to reconsider the limit for Haringey after receiving a letter from its district auditor saying it would have a deficit if the original limit had been imposed. At 10.15pm on the night before the order would have been debated, Jenkin announced that the debate was being delayed. After the figures for six councils were altered, revised figures for the caps were approved by a vote of 267 to 184 in the House of Commons on 25 February.
The budget restrictions imposed are shown in the table. The first column states whether the council made a rate or set a precept to be collected by other authorities on its behalf. The next column gives the 1985/86 budget limit imposed; following that are the budget plans showing what the council intended to spend in 1985/86. The maximum rate imposed by the cap (in pence) comes next, followed by the maximum percentage change on 1984/85 rate levels. The final two columns shows the rate that the council would have hoped to set, and the percentage change on 1984/85 rate levels this represented.
councils were subject to the legal requirement to make their precept by 10 March. They were also facing their own abolition at the end of March 1986. Faced with the prospect of immediate legal sanctions if they failed to do set a budget and with no continuing existence, neither were inclined to press their objections to rate-capping. At a meeting of capped councils on 19 February, both made it clear that they would set a legal precept on time. South Yorkshire County Council then made it clear publicly that it would fix a budget within the cap, and proceeded to do so at a budget meeting on 7 March.
Merseyside also decided on 7 March not to defy the cap but to set a £213m budget substantially lower than the limit: the precept was 73p which was much lower than the cap of 82.86p, meaning rates rose by 11% instead of the 27% which was allowed. The budget set no further details on council spending, but the council created a special mechanism to keep spending under the limit. The council had obtained legal advice that this course of action was risky, but likely to be accepted as legal if the council was sincerely trying to keep its budget within the cap. Council leader Keva Coombes called for extra assistance but was rebuffed by Patrick Jenkin.
From an early stage, the GLC and its leader Ken Livingstone
and finance chair John McDonnell
were heavily involved in planning the campaign to defy rate-capping. Their involvement also took in the Inner London Education Authority
which was technically a special committee of the Greater London Council
, consisting of members elected to the GLC from inner London, plus one member from each of the inner London borough
s. As both the GLC and ILEA set a precept rather than a rate, both were under a legal requirement to set a budget by 10 March. Livingstone was conscious that the Labour group on the GLC had recent experience of deciding whether to defy the law, having split 23 to 22 to vote in 1981 not to comply with a House of Lords
judgment ordering it to raise public transport fares. He was not confident of persuading more councillors to support defying the law on budgeting, but because the Government was intending to abolish the GLC on 31 March 1985, he went along with supporting the campaign.
Just as the tactic of not setting a rate became popular among the councils subject to rate-capping, the Government suffered a defeat in the House of Lords
which gave the GLC an extra year of existence and subjecting it to budgeting and rate-capping for 1985-86. Owing to the inevitable split in the Labour group of councillors, it was agreed not to debate the issue until just before the deadline; in the meantime, to stop the Government setting a harsh cap on the budget, the council ordered that no detailed budget documents would be published. John McDonnell was given the responsibility of leading the campaign in which he claimed that the rate-capping would require a reduction of £138m in the planned spending.
As the time for voting on the budget approached, Livingstone discovered that instead of the outright illegality involved in resolving not to make a rate, the other councils were planning to exploit the legal gray area of refusing to make a rate for the time being. This strategy would put them in a different position to the GLC and ILEA who would be illegal immediately. Budget papers prepared by the Director-General Maurice Stonefrost then revealed that the capping limit still allowed the council to increase spending substantially; the papers were circulated to all members of the GLC on 1 March. A long and acrimonious debate at a Labour group meeting on 4 March agreed by 24 votes to 18 to support the legal budget with its £25m in growth. The GLC Labour group split into three factions, with one group of 10 under John McDonnell insistent on not setting a rate, another of 8 under Ken Livingstone willing to defy the law but also to accept a budget at the cap if that stance failed, and a third group unwilling to support any illegal budgeting.
First to meet was ILEA, on 7 March; supporters of the no rate strategy had hoped that it would still vote for defiance but the authority ended up adopting a legal budget by a margin of four votes. The GLC met the following day; with the Chairman Illtyd Harrington not voting except to break a tie, one Labour member ill and another absent on holiday, the full voting strength was Labour 45, Conservatives 41 and Alliance
3. The first budget to be voted on was the Conservative proposal for cut in the rates to 27p; this was rejected by 48 to 38. A budget setting the rate at the maximum allowed by the cap was defeated by 59 to 30 with both Livingstone and McDonnell opposed. At this point the meeting was adjourned until Sunday 10 March, at which meeting a second attempt to set a budget at the cap level was rejected by 54 to 34. After a further budget proposed by the Conservative group was rejected, another budget at the cap level was proposed by Steve Bundred but again rejected by 53 to 36. Finally a budget proposed by moderate Labour councillor Barrie Stead, setting the rate below cap level, was passed by 60 to 26.
to independently investigate its spending, hoping that it would vindicate the council's decisions. The report found that the council's high spending was not the result of inefficiency but of policy decisions, and the fact that as a new town
it had higher interest payments and higher spending on managing housing. The council duly published the report after it was capped, making much of the fact that the Audit Commission had exonerated it.
Determined to frustrate the capping order, Basildon announced at the end of February 1985 that it could evade it by setting up a limited company
- Basildon Economic Development Corporation Ltd - through which the council would contract to pay grants of £140,000 to voluntary organisations. When it came to the budgeting meeting on 7 March 1985, a group of rebel Labour councillors pulled back from pressing the council to join the others in refusing to set a rate; instead the council set the rate at the limit allowed by the cap. The council leader Harry Tinworth claimed that the council had won the first round in a battle with the Government to preserve essential services. Later that month the council announced its plan to sell council mortgages to a merchant bank in order to raise capital finance to build sheltered homes for the elderly, also evading the cap.
In the middle of March the district auditor, Brian Singleton, sent a letter to every councillor warning them of the legal dangers of delaying setting a rate. At a special council meeting called by the Conservative group on 22 March 1985, the Labour chair of the Finance Committee Harry Rutherford proposed an £83m budget which included uncommitted growth of only £300,000 instead of the £4.2m wanted by the Leader; he attracted the support of the opposition Conservative and Alliance councillors together with 12 other Labour rebels and the budget was passed. The chief whip of the Labour group Stephen Byers
said that the auditor would have to check the budget was legal. Four of the thirteen Labour rebels were suspended from the party for terms between six and twelve months, and the others were reprimanded and required to give a written undertaking to observe group policy in future.
Simon Coombs
(who was Parliamentary Private Secretary
to Kenneth Baker, the local government Minister) pressed the council to use the appeal mechanism provided in the Rates Act 1984. The ruling Labour group maintained the unity of the capped councils by refusing to appeal, and on this issue had the support of Conservative councillors. However the leadership of the Labour group was relatively moderate and wary of the 'no rate' strategy. Thamesdown seemed to some observers an odd target for capping; The Times correspondent reported local rumours that it had been selected for capping in the hope that it might appeal and be removed, thereby damaging the policy of confrontation.
On 7 March, Thamesdown passed a motion declaring its inability to set a rate. The council's Chief Executive, David Kent, wrote to all councillors after the meeting telling them that a rate had to be set by the end of March, and pressure appeared also from the Department of Health and Social Security
which warned on 21 March that there would be a problem paying Housing Benefit
to the council if no rate was made. The council felt sufficiently concerned to avoid budget chaos that it set up a special resources sub-committee to agree emergency measures for ordering supplies. On 25 March the Mayor summoned a special council meeting for 28 March, while senior councillors discussed options with the borough solicitor. The meeting on 28 March saw prolonged disruption from the public gallery by those who supported continued defiance, and Mayor Harry Garrett called on the police to keep order. Among the councillors the decision was taken to approve a legal rate of 196.65p; a council spokesman claimed that the council would be going ahead with what it was going to do anyway.
described as "savage treatment". However later figures allowed the council to include an additional £3.7m in its budget. On 7 March 1985 the council approved a budget of £30,650,000 (significantly over the cap), but not a rate to go with it; the motion also told the Secretary of State that if the rate limit and grant penalties were withdrawn, the council could set a rate rise lower than the rate of inflation. Although this vote was unanimous, the Labour leadership soon decided that there was no point in holding out. The council came under pressure not to give in, with a letter from the 'West End Rate-Capping Campaign Group' sent to each councillor urging them to continue to set no rate, and a petition of 2,000 presented to the council opposing rate-capping by Mrs Megan Armstrong who urged the council to defy the Government even if it meant breaking the law. From the other side, the Conservative group on Leicestershire
county council attempted to get their authority to initiate a judicial review
as Leicester collected and passed on its precept; the attempt failed as the Liberal group opposed it.
The council leadership proposed a deficit budget at a policy committee meeting on 27 March; despite being told by city treasurer Michael Lambert that it was illegal, the committee referred it to full council the following day. Although 22 petitions containing 9,000 signatures were presented to the council meeting calling for continued defiance, the council adopted the budget; finance committee chair Graham Bett said that it was not the rate of elected councillors but of a "remote right-wing Government in London". Seven Labour councillors were absent from the meeting, continuing to support defiance.
Manchester City Council was not rate-capped. However its leadership was fully committed to the strategy of not setting a rate, arguing that the effect of the grant penalties system harmed it. A large rally protesting against rate-capping was held in Manchester on 6 March 1985, followed the next day by the council voting not to set a rate. When, the following week, the opposition Liberal Party group on the council called a special meeting to propose their own budget (which included a 4.4% rate rise), the council leader Graham Stringer
insisted that the no rate strategy would continue. Liberal leader David Sandiford was ruled out of order by Stringer when he attempted to speak about the no rate strategy at a Policy Committee meeting on 17 March.
Legal pressure on the council leadership began early when the District Auditor wrote to the City Clerk saying that the decision not to set a rate was 'wilful misconduct'. At the special meeting of the council on 22 March, the Liberal proposed budget was defeated, but 16 Labour councillors (including the Lord Mayor) supported it. One of them, Paul Murphy, insisted the council could make a rate without job losses. A further council meeting on 25 March saw 17 Labour councillors support the Liberal budget, but it was again rejected by 52 to 23.
On the last day of the financial year, 31 March, the council met again in its fifth budgeting meeting in a month. In a six hour meeting, a left-wing amendment declaring it impossible to set a rate was defeated by 51-45, with 31 Labour councillors opposing it. A Conservative budget involving a 0.7% rate rise was voted down; the Labour chair of the Economic Development committee then proposed a 257.5p rate (a 6% rise) which was agreed by 83-1 with 12 abstentions. Graham Stringer declared that "Manchester's case and the national campaign has been weakened" but pledged that there would be no cuts and they would continue to support other councils.
The Labour group, incensed at being caught off guard, took legal advice but were told that the budget as approved was "more legal than not". The Conservative councillor who had led the initiative of calling the meeting claimed that Labour councillors had told him it was the best thing to happen, as it removed the threat of disqualification and surcharge while allowing Labour to blame the Conservatives locally for any service cuts. However Ron Stockbridge subsequently resigned as council leader.
However at a party meeting on 10 April the attitude of the council leadership had changed and a significant split opened up.
Council leader George Meehan proposed at a meeting of Labour Party councillors that a legal rate be set at the council meeting the day after, but was defeated by "a clear majority" in favour of delaying a rate until 29 April by which time the council would have met Ministers. Meehan then offered his resignation. At the council meeting Meehan formally proposed the legal rate and then joined with 12 other Labour councillors and the opposition Conservative group to pass it; the majority of the Labour group voted in favour of delay until 29 April. Meehan then left office and Bernie Grant
succeeded him as leader.
was voted down by 20 to 33.
In April the council leadership received a warning from the trade unions representing council workers that their support for the council's stance was limited and "the day you stop paying wages then our fight is with you". A meeting of Labour councillors on 15 April agreed to support a budget of £150.6m, and a council meeting the following day approved it.
holding a place on the Labour Party National Executive Committee
, Sheffield was one of the most prominent Labour councils of the 1980s and Blunkett was an unofficial spokesman on behalf of Labour in local government. One of the rallies held on 6 March to protest against rate-capping was held in Sheffield. On 7 March the council passed a budget (including capital spending which was not subject to the cap) of £249m, which was £31.1m over the cap; £11.8m of the gap was met from reserves. The council then passed a motion calling for income and expenditure to be reconciled and instructed the Policy Committee to prepare a detailed budget. The council did not set the rate to go with the budget but instead passed a motion declaring that it could not set a rate. Later in March the council passed a second resolution which explained that it would not set a rate until learning the outcome of Greenwich borough council's application for judicial review
which was due to be heard on 12 April.
Sheffield's own action for judicial review of its spending limit ended on 2 April when Mr Justice Woolf
refused it permission, ruling that while the High Court had jurisdiction, any matter involving political judgment should be dealt with through the democratic processes; an appeal failed on 2 May. A further meeting on 24 April again postponed setting a rate. By the beginning of May, leading members of the council were acknowledging the risks of their stance: the deputy leader Rev. Alan Billings talked of "asking people to commit political suicide for the greater good", while Blunkett talked in Tribune
of "those who look for corpses .. to prove that there has been a genuine struggle". Blunkett appealed for campaigners to avoid a shambles such as had happened at the GLC.
On 7 May the council came to a crunch meeting at which the council leadership put forward a motion which stopped delaying fixing a rate but instead refused to set a rate until the Government began negotiating. It was understood that this motion would invite immediate legal action. Instead, after a five hour meeting, 20 Labour councillors voted with the Liberal and Conservative groups on the council in favour of an amendment to set a rate within the cap limit; the amendment passed by 46 to 38 with one abstention. After the vote, it was noticed that the rate demands sent out by the council appeared to have been printed before the council had formally set the rate. The problems for Sheffield did not end there as the council leadership asked chief officers to implement the original budget. A report by the district auditor in July declared Sheffield's deficit budget illegal and the council had to instruct the service committees to reduce spending in line with a capped budget.
The response of the Labour leadership was to expel the nine rebels, a move opposed by the Greater London Labour Party and by the majority of Labour Party members in the borough. This move reduced the Labour group to a minority on the council. When the Mayor Bob Ashkettle attempted to put through a budget at a council meeting on 23 April with an 8% rise, legal advice was sought and the motion was ruled unconstitutional. The Liberal group was opposed to this budget, demanding extra spending. The leadership then tried to compromise, but an extra £3.5m in the budget failed to shift the Liberal opposition on 8 May. It was not until a meeting on 14 May 1985 called by the Liberal group that a rate was set by 33 votes to 10.
candidate in a byelection in Hackney's Clissold
ward which had been won by a Labour candidate pledged to the no rate strategy. On 6 March 1985 in the High Court
, Mr Justice Mann issued an interlocutory declaration that the council had a duty to set a rate which did not breach the cap and that it could not use interim borrowing powers. Notwithstanding the judgment and firm advice from the borough solicitor that the council had to set a rate, on 7 March the council passed a resolution declaring that "the council considers it would be impossible to make a rate". The resolution disguised the refusal to set a rate as a delay pending negotiation with the Secretary of State.
On 20 March, council leader Hilda Kean declared that the council would be bankrupt by the middle of April if unable to set a rate and abjured the use of creative accounting to evade the cap. The council slightly softened its policy on 28 March, declaring that it was only deferring making a rate and committing to making a legal rate in due course; a motion to stick to the previous formula was defeated by 32 to 24. The council having ignored the High Court's interlocutory declaration, Mourad Fleming's judicial review application proceeded to trial on 1 April; Fleming agreed to vary an order and let the council use borrowing powers in the 1985/86 financial year, but said that he would ask the court to appoint a receiver to run the council if no rate was set. At the end of the hearing, Mr Justice Woolf
found both Hackney's resolutions of 7 March and 28 March unlawful and quashed them but refused to immediately order the council to set a rate. Instead he adjourned the case to 16 April.
Mr Justice Woolf's judgment on 16 April observed that the council "have determined, irrespective of their legal duty, not to make a rate". Having decided that this was unlawful, he then grappled with the issue of the discretion available to the council of when to set its rate which he found the council had to use reasonably and in the interests of ratepayers. Woolf again declined to issue an order of mandamus
compelling the council to set a rate, instead stating that he would do so unless Hackney indicated it would make a rate within an acceptable timescale. After hearing submissions about what such a timescale would be, he decided to give the council "a relatively liberal period of time in which to give effect to this judgment" and fixed the end of May as the deadline. On 2 May, Hackney also lost its appeal against the ruling in its own judicial review challenge of the Secretary of State's spending guidance, and was refused leave to appeal to the House of Lords. The council was warned by the borough solicitor that the legal costs of attempting further legal challenge would probably be the subject of a surcharge of councillors.
By the middle of May it was clear that enough Labour councillors in Hackney had become willing to vote for a legal budget and that the council would not defy the court judgment. A group of Labour councillors joined with the council's Liberal group to produce an acceptable budget. An attempt to hold a budgeting meeting on 16 May was thwarted when some town hall staff locked up the building and refused to allow councillors in; when the council met on 22 May, it allowed addresses by delegations from trade unions and community groups at which the secretary of the joint shop stewards Alf Sullivan described what was proposed as "a bent budget" introduced to "cover your retreat from the fight". When the vote on the budget was called at 12:45 AM, the chamber was invaded with the result that the meeting was adjourned to the following day. On 23 May the council finally approved a legal budget put forward by Labour councillor Tony Millwood. 24 Labour councillors joined six Conservatives and three Liberals to pass it, while 26 Labour councillors remained opposed. Hilda Kean, who said the decision was a betrayal, resigned the leadership along with her deputy Andrew Puddephatt.
said in Parliament that until a rate was set, ratepayers need not pay anything.
While the leadership was determined not to set a rate, there were moderate Labour councillors who were willing to defy the whip to vote for a legal budget. Supporters sought to prevent them from being put in such a position. On 16 April, council leader Tony Ritchie prevented a meeting called to set a legal rate from continuing by using powers under the council's standing orders to adjourn pending new advice; the meeting lasted only two minutes. A further meeting on 24 April was also swiftly adjourned, although on this occasion it was because Ritchie collapsed and had to be taken to hospital. When the council finally met on 26 April, the chamber was invaded by members of tenants groups and council staff with the result that the meeting broke up and was cancelled by the Mayor.
On 1 May the council managed to meet, and the meeting went on for seven hours of angry debate. It resulted in a legal budget written by Labour moderates, which would have cut the rates, being voted down by the Labour leadership and the Conservative group. A further, more orderly, meeting on 8 May voted down a Conservative budget and a deficit budget proposed as a compromise by a minority faction in the Labour group. The next day, the District Auditor Brian Skinner wrote to all councillors in authorities which had not yet set rates telling them to do so without delay and certainly before the end of May deadline given by the High Court in the Hackney case. The council maintained its defiance at the next meeting on 16 May, but by a margin of only one vote (24 to 23). On 23 May, a vote to continue not setting a rate was passed only on the casting vote
of the Mayor.
As the end of May deadline approached, the Conservative group leader Toby Eckersley voiced his dislike of the pressure put on him to vote for a budget featuring an increase in spending of 34% in order to solve the dispute, especially since the motion also included political criticism of the Conservative government. Finally at a meeting on 30 May, the council voted by 26 to 23 to set a rate at the maximum level allowed, although the budget did not fund £9.5m of spending commitments. The final voting showed that 25 Labour councillors had supported the budget together with one Independent, 21 Labour councillors and two Independents had opposed, while the eight Conservative and two Liberal councillors had joined one Labour councillor in abstaining.
, had chaired the meeting of the Labour London Boroughs in June 1984 at which the strategy of setting no rate had been decided upon, and according to Ken Livingstone, claimed to have come up with the idea. Hodge was one of the public leaders of the campaign and on the evening of Thursday 7 March the council organised a people's festival in the civic auditorium while the council formally voted not to set a rate. On 22 April the council published the results of an opinion poll it had commissioned which showed that 57% of people in Islington supported the council in the struggle, with 20% supporting the Government. Asked what the council should do, the poll found 37% wanted the council to continue not to set a rate, 27% wanted the council to resign and force an election on the issue, and 21% wanted the council to set a legal rate.
When the council met again on 23 April, the members had been warned by District Auditor Brian Skinner of "serious consequences" including surcharge should they decide not to set a rate; Margaret Hodge ignored the advice and commented as she moved the motion that she would not "abandon the collective unity that is so important in the struggle against the Government". However the council sent out a circular requesting ratepayers to volunteer rate payments in accordance with the previous years' demands. The council deliberately took steps to justify its delay in setting a rate by obtaining counsel's opinion; on 26 April Hodge wrote to Brian Skinner declaring that "important [specified] matters justifying such a deferral arose" and that "matters [have been] taken to minimize and cancel any possible losses which might arise".
After a series of warning letters, District Auditor Skinner was invited to Islington town hall on 8 May to meet the council leaders and discuss his draft report on Islington. Skinner found that the streets outside were full of thousands of demonstrators supporting the council, which the councillors insisted had arrived spontaneously. Despite police protection he was kicked when attempting to leave after the meeting, and had to be smuggled out lying on the back seat of a police car covered by coats. An application for an emergency debate in the House of Commons
by Islington North MP Jeremy Corbyn
was turned down that afternoon.
As with other councils still without a budget, the auditor had ordered Islington to set a legal rate by the end of May or face an extraordinary audit. On 30 May, the Local Government committee of the Islington Labour Party narrowly voted to support a legal rate, and the following day Margaret Hodge proposed a legal budget to the council. The galleries were crowded with people urging the council to continue the fight and an amendment to continue to defer setting a rate was moved by Chris Calnan, but the amendment was lost by 34 votes to 10 with six abstentions and Islington duly set a legal rate a few hours before the deadline.
For the moment the council continued, citing the forthcoming judicial review action by Greenwich as justification. In the middle of April, a Labour councillor was quoted by the Hampstead & Highgate Express contemplating alternate strategies of non-compliance and worrying about drifting into surcharge and disqualification "through nothing more than indecision, confusion and default", although the council continued to vote against setting a rate at its meeting on 24 April.
Along with other councils who had set no rate, Camden was sent a statutory report by the district auditor Brian Skinner on 9 May giving them until the end of May to set a rate or face an extraordinary audit. The Conservative opposition thought this move may have been counter-productive, and the council went until 5 June before meeting. This meeting continued until 3 AM when 10 Labour councillors rebelled to vote through a budget proposed by former council leader Roy Shaw which passed by 33 to 26. Shaw, who was a member of the Audit Commission
, had agreed with the Deputy Controller of the commission that he would be alerted before his council position came into conflict with his audit role. The budget agreed by Camden was prima facie
unbalanced and illegal as it showed expenditure of £132.46m against a cap of £117.609m, but by counting income from the GLC's 'stress borough' fund and using accounting tricks, it came into balance.
had signed the personal statement published in Labour Herald on 22 June 1984. The council duly passed a resolution declaring its inability to set a rate, and John Austin-Walker accepted that his refusal to cut spending "may place us beyond the law". The council brought its own proceedings for Judicial Review
against the Government's decision to cap its budget, which was set down for initial hearing on 12 April with the main hearing not until 19 June. In April the council sent out standing order forms to ratepayers which were calculated on the basis of a budget at the cap limit, but denied that this marked a concession.
On 19 April the council was warned by the District Auditor Brian Skinner that the Judge's decision in the Hackney case not to require the council to set a rate did not give Greenwich the same leeway, but on 24 April the council again refused to set a rate. The auditor followed up with a formal audit report on 9 May, giving a deadline of the end of that month to set a rate, accompanied by counsel's opinion which stated that the pending High Court case did not override the council's legal duty to make a rate. The council had obtained its own counsel's opinion that refusing to make a rate pending the outcome of the High Court case was reasonable, and the auditor's opinion took steps to nullify it by stating "A councillor cannot escape from being guilty of misconduct by relying on advice of counsel where that advice is shown to be wrong". The borough solicitor Tony Child continued to insist that the council still had discretion to refuse to make a rate.
Despite the auditor's deadline, Greenwich voted by 39 to 19 against setting a rate on 29 May, although it quietly stopped using the demand for spending concessions as a reason for its actions. A 12-hour council meeting called on Saturday 8 June eventually voted to set a rate, under two weeks before the High Court hearing on which the council had pinned its hopes. The Judicial Review went ahead but on 18 July Greenwich was notified that it had lost: Mr Justice McNeill ruled that the Government acted lawfully. Greenwich appealed but the Court of Appeal upheld the judgment.
On 10 June, the auditor sent out letters to the Liverpool councillors reporting that the council's failure to set a rate that financial year had already caused a loss of £106,103, and notifying them of an extraordinary audit under section 20 of the Local Government Finance Act 1982. According to council deputy leader Derek Hatton, the letters had the effect of prolonging the dispute: "According to McMahon's assessment of the situation, we had already broken the law. So what the hell had we to lose by doing it again?" Their continued defiance took the form of a deficit budget involving a 9% rise in rates, which was to produce £236m, but also approving £265m of spending. The budget was approved by 49 to 42 on 14 June, with five Labour councillors opposed. The council leadership saw the deficit budget as a tactic to comply with the law in one sense and so buy time.
The council was given notice of an extraordinary audit on 26 June with the auditor concentrating on the council's loss of interest on payments from the Department of Health and Social Security (which would have covered the rate rebates element in housing benefit subsidy), and on payments from the Treasury Valuer (which paid contributions in lieu of rates on crown property). The amount of both of these payments depended on the level of rates, and so no payment could be made until the level of rates was set.
s. Meanwhile council officials estimated that the failure to set a rate by 1 May had already cost the council £170,000 in lost interest.
As had happened on other councils, the district auditor wrote to all councillors on 9 May telling them that an extraordinary audit would follow if no rate had been set by the end of the month; council leader Ted Knight insisted that the council would not set a rate at its meeting on 15 May "or any time after until the Government returns the money it has taken from us". At this meeting a third Labour councillor, Vince Leon, joined Boston and Cakebread in voting for legal budgets. Boston and Cakebread were removed from all committees by the Lambeth Labour Group at the end of the month, and Boston was told to resign her seat by her local ward Labour Party (she refused). Cakebread received the support of his branch.
The district auditor, Brian Skinner, found that his permission to use offices in Lambeth town hall allocated to NALGO was withdrawn in mid-May; he was also surprised to discover his photograph on a threatening mock 'Wanted' poster
in his local supermarket
. Skinner's employers, the Audit Commission
, sought police assistance in tracking down and destroying copies of the poster. After a council meeting on 5 June again rejected a legal budget (by 32-30), the Audit Commission stated that a letter would be sent immediately to all councillors who had not voted for the motion (possibly including two Conservatives who had been absent) notifying them of an extraordinary audit and possible surcharge over lost interest which by then amounted to over £270,000.
While the council finances were sustained by loans amounting to £29m from the Public Works Loan Board
, the resignation of Labour councillor Mike Bright on 21 June 1985 put those supporting continued defiance in the minority. Bright wrote a resignation letter revealing he saw no hope of success and expected to be surcharged: "Martyrdom, however heroic, is usually the sign of a lost cause". Ted Knight described Bright as a "victim of [the state] machine". After a formal notice of an extraordinary audit was published on 18 June, 32 councillors received notice on 27 June that the auditor deemed them liable to a surcharge of £126,947. The response of the councillors was to set up a 'Fighting Fund' in their defence, which was supported at its launch by celebrities Jill Gascoine
, Frances de la Tour
, Matthew Kelly
, and Timothy West
; the Labour group debated whether Mike Bright ought to be eligible for help from the fund.
At the next council meeting on 3 July, there was uproar after members of Vauxhall
Constituency Labour Party
unfurled a banner from the public gallery behind the Conservative group. When Conservative councillor Tony Green tore the banner down, Labour councillor Terry Rich rushed across to confront him and was only held back in a headlock by another councillor. The meeting was adjourned for 20 minutes. When it resumed, Janet Boston and Stuart Cakebread moved a legal rate which was passed by 32 to 31. The council was able to avoid cuts in planned spending with the aid of additional £5.5m housing subsidy from the Government and £6m from the Greater London Council's 'stress boroughs' scheme, the Lambeth Fighting Fund therefore claimed the campaign had been a success "in financial terms".
The Lambeth Fighting Fund had raised £74,000 by the opening of the High Court case, of which £69,000 had already been spent. The council had also spent £31,050 on publicity for what it termed "Lambeth Rates Democracy", spending which was criticised by the Conservative group. The High Court delivered its judgment on 6 March 1986, finding heavily against the councils. Lord Justice Glidewell
described the stance of the councillors as "mere political posturing"; Mr Justice Caulfield described the evidence of wilful misconduct as "crushing" and the councillors' stance as having "reached a pinnacle of political perversity".
The judgment came just before full council elections were due in Lambeth, which had elections for every seat once every four years. If the councillors appealed and lost, they would be disqualified in the middle of the term, endangering Labour control of the council. The Lambeth Labour group decided (with seven dissenting) that it was better not to appeal, accept the disqualifications and select replacement candidates for the impending elections. After holding a special meeting to transfer running of the council up to the election to a special committee consisting of three Labour councillors who had not been surcharged (Janet Boston, and two had been elected in byelections after the rate was set), the councillors were disqualified on 30 March. The Transport and General Workers Union ended financial support for the Liverpool and Lambeth councillors at the beginning of April, having spent £107,000 up to then. At the end of July 1986, the surcharged Lambeth councillors were given 21 months to pay off the surcharges; they were to pay £5,000 per month between them.
Liverpool had elections three years out of four, with one third of councillors elected in each election. The Liverpool councillors did appeal - bringing in the argument that the extraordinary audit had not notified the councillors of their right for an oral hearing to put their case before making a finding of wilful misconduct. The Court of Appeal agreed that an oral hearing ought to have been allowed, but that the subsequent High Court hearing had cured that deficiency. The councillors then appealed to the House of Lords which unanimously rejected the appeal on 12 March 1987, ruling that the auditor's procedure was fair and not prejudiced against the council. The total surcharge to be paid by 47 current and former councillors (two had died in the meantime) amounted to £333,000.
Just as the Lambeth councillors' five year disqualification was ending, they were sent further letters inviting them to attend a hearing at Lambeth Town Hall on 3 April 1991 which was to look at the final year's accounts for 1985-86. The auditor was looking into whether the council's final outturn, which showed an additional loss of interest amounting to £212,000 over and above the amount surcharged in 1986, should be the subject of a new surcharge. Former council leader Ted Knight described it as a "witch hunt", asserting that it had been a political decision by the Government to suspend the councillors from office for a further five years and that it amounted to being tried twice for the same offence. No further surcharge was levied.
The redundancy notices were issued on 27 September, together with a letter from the council's leader and deputy leader (John Hamilton and Derek Hatton) explaining that there was no intention to make any employee redundant but that the notices were a legal requirement. With time running out, the council had to hire taxis to distribute the notices. At the Labour Party conference the following week, David Blunkett agreed with Hatton that the GLC's Director-General Maurice Stonefrost could offer advice to Liverpool. Stonefrost suggested increasing rates by 15%, and cutting the housing programme. The council's budget problems for the 1985-86 financial year were only solved when the council removed £23m from its capital budget to fund revenue spending, and borrowed £30m from Swiss banks to replenish the capital fund. The council also transferred £3m in loans which it had given to other Labour councils and found £3m of budget savings. The council's Finance Committee approved this plan on 26 November 1985.
, which was a body established by (although operationally independent of) central government. Given the highly politicised fight, there was speculation that the Government was encouraging the Commission. Looking back on the history, Martin Loughlin noted that the Government did not appear to be formally directing the Commission, but that there was probably extensive consultation. The Commissioners had on 6 June 1985 directed the extraordinary audits of Lambeth and Liverpool, although by that time the district auditors were already planning to take this course. The auditors calculated the loss to the council as being the amount lost from interest payments on the amount paid by the Department of Health and Social Services and the Treasury Valuer which were unable to be paid until a rate was set; Martin Loughlin notes that this interest had instead accrued to the Government and therefore no money was lost to the public purse.
Given that other councils went into the new financial year having deliberately set no rate, and seven had incurred financial loss through their delay, Audit Commissioners considered whether to subject them to the same audits as had been ordered on Lambeth and Liverpool. As the formal notice of surcharges were being sent to the Lambeth and Liverpool councillors in autumn 1985, it was not clear to the Commissioners whether there was a significant distinction between them and the councils which had backed down earlier. At regular meetings of the Commission, deputy controller Cliff Nicholson had to give an update; his regular answer was that auditors were awaiting information from the councils before they could proceed. There were several reasons to delay action: the Lambeth and Liverpool appeals were proceeding, ratepayers were separately objecting to the accounts, and new auditors in Islington and Hackney were being challenged by the councils. The Commission also needed legal advice whether to proceed against all seven councils together, or one at a time.
A Conservative member of the Commission, Ian Coutts, became concerned at the prolonged delay. The history of the Audit Commission, "Follow the Money", notes that the controller and deputy controller had decided before the end of 1985 that having acted on Lambeth and Liverpool, it would be better to take no action on the others, and then sought reasons to justify this lack of action. One of the reasons for this stance was concern that Lambeth and Liverpool appeals might be successful; another was that no council sought to follow the same strategy in the next financial year. Writing a decade earlier, Martin Loughlin also believed that having made an example of Lambeth and Liverpool, the most confrontational councils, the Audit Commission had no need to pursue the others.
After the High Court ruled in favour of the auditor, the Commission obtained legal advice from Robert Alexander
QC who agreed that taking on other councils would be useless. David Blunkett agreed in an interview in New Society in March 1986 that pursuing other councils would look "highly political" and would negate what the Commission had achieved in auditing Lambeth and Liverpool. Although the district auditor for Sheffield prepared two papers in March 1987, one justifying the issue of a certificate of wilful misconduct and the other not, and obtained a legal opinion advising him to submit the first, he decided to take no action; no other auditor sought to pursue losses due to late setting of rates.
, a leading local government academic, regarded it as remarkable that they had neglected to block this gap in the Rates Act 1984. The Local Government Act 1986
, which in section 1 required councils to set a rate by 1 April each year, received Royal Assent on 26 March 1986.
This Act was followed by the Local Government Act 1988
, which gave auditors power to issue a 'prohibition order' to negate any decision by a local authority which would lead to a breach in the law, and also gave auditors the power to initiate a judicial review of any decision or failure to act which might have an effect on the council's accounts. The Audit Commission welcomed the second power in particular as it was broadly worded. The Local Government and Housing Act 1989 then required local authorities to designate one of their officers as a "Monitoring Officer" who would have the duty of alerting the Director of Finance to any legally questionable decision.
told the party's Local Government committee on 10 March 1986 that there was no possibility of a Labour government extending a retrospective indemnity from surcharges.
The Labour Party conference was held in the week that Liverpool's council employees received their redundancy notices. On the morning that Labour Party leader Neil Kinnock
was due to make his speech, an article by the Anglican and Roman Catholic Bishops of Liverpool David Sheppard
and Derek Worlock denounced the Militant leadership and council's "policy of confrontation". Kinnock's speech denounced "the grotesque chaos of a Labour council .. hiring taxis to scuttle round a city, handing out redundancy notices to its own workers". In the aftermath of the speech, the Labour Party National Executive Committee
suspended the Liverpool district Labour Party and ordered an investigation, which resulted eventually in the expulsion of all Militant tendency members from the Labour Party.
which criticised the Commission's "apparent inability to date to make any impact" on it. Council practices grew more sophisticated as the number of Public Interest Reports issued by district auditors increased. However it was only legislative changes which succeeded in stopping the unorthodox financial practices. The Local Government Act 1985
introduced automatic precept limitation for the new authorities created by it in the Metropolitan counties
.
Just as the fight between local authorities and the Government over rate-capping was starting in March 1985, the Government was deciding whether to proceed with a proposal for a new form of tax for local government replace to replace Rates, which would take the form of a flat rate charge for each individual adult resident living within the area of the local authority. According to one published history of this reform, the fight and the acrimony over rate-capping helped to encourage the Government and the Prime Minister in particular to support this change. This proposal was eventually enacted as the Community Charge
. For the 1986-87 financial year, twelve local authorities were rate-capped. Ten of them had been rate-capped the previous year (Basildon, Camden, Greenwich, Hackney, Haringey, Islington, Lambeth, Lewisham, Southwark and Thamesdown); two were newly selected, Liverpool and Newcastle upon Tyne
. The following year, 1987–88, saw 20 authorities rate-capped and in 1988-89 there were 17.
In June 1990, after a favourable opinion from the Government's law officers, it was decided to use the power to issue a general limitation on local government budgets in all authorities which had been enacted in the Rates Act 1984 but had remained unused until then. This decision removed most local government financial autonomy. This 'universal capping' continued from the 1991-92 financial year until 1998-99; when it was ended the Secretary of State took reserve powers under the Local Government Act 1999 to regulate increases in the Council Tax
(which had replaced the Community Charge). The Secretary of State was also allowed to require reduction in individual local authorities' budgets.
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
local councils
Local government in the United Kingdom
The pattern of local government in England is complex, with the distribution of functions varying according to the local arrangements. Legislation concerning local government in England is decided by the Parliament and Government of the United Kingdom, because England does not have a devolved...
in 1985 which aimed to force the Conservative
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
government of Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
to withdraw powers to restrict the spending of councils. The affected councils were almost all run by left-wing Labour Party
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
leaderships. The campaign's tactic was that councils whose budgets were restricted would refuse to set any budget at all for the financial year 1985-86, requiring the Government to intervene directly in providing local services, or to concede. However, all 15 councils which initially refused to set a rate eventually did so, and the campaign failed to change Government policy. Powers to restrict council budgets have remained in place ever since.
Rising local government spending had long been a concern of central government, but direct powers to limit individual council budgets were controversial and some Conservative Party members opposed them. While the measure was passing through Parliament, internal dissent within Liverpool
Liverpool
Liverpool is a city and metropolitan borough of Merseyside, England, along the eastern side of the Mersey Estuary. It was founded as a borough in 1207 and was granted city status in 1880...
City Council led to prolonged delay in budgeting which only ended when Government grants were increased. Believing Liverpool to have forced a concession, left-wing Labour council leaders decided to emulate their approach, despite warnings by Liverpool that success was unlikely. Refusing to set a budget was illegal and the campaign was divisive: it did not unify the left-wing of the Labour Party in its support and the party leadership made it clear its lack of support.
Eight councils ended their campaign when the leadership proposed a legal budget, six when councillors from the majority group joined opposition councillors to overrule the leadership; Lewisham
Lewisham London Borough Council
Lewisham London Borough Council is the local authority for the London Borough of Lewisham in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. The council is unusual in that its executive function is controlled by a directly elected mayor of...
conceded in unique circumstances. Two councils, Lambeth
Lambeth London Borough Council
Lambeth London Borough Council is the local authority for the London Borough of Lambeth in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London...
and Liverpool
Liverpool City Council
Liverpool City Council is the governing body for the city of Liverpool in Merseyside, England. It consists of 90 councillors, three for each of the city's 30 wards. The council is currently controlled by the Labour Party and is led by Joe Anderson.-Domain:...
held out for longer than others and were subjected to an extraordinary audit
Audit
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and energy conservation.- Accounting...
which resulted in the councillors responsible for not setting a budget being required to repay the amount the council lost in interest, and also being disqualified from office. Liverpool's delay in setting a budget caused a severe financial crisis which was denounced by the Labour Party leader Neil Kinnock
Neil Kinnock
Neil Gordon Kinnock, Baron Kinnock is a Welsh politician belonging to the Labour Party. He served as a Member of Parliament from 1970 until 1995 and as Labour Leader and Leader of Her Majesty's Loyal Opposition from 1983 until 1992 - his leadership of the party during nearly nine years making him...
.
Rates
Until 1989 in Scotland and 1990 in England and Wales, local councils raised their own revenue through a tax known as ratesRates (tax)
Rates are a type of property tax system in the United Kingdom, and in places with systems deriving from the British one, the proceeds of which are used to fund local government...
. Every property, whether residential or commercial, was given a rateable value which estimated the annual rent it would bring in. In the budgeting process the council would work out the total amount it needed to raise locally, and then divide it by the total rateable value within its boundaries to produce the proportion of the rateable value that each householder or business would have to pay. This proportion was known as 'the rate' for the year and the process was therefore known as 'setting a rate'.
Where there were two levels of local government, one of them (the lower tier) was designated as the principal local authority, with the higher tier authority setting its rate in the form of a precept
Precept
A precept is a commandment, instruction, or order intended as an authoritative rule of action.-Christianity:The term is encountered frequently in the Jewish and Christian Scriptures; e.g.:...
which was added to the rate levels set by the lower tier authorities it covered. The lower tier was responsible for collecting the whole amount and then passing on the proceeds of the precept to the authority which had set it.
Targets and grant penalties
The Conservative PartyConservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
came to power in 1979 committed to reducing public spending, and reducing spending by local authorities was part of this desire from the start. As early as November 1979 the Environment Secretary
Secretary of State for the Environment
The Secretary of State for the Environment was a UK cabinet position, responsible for the Department of the Environment . This was created by Edward Heath as a combination of the Ministry of Housing and Local Government, the Ministry of Transport and the Ministry of Public Building and Works on 15...
Michael Heseltine
Michael Heseltine
Michael Ray Dibdin Heseltine, Baron Heseltine, CH, PC is a British businessman, Conservative politician and patron of the Tory Reform Group. He was a Member of Parliament from 1966 to 2001 and was a prominent figure in the governments of Margaret Thatcher and John Major...
announced his intention to take powers to curb overspending local authorities. From the financial year 1980-81, councils which were deemed to be overspending had their central government grants reduced; in 1981-82, a system known as 'targets and penalties' was introduced.
However, the election of many more Labour councillors and Labour councils in local elections in 1981 and 1982, many of whom were associated with the left-wing, meant that more councils were explicitly committed to increasing public spending. Local government spending started to rise again in 1982-83. As councils found their grants cut, their response was not to cut their budgets, but to increase the rates even further to compensate. Pressure within the Government, especially from the Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
and Chief Secretary
Chief Secretary to the Treasury
The Chief Secretary to the Treasury is the third most senior ministerial position in HM Treasury, after the Prime Minister and the Chancellor of the Exchequer . In recent years, the office holder has usually been given a junior position in the British Cabinet...
Leon Brittan was applied to the Department of the Environment to take more effective action. On 16 July 1982 Brittan told the conference of the Society of Local Authority Chief Executives that continued overspending was "bound to cause central government to intervene ever more obtrusively and seek ever greater powers over local authority finances".
Cabinet committee
In June 1982, a cabinet committee had been set up to look at local government finance, on which Brittan sat. At this committee the idea of central government taking powers to limit rates was first developed; however it proved very unpopular with most Ministers on the committee: Michael HeseltineMichael Heseltine
Michael Ray Dibdin Heseltine, Baron Heseltine, CH, PC is a British businessman, Conservative politician and patron of the Tory Reform Group. He was a Member of Parliament from 1966 to 2001 and was a prominent figure in the governments of Margaret Thatcher and John Major...
and his deputy Tom King
Tom King, Baron King of Bridgwater
Thomas Jeremy King, Baron King of Bridgwater, CH, PC , is a British politician. A member of the Conservative Party, he served in the Cabinet from 1983–92, and was the Member of Parliament for the constituency of Bridgwater in Somerset from 1970-2001...
thought it would be too complicated and possibly unconstitutional, and the Attorney General
Attorney General for England and Wales
Her Majesty's Attorney General for England and Wales, usually known simply as the Attorney General, is one of the Law Officers of the Crown. Along with the subordinate Solicitor General for England and Wales, the Attorney General serves as the chief legal adviser of the Crown and its government in...
Sir Michael Havers
Michael Havers, Baron Havers
Robert Michael Oldfield Havers, Baron Havers PC, QC was a British barrister and Conservative politician. From his knighthood in 1972 until becoming a peer in 1987 he was known as Sir Michael Havers.- Early life :...
had to give advice. When the committee reported to Cabinet on 17 January 1983 against rate limitation, Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
rejected its report and instructed Tom King (who had since been promoted to Environment Secretary) to come up with a foolproof system.
Rate limitation proposed
King put Terry Heiser, a civil servant then Deputy Secretary in charge of the Finance and Local Government at the Department of the Environment, in charge of developing the policy; Heiser produced two schemes known as 'selective' and 'general' rate limitation which were approved at a Cabinet meeting on 12 May – three days after Mrs Thatcher had called a general electionUnited Kingdom general election, 1983
The 1983 United Kingdom general election was held on 9 June 1983. It gave the Conservative Party under Margaret Thatcher the most decisive election victory since that of Labour in 1945...
. The Conservative Party
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
manifesto
Manifesto
A manifesto is a public declaration of principles and intentions, often political in nature. Manifestos relating to religious belief are generally referred to as creeds. Manifestos may also be life stance-related.-Etymology:...
declared:
The Conservatives' victory in the election was followed on 1 August 1983 by a white paper
White paper
A white paper is an authoritative report or guide that helps solve a problem. White papers are used to educate readers and help people make decisions, and are often requested and used in politics, policy, business, and technical fields. In commercial use, the term has also come to refer to...
which put more details on the proposal. It stated that authorities would be selected on the basis of several factors, not only the absolute level of spending in comparison with the 'Grant Related Expenditure' (the notional level set by the Government needed to provide a standard level of service):
Identifying the local authorities which were spending significantly more than they received in grants and more than the government's targets, all were controlled by the Labour Party except for the City of London Corporation. The Government announced that it would aim to pass legislation in 1984, and then select a small number of councils to have their rates capped in 1985-86. The proposal to cap rates was controversial and many in local government were concerned where it would lead to; in particular the Audit Commission
Audit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
, responsible for overseeing local government spending, was concerned that it might be drawn in to a political fight, casting doubt on its independence.
Parliamentary passage of the Rates Bill
On 20 December the Rates Bill was published, with the new Environment Secretary Patrick JenkinPatrick Jenkin, Baron Jenkin of Roding
Charles Patrick Fleeming Jenkin, Baron Jenkin of Roding, PC is a British Conservative politician and the great-grandson of the scientist Fleeming Jenkin....
making it clear he would resign if he could not get it enacted. It was anticipated that the Bill would be highly controversial especially with members of the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
and Jenkin was said to have reminded them of the Salisbury Convention
Salisbury Convention
The Salisbury Convention is a constitutional convention in the United Kingdom which puts forward that the House of Lords will not oppose the second or third reading of any government legislation promised in its election manifesto.Following a landslide Labour general election victory in...
which prevented the Lords from rejecting any Bill mentioned in an election manifesto. The Bill was soon under criticism in Parliament by Conservative MPs Geoffrey Rippon
Geoffrey Rippon
Geoffrey Frederick Rippon, Baron Rippon of Hexham, PC, was a British Conservative politician. He was Chairman of the European-Atlantic Group....
and Anthony Beaumont-Dark
Anthony Beaumont-Dark
Sir Anthony Michael Beaumont-Dark was a British politician.He was a Conservative City Councillor for Birmingham from 1956 to 1967 and MP for the constituency of Birmingham Selly Oak from 1979 to 1992...
, and outside it by David Howell
David Howell, Baron Howell of Guildford
David Arthur Russell Howell, Baron Howell of Guildford, PC , is a British Conservative politician, journalist, and economic consultant. Having been successively Secretary of State for Energy and then for Transport under Margaret Thatcher, Howell is now a Minister of State in the Foreign Office...
.
When the Bill was debated on 17 January 1984, the opposition was led by former Prime Minister Edward Heath
Edward Heath
Sir Edward Richard George "Ted" Heath, KG, MBE, PC was a British Conservative politician who served as Prime Minister of the United Kingdom and as Leader of the Conservative Party ....
who attacked the centralisation of power; Heath led a total of 24 Conservative MPs in voting against the Bill, while 11 more abstained including Francis Pym. With opposition MPs debating the Bill in detail, the Government was forced to move a guillotine motion
Cloture
In parliamentary procedure, cloture is a motion or process aimed at bringing debate to a quick end. It is also called closure or, informally, a guillotine. The cloture procedure originated in the French National Assembly, from which the name is taken. Clôture is French for "ending" or "conclusion"...
on 29 February, which was passed despite some Conservative protests. After making a minor concession exempting smaller councils from selective capping, the Bill went to the Lords where the Labour opposition moved an amendment asserting that it would "gravely weaken local democracy" and rejecting the Bill. The amendment was lost by 235 to 153, the Government regarding it as an issue of confidence which justified them summoning many Peers who rarely attended.
The main clause giving the Government power to cap rates was supported by the Lords with a majority of 10 votes despite some Conservative abstentions, and after some more concessions the Government saw the Bill through the Lords without a defeat. The Rates Act 1984 received Royal Assent on 26 June.
Liverpool budget-setting in 1984
Militant Tendency
The Militant tendency was an entrist group within the British Labour Party based around the Militant newspaper that was first published in 1964...
, a group which had a majority of the active members of the Liverpool District Labour Party which directed the activities of the council group. The new leadership inherited a budget set by the Liberal Party
Liberal Party (UK)
The Liberal Party was one of the two major political parties of the United Kingdom during the 19th and early 20th centuries. It was a third party of negligible importance throughout the latter half of the 20th Century, before merging with the Social Democratic Party in 1988 to form the present day...
administration which preceded them, which it considered was insufficient to meet their commitments to the electorate to the tune of £25m. The council, under Militant's guidance, began in Summer 1983 a political fight to win more resources from the Government.
With no alteration in the Government's stance, there was already talk of the council adopting illegal tactics in its 1984 budgeting, and on 19 March the District Auditor Les Stanford wrote to every councillor warning that the consequences of not setting a legal rate was a budget crisis, with surcharge
Surcharge (sanction)
In the United Kingdom a public servant, for example a local government officer, who has unlawfully spent public funds, or caused loss to a public authority through misconduct may be surcharged to recover public money...
and disqualification for councillors. A group of six Labour councillors under the leadership of Eddie Roderick declared they would not approve an illegal budget, but the majority of the Labour group thought the letter was a tactic to scare them into backing down. The council leadership put forward an illegal budget on 29 March; after an eight hour meeting, Roderick put forward an amendment to delay setting a budget until 11 April in order to let officers prepare a legal one. A suggestion that council leader John Hamilton
John Hamilton (Liverpool)
John Hamilton was a British politician. He was a member of the Labour Party and Leader of Liverpool City Council from 1983 to 1986.-Municipal life:...
and chair of Finance Tony Byrne form an emergency committee to control finances in the interim was accepted but the delaying amendment fell: it had the support of the Conservatives and six councillors in Roderick's group but the Liberal councillors opposed it and supporters of the council leadership abstained. Instead the six Labour rebels, 30 Liberals and 18 Conservatives voted to postpone consideration.
A further budgeting meeting on 25 April saw the illegal budget again presented but owing to the opposition of the Roderick group it was defeated; the Conservative and Liberal groups could not agree on an alternative and the matter was allowed to drop; among the council leadership it was decided to delay setting a rate until after the results of local elections to one third of the council. In the event Labour gained seven seats, which gave a majority even if the Roderick Group opposed. A further council meeting was set for 15 May, but on 9 May Patrick Jenkin announced that he would be going to Liverpool on 7 June to look at housing conditions, and would be willing to meet council leaders while there. The council therefore postponed budgeting again until the outcome of these talks was known.
Nothing resulted from the meeting with the councillors on 7 June, with the council leadership still putting forward an illegal budget, but Jenkin agreed to meet with them again in London on 9 July. At this meeting Jenkin told the councillors that he could offer about £20m extra money for housing. This concession was treated by the leading members of Liverpool City Council as a major victory, and two days later the council set a legal budget.
Reactions to Liverpool
Other commentators agreed that Liverpool's tactics had been successful: The TimesThe Times
The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...
printed a leader
Editorial
An opinion piece is an article, published in a newspaper or magazine, that mainly reflects the author's opinion about the subject. Opinion pieces are featured in many periodicals.-Editorials:...
which began "Today in Liverpool municipal militancy is vindicated" and argued that the Government had subverted "its whole local government financial policy of the past four years; it issues an open invitation to councils to say the caps don't fit and they won't wear them". Within the Conservative government the political impact was immense. While the Government had not wanted to engage in a major fight in 1984 at the same time as the miners' strike
UK miners' strike (1984–1985)
The UK miners' strike was a major industrial action affecting the British coal industry. It was a defining moment in British industrial relations, and its defeat significantly weakened the British trades union movement...
, attitudes quickly hardened. Margaret Thatcher, in a lecture in November 1984 delivered a month after she survived an assassination attempt
Brighton hotel bombing
The Brighton hotel bombing happened on 12 October 1984 at the Grand Hotel in Brighton, England. The bomb was planted by Provisional Irish Republican Army member Patrick Magee, with the intention of assassinating Prime Minister Margaret Thatcher and her cabinet who were staying at the hotel for the...
that killed five senior Conservatives, referred to a spectrum of groups undermining rule of law: "At one end of the spectrum are the terrorist gangs within our borders, and the terrorist states which finance and arm them. At the other are the Hard Left operating inside our system, conspiring to use union power and the apparatus of local government to break, defy and subvert the law."
On the left, many thought that the outcome of Liverpool's budget dispute in 1984 had vindicated its confrontational approach.
Formulating the campaign
While the Liverpool dispute was still unresolved at the end of May 1984 there was already pressure on the left-wing leadership of Lewisham London Borough CouncilLewisham London Borough Council
Lewisham London Borough Council is the local authority for the London Borough of Lewisham in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. The council is unusual in that its executive function is controlled by a directly elected mayor of...
to copy the Liverpool option and confront the Government with a deficit budget. At a meeting of Labour controlled London boroughs in mid-June, the idea of a united strategy of many councils refusing to levy a rate was introduced. The idea caught on, especially with the leaders of the four South London boroughs of Lambeth, Southwark, Lewisham and Greenwich, and with John McDonnell
John McDonnell (politician)
John Martin McDonnell is a British Labour Party politician, who has been the Member of Parliament for Hayes and Harlington since 1997; he serves as Chair of the Socialist Campaign Group, the Labour Representation Committee, and the "Public Services Not Private Profit Group"...
, chair of the finance committee of the Greater London Council
Greater London Council
The Greater London Council was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council which had covered a much smaller area...
. On 22 June 1984, they signed a statement published in Labour Herald which outlined the strategy.
The day after Labour Herald was published, left-wing council leaders met in Liverpool to discuss tactics. The strategy of many councils refusing to levy rates was heavily discussed: John Austin-Walker
John Austin (politician)
John Eric Austin, formerly known as John Austin-Walker, is a British Labour Party politician, who was the Member of Parliament for Woolwich from 1992 to 1997 and for Erith and Thamesmead from 1997 to 2010.-Early life:...
, leader of Greenwich London Borough Council
Greenwich London Borough Council
Greenwich London Borough Council is the local authority for the London Borough of Greenwich in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Greenwich is divided into 17 wards, each electing three councillors...
was quoted saying that enough councils would join "sufficient .. to force the Government's hand". Especially in London the policy was approved by groups of Labour councillors, and by the Greater London Labour Party executive.
The Labour Party's official line was to oppose the strategy as it was illegal. Over the weekend of 7–8 July, Labour councillors met at a conference organised by the Party in Sheffield; as the invitations included moderate councils, the meeting was expected to endorse the official line. The host, leader of Sheffield city council David Blunkett
David Blunkett
David Blunkett is a British Labour Party politician and the Member of Parliament for Sheffield Brightside and Hillsborough, having represented Sheffield Brightside from 1987 to 2010...
wrote a paper for the conference which said that "collective action, achieving Government retreat, and not martyrdom, is the objective". The meeting adopted an attitude of non-compliance, with many councillors willing to break the law; there were also hints from Liberal spokesman on local government Simon Hughes
Simon Hughes
Simon Henry Ward Hughes is a British politician and Deputy Leader of the Liberal Democrats. He is Member of Parliament for the constituency of Bermondsey and Old Southwark. Until 2008 he was President of the Liberal Democrats...
that Liberal councillors may do the same. Non-compliance included refusing to use the system in the Rates Act which allowed a council to ask for a reassessment of its cap: to do so meant supplying any information the Secretary of State required, and gave the Secretary of State power to impose "such requirements relating to its expenditure or financial management as he thinks appropriate" on the council. Labour-run councils regarded this provision as inviting a Conservative minister to undertake detailed scrutiny of their policies with power to change them, which they refused to countenance.
Options under consideration
Once the list of councils to be capped was known, their leaders began meeting regularly under the auspices of the Local Government Information UnitLocal Government Information Unit
The Local Government Information Unit is a London based thinktank and registered charity. Established in 1983 as a membership organisation for UK local authorities, the LGiU provides policy services and seeks to influence national policy, particularly in relation to local government and local...
, being joined by some uncapped councils (including Newham, Liverpool and Manchester) who decided to follow the same strategy because of the effect of grant penalties on their budget. Five strategies were under consideration:
- Delaying making a rate indefinitely, with the prospect of the council running out of money and defaulting on loans
- Set a deficit budget with a legal rate or precept, but refusing to cut spending to match
- Set a rate above the cap
- Refuse to make a rate or precept at all
- Resigning en masse, or refusing to act as a governing party and going into opposition.
Of these options, the first was heavily advocated by the rate-capped councils from south London. It was strongly opposed by Liverpool, where the deputy leader Derek Hatton
Derek Hatton
Derek 'Degsy' Hatton is a broadcaster, businessman and after-dinner speaker. He won celebrity status as a local politician in Liverpool during the 1980s, where he was deputy leader of the city council, and a supporter of the Trotskyist Militant Tendency.-Early life:He attended Liverpool Institute...
regarded it as "a totally negative strategy", and Militant supporting councillor Felicity Dowling complained that she had spent months arguing publicly against a formal 'no rate' stance which would have serious consequences. Liverpool felt obliged to go along with the other councils for the sake of unity although they felt sure that some of the leaders would not carry their groups in support and most of the other councils would soon drop out.
Labour Party conference
The councils facing rate-capping, together with others who were not capped but supported the campaign, hoped to get the Labour Party to vote to support their approach at the party's conference at Blackpool in early October. Local government was debated on the morning of Wednesday 3 October, with three issues to be voted on. The National Executive CommitteeNational Executive Committee
The National Executive Committee or NEC is the chief administrative body of the UK Labour Party. Its composition has changed over the years, and includes representatives of affiliated trade unions, the Parliamentary Labour Party and European Parliamentary Labour Party, Constituency Labour Parties,...
sought approval for a statement which endorsed non-compliance with the Government and called for unity, but did not explicitly support illegality. There were then two composite motions
Compositing (democracy)
In deliberative procedure, compositing is the process of combining several motions into one composite motion.The process of compositing motions may be desirable for two reasons. First, it can save the time of an assembly by avoiding presenting two or more similar motions...
; the first (composite 42), moved by the National Union of Public Employees
National Union of Public Employees
The National Union of Public Employees was a British trade union which represented public sector workers. The union was founded in 1908 as the National Union of Corporation Workers, which split from the Municipal Employees Association, following Albin Taylor's dismissal as General Secretary...
, followed the lines of the NEC statement but supported councils framing budgets "which can be defined as technical illegality". The second (composite 43) was moved by Derek Hatton on behalf of Liverpool Broadgreen
Liverpool Broadgreen (UK Parliament constituency)
Liverpool Broadgreen was a parliamentary constituency centred on the Broadgreen suburb of Liverpool. It returned one Member of Parliament to the House of Commons of the Parliament of the United Kingdom....
Constituency Labour Party
Constituency Labour Party
A Constituency Labour Party is an organisation of members of the British Labour Party who live in a particular UK parliamentary constituency in England, Scotland and Wales. The Labour Party in Northern Ireland has, since February 2009, been organised as a province-wide Constituency Labour Party...
declared support for "any councils which are forced to break the law as a result of the Tory government's policies".
On the previous day, Neil Kinnock had told the party not to "scorn legality", but the General Secretary of NUPE Rodney Bickerstaffe
Rodney Bickerstaffe
Rodney Bickerstaffe has been president of the UK National Pensioners Convention and was leader of Britain's largest trade union, UNISON until 2001....
responded when moving composite 42 that the required cuts would force councils to break statutory obligations: "The question is not should we break the law, but which law shall we obey?". When summing up the debate on behalf of the NEC, David Blunkett
David Blunkett
David Blunkett is a British Labour Party politician and the Member of Parliament for Sheffield Brightside and Hillsborough, having represented Sheffield Brightside from 1987 to 2010...
(Leader of rate-capped Sheffield City Council) did not make clear that the NEC asked for composite 43 to be remitted, meaning withdrawn for further consideration. On a show of hands from those in the hall, the NEC statement and both composites were carried. The result, supporting illegal budgeting, dismayed the party leadership.
Final strategy
By December 1984 the first option had emerged as the preferred strategy as councils would not involve themselves in immediate illegality if they simply voted to postpone making a rate. In the new year of 1985 the strategy came under strain as the deadline for any application to reconsider the level of the cap (set at 15 January) approached; when no council applied, the deadline was extended to 24 January, but the councils held firm. However, some councils made informal approaches and the Department of the Environment revised some of the limits. The councils intending to set no rate met together to plan the campaign, and Patrick Jenkin gave them de facto recognition by meeting them as a group.The meeting on 4 February 1985 went badly for the councils, with Jenkin refusing to abandon rate capping and grant penalties; Jenkin declared his willingness to meet the councils again if they wanted to negotiate. Shortly before, Labour leader Neil Kinnock had made clear his opposition to the policy of not setting a rate; he declared at the Labour Party local government conference that what Labour supporters were saying was "Better a dented shield than no shield at all. Better a Labour council doing its best to help us than Government placemen extending the full force of Government policy". He saw the strategy as a gesture which would not help protect services. Notwithstanding his criticism, 26 councils were still considering defying the law.
Legal basis
One of the foundations of the campaign was the knowledge that certain aspects of the law on council budgeting in 1985 were not entirely clear. What was clear was that all local authorities had a duty to set a budget and therefore an annual rate or precept, under sections 2 and 11 of the General Rate Act 1967. Precepting authorities had the additional responsibility to set their budgets and precepts at least 21 days before the start of the new financial year; as the local government financial year began on 1 April, 21 days before was 10 March. No such duty applied to rate-making authorities. In practice most set a budget and a rate some weeks before the new financial year, but not all did; some authorities routinely made their rates after the beginning of a financial year. The General Rate Act, section 2(1), also provided that the rate had to be sufficient to meet all estimated expenditure not met by other sources, thereby making any deficit budget illegal.Checking council activities was the responsibility of the district auditor who was appointed by the Audit Commission
Audit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
; if the auditor found that financial loss to the authority had been caused by the wilful misconduct of councillors, then they were under a duty to issue a certificate to the councillors responsible ordering them to repay the money in a surcharge. If the sum to be paid was more than £2,000 each, the councillor would also be disqualified from office. Councillors were held to be 'jointly and severally liable' for the sum, meaning that the total amount was recoverable from each individually should others be unable to pay.
Most councillors contemplating delaying setting a rate considered that the crucial point would come at the point in the year when the first rate payments would have become due; if the council had not set a rate at that point, it would be unable to recover the interest on the payments due to have been made to it. The General Rate Act 1967 section 50 and schedule 10 gave ratepayers the right to pay by ten instalments which were to be paid at monthly intervals during the year. With a financial year ending on 31 March, the latest date to start the payment was 1 July; the council had to give ten days' notice of a payment being due, so the latest date for setting a rate without incurring irrecoverable debts was 20 June.
Capping of local authorities
Environment Secretary Patrick Jenkin announced the list of local authorities to be capped in a statement to the House of Commons on 24 July 1984. There were 18 authorities on the list:- Basildon District Council
- Brent London Borough Council
- Camden London Borough CouncilCamden London Borough CouncilCamden London Borough Council is the local authority for the London Borough of Camden in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London...
- Greater London CouncilGreater London CouncilThe Greater London Council was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council which had covered a much smaller area...
- Greenwich London Borough CouncilGreenwich London Borough CouncilGreenwich London Borough Council is the local authority for the London Borough of Greenwich in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Greenwich is divided into 17 wards, each electing three councillors...
- Hackney London Borough CouncilHackney London Borough CouncilHackney London Borough Council is the local authority for the London Borough of Hackney in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. The council is unusual in the United Kingdom local government system in that its executive function...
- Haringey London Borough CouncilHaringey London Borough CouncilHaringey London Borough Council is the local authority for the London Borough of Haringey in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Haringey is divided into 19 wards, each electing three councillors. Haringey London Borough...
- Inner London Education AuthorityInner London Education AuthorityThe Inner London Education Authority was the education authority for the 12 inner London boroughs from 1965 until its abolition in 1990.-History:...
- Islington London Borough CouncilIslington London Borough CouncilIslington London Borough Council is the local authority for the London Borough of Islington in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Islington is divided into 16 wards, each electing three councillors...
- Lambeth London Borough CouncilLambeth London Borough CouncilLambeth London Borough Council is the local authority for the London Borough of Lambeth in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London...
- Leicester City CouncilLeicester City CouncilLeicester City Council is a unitary authority responsible for local government in the city of Leicester, England. It consists of 54 councillors, representing 22 wards in the city, overseen by a directly elected mayor. It is currently controlled by the Labour Party and has been led by Mayor Sir...
- Lewisham London Borough CouncilLewisham London Borough CouncilLewisham London Borough Council is the local authority for the London Borough of Lewisham in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. The council is unusual in that its executive function is controlled by a directly elected mayor of...
- Merseyside County Council
- Portsmouth City Council
- Sheffield City CouncilSheffield City CouncilSheffield City Council is the city council for the metropolitan borough of Sheffield in South Yorkshire, England. It consists of 84 councillors, elected to represent 28 wards, each with three councillors...
- Southwark London Borough Council
- South Yorkshire County Council
- Thamesdown Borough Council
Jenkin decided to limit the 1985/86 budget of 15 of these councils to the cash level of their 1984/85 budget. In the cases of the GLC, ILEA and Greenwich, where budgets were over 70% above their grant-related expenditure, and had gone up by more than 30% since 1981/82, he placed the cap at 1½% below the 1984/85 budget. 16 out of the 18 councils were under majority control by Labour at the time they were designated. The exceptions were Portsmouth, where there was a Conservative majority, and Brent where no party had an overall majority. A Labour administration had held power but when Labour councillor Ambrozine Neil joined the Conservatives in December 1983, the Conservatives took control with Liberal support.
Portsmouth City Council's Conservative leader Ian Gibson called the decision to cap his budget "iniquitous", explaining that the reason for high spending was that the council had heavy debt charges from extensive rebuilding several years before. He pledged to use the appeal mechanism, but when the matter came to a vote on 25 September the council voted not to do so.
Setting the cap
On 11 December 1984, Patrick Jenkin confirmed the list of 18 councils announced for capping and announced provisional figures for their budgets. For 12 out of the 18, the budget cap meant an absolute cut in the level of the rates to be paid by households. In January Portsmouth decided to accept the cap and make a budget within the limits which the Government was planning to impose; it was therefore removed from the list.After the figures for the budget limitations were revised, Patrick Jenkin introduced the first order to limit budgets on the four precepting authorities (the GLC, ILEA, Merseyside and South Yorkshire) in the House of Commons on 6 February 1985. After a short debate the order was approved by 255 to 193 votes. The second order, covering the remaining 13 rate-making authorities, was set down for debate on 20 February, but on the previous day Jenkin had to agree to reconsider the limit for Haringey after receiving a letter from its district auditor saying it would have a deficit if the original limit had been imposed. At 10.15pm on the night before the order would have been debated, Jenkin announced that the debate was being delayed. After the figures for six councils were altered, revised figures for the caps were approved by a vote of 267 to 184 in the House of Commons on 25 February.
The budget restrictions imposed are shown in the table. The first column states whether the council made a rate or set a precept to be collected by other authorities on its behalf. The next column gives the 1985/86 budget limit imposed; following that are the budget plans showing what the council intended to spend in 1985/86. The maximum rate imposed by the cap (in pence) comes next, followed by the maximum percentage change on 1984/85 rate levels. The final two columns shows the rate that the council would have hoped to set, and the percentage change on 1984/85 rate levels this represented.
| Authority | Rate or precept | Budget limit (£m) | Budget plans (£m) | Rate limit (p) | Rate change (%) | Desired rate (p) | Desired rate change (%) |
|---|---|---|---|---|---|---|---|
| Basildon | rate | 13.7 | 15 | 50.33 | +17.59 | 59 | +38 |
| Brent | rate | 140 | 174 | 196 | +1.55 | 350 | +81.4 |
| Camden Camden London Borough Council Camden London Borough Council is the local authority for the London Borough of Camden in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London... |
rate | 117 | 133 | 92.02 | +0.09 | 106 | +15.48 |
| GLC Greater London Council The Greater London Council was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council which had covered a much smaller area... |
precept | 785 | 860 | 36.52 | –0.08 | 40.58 | +11 |
| Greenwich Greenwich London Borough Council Greenwich London Borough Council is the local authority for the London Borough of Greenwich in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Greenwich is divided into 17 wards, each electing three councillors... |
rate | 66.5 | 78.3 | 96.42 | –19.02 | 166 | +39.5 |
| Hackney Hackney London Borough Council Hackney London Borough Council is the local authority for the London Borough of Hackney in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. The council is unusual in the United Kingdom local government system in that its executive function... |
rate | 82.3 | 118 | 147.18 | +22.2 | 322.7 | +168 |
| Haringey Haringey London Borough Council Haringey London Borough Council is the local authority for the London Borough of Haringey in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Haringey is divided into 19 wards, each electing three councillors. Haringey London Borough... |
rate | 128 | 148 | 268 | +16.5 | 402 | +74.5 |
| ILEA Inner London Education Authority The Inner London Education Authority was the education authority for the 12 inner London boroughs from 1965 until its abolition in 1990.-History:... |
precept | 900 | 957 | 77.25 | –3.44 | 82.28 | +2.85 |
| Islington Islington London Borough Council Islington London Borough Council is the local authority for the London Borough of Islington in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. Islington is divided into 16 wards, each electing three councillors... |
rate | 85.5 | 94 | 112 | –8.69 | 165 | +34.6 |
| Lambeth Lambeth London Borough Council Lambeth London Borough Council is the local authority for the London Borough of Lambeth in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London... |
rate | 113.5 | 131.5 | 107.5 | –12.0 | 182 | +48.9 |
| Leicester Leicester City Council Leicester City Council is a unitary authority responsible for local government in the city of Leicester, England. It consists of 54 councillors, representing 22 wards in the city, overseen by a directly elected mayor. It is currently controlled by the Labour Party and has been led by Mayor Sir... |
rate | 24 | 30 | 25.2 | –32.7 | 59.6 | +58.9 |
| Lewisham Lewisham London Borough Council Lewisham London Borough Council is the local authority for the London Borough of Lewisham in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. The council is unusual in that its executive function is controlled by a directly elected mayor of... |
rate | 79 | 93 | 99.6 | –13.8 | 162 | +40.4 |
| Merseyside | precept | 205 | 249 | 82.86 | +27.48 | 130 | +100 |
| Portsmouth | rate | limit agreed | 26.88 | –1.18 | limit agreed | ||
| Sheffield Sheffield City Council Sheffield City Council is the city council for the metropolitan borough of Sheffield in South Yorkshire, England. It consists of 84 councillors, elected to represent 28 wards, each with three councillors... |
rate | 216 | 249 | 207 | –0.56 | 361 | +73 |
| South Yorkshire | precept | 178 | 206 | 81 | –2.38 | 131 | +57 |
| Southwark | rate | 108 | 131 | 112.6 | –24.74 | 215 | +44 |
| Thamesdown | rate | 14.2 | 15.9 | 57.2 | +5.59 | 74 | +36.9 |
Capped councils which set a legal rate
The two capped councils that were controlled by the Conservatives, Brent and Portsmouth, were never part of the strategy of not setting a rate. Portsmouth having already accepted its cap, it set its budget without incident on 5 March 1985. Brent, where the Conservatives had taken over in December 1983, had not, but set a legal budget on 13 March 1985.Merseyside and South Yorkshire
The two metropolitan countyMetropolitan county
The metropolitan counties are a type of county-level administrative division of England. There are six metropolitan counties, which each cover large urban areas, typically with populations of 1.2 to 2.8 million...
councils were subject to the legal requirement to make their precept by 10 March. They were also facing their own abolition at the end of March 1986. Faced with the prospect of immediate legal sanctions if they failed to do set a budget and with no continuing existence, neither were inclined to press their objections to rate-capping. At a meeting of capped councils on 19 February, both made it clear that they would set a legal precept on time. South Yorkshire County Council then made it clear publicly that it would fix a budget within the cap, and proceeded to do so at a budget meeting on 7 March.
Merseyside also decided on 7 March not to defy the cap but to set a £213m budget substantially lower than the limit: the precept was 73p which was much lower than the cap of 82.86p, meaning rates rose by 11% instead of the 27% which was allowed. The budget set no further details on council spending, but the council created a special mechanism to keep spending under the limit. The council had obtained legal advice that this course of action was risky, but likely to be accepted as legal if the council was sincerely trying to keep its budget within the cap. Council leader Keva Coombes called for extra assistance but was rebuffed by Patrick Jenkin.
GLC and ILEA
Ken Livingstone
Kenneth Robert "Ken" Livingstone is an English politician who is currently a member of the centrist to centre-left Labour Party...
and finance chair John McDonnell
John McDonnell (politician)
John Martin McDonnell is a British Labour Party politician, who has been the Member of Parliament for Hayes and Harlington since 1997; he serves as Chair of the Socialist Campaign Group, the Labour Representation Committee, and the "Public Services Not Private Profit Group"...
were heavily involved in planning the campaign to defy rate-capping. Their involvement also took in the Inner London Education Authority
Inner London Education Authority
The Inner London Education Authority was the education authority for the 12 inner London boroughs from 1965 until its abolition in 1990.-History:...
which was technically a special committee of the Greater London Council
Greater London Council
The Greater London Council was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council which had covered a much smaller area...
, consisting of members elected to the GLC from inner London, plus one member from each of the inner London borough
London borough
The administrative area of Greater London contains thirty-two London boroughs. Inner London comprises twelve of these boroughs plus the City of London. Outer London comprises the twenty remaining boroughs of Greater London.-Functions:...
s. As both the GLC and ILEA set a precept rather than a rate, both were under a legal requirement to set a budget by 10 March. Livingstone was conscious that the Labour group on the GLC had recent experience of deciding whether to defy the law, having split 23 to 22 to vote in 1981 not to comply with a House of Lords
Judicial functions of the House of Lords
The House of Lords, in addition to having a legislative function, historically also had a judicial function. It functioned as a court of first instance for the trials of peers, for impeachment cases, and as a court of last resort within the United Kingdom. In the latter case the House's...
judgment ordering it to raise public transport fares. He was not confident of persuading more councillors to support defying the law on budgeting, but because the Government was intending to abolish the GLC on 31 March 1985, he went along with supporting the campaign.
Just as the tactic of not setting a rate became popular among the councils subject to rate-capping, the Government suffered a defeat in the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
which gave the GLC an extra year of existence and subjecting it to budgeting and rate-capping for 1985-86. Owing to the inevitable split in the Labour group of councillors, it was agreed not to debate the issue until just before the deadline; in the meantime, to stop the Government setting a harsh cap on the budget, the council ordered that no detailed budget documents would be published. John McDonnell was given the responsibility of leading the campaign in which he claimed that the rate-capping would require a reduction of £138m in the planned spending.
As the time for voting on the budget approached, Livingstone discovered that instead of the outright illegality involved in resolving not to make a rate, the other councils were planning to exploit the legal gray area of refusing to make a rate for the time being. This strategy would put them in a different position to the GLC and ILEA who would be illegal immediately. Budget papers prepared by the Director-General Maurice Stonefrost then revealed that the capping limit still allowed the council to increase spending substantially; the papers were circulated to all members of the GLC on 1 March. A long and acrimonious debate at a Labour group meeting on 4 March agreed by 24 votes to 18 to support the legal budget with its £25m in growth. The GLC Labour group split into three factions, with one group of 10 under John McDonnell insistent on not setting a rate, another of 8 under Ken Livingstone willing to defy the law but also to accept a budget at the cap if that stance failed, and a third group unwilling to support any illegal budgeting.
First to meet was ILEA, on 7 March; supporters of the no rate strategy had hoped that it would still vote for defiance but the authority ended up adopting a legal budget by a margin of four votes. The GLC met the following day; with the Chairman Illtyd Harrington not voting except to break a tie, one Labour member ill and another absent on holiday, the full voting strength was Labour 45, Conservatives 41 and Alliance
SDP-Liberal Alliance
The SDP–Liberal Alliance was an electoral pact formed by the Social Democratic Party and the Liberal Party in the United Kingdom which was in existence from 1981 to 1988, when the bulk of the two parties merged to form the Social and Liberal Democrats, later referred to as simply the Liberal...
3. The first budget to be voted on was the Conservative proposal for cut in the rates to 27p; this was rejected by 48 to 38. A budget setting the rate at the maximum allowed by the cap was defeated by 59 to 30 with both Livingstone and McDonnell opposed. At this point the meeting was adjourned until Sunday 10 March, at which meeting a second attempt to set a budget at the cap level was rejected by 54 to 34. After a further budget proposed by the Conservative group was rejected, another budget at the cap level was proposed by Steve Bundred but again rejected by 53 to 36. Finally a budget proposed by moderate Labour councillor Barrie Stead, setting the rate below cap level, was passed by 60 to 26.
Basildon
From an early stage in 1984, before the official announcement of the councils to be rate-capped, Basildon had worked on the assumption that it would have its budget restricted. In March, prior to the capping list being announced, the council leadership invited the Audit CommissionAudit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
to independently investigate its spending, hoping that it would vindicate the council's decisions. The report found that the council's high spending was not the result of inefficiency but of policy decisions, and the fact that as a new town
New town
A new town is a specific type of a planned community, or planned city, that was carefully planned from its inception and is typically constructed in a previously undeveloped area. This contrasts with settlements that evolve in a more ad hoc fashion. Land use conflicts are uncommon in new...
it had higher interest payments and higher spending on managing housing. The council duly published the report after it was capped, making much of the fact that the Audit Commission had exonerated it.
Determined to frustrate the capping order, Basildon announced at the end of February 1985 that it could evade it by setting up a limited company
Limited company
A limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. And the former of these, a limited company limited by shares, may be...
- Basildon Economic Development Corporation Ltd - through which the council would contract to pay grants of £140,000 to voluntary organisations. When it came to the budgeting meeting on 7 March 1985, a group of rebel Labour councillors pulled back from pressing the council to join the others in refusing to set a rate; instead the council set the rate at the limit allowed by the cap. The council leader Harry Tinworth claimed that the council had won the first round in a battle with the Government to preserve essential services. Later that month the council announced its plan to sell council mortgages to a merchant bank in order to raise capital finance to build sheltered homes for the elderly, also evading the cap.
North Tyneside
The north-eastern borough of North Tyneside was not rate-capped but the effect of rate penalties had reduced its rate support grant from £55m to £38m. On 26 February 1985 the Labour leadership of the council called a press conference to announce that the Labour group had decided to recommend to the council that it not set a rate, to allow negotiations with the Government to produce improved grant. At the council's budget meeting on 8 March, all Labour councillors voted along these lines; the council leader Brian Flood declared that he wished to see spending growth of £4.2m.In the middle of March the district auditor, Brian Singleton, sent a letter to every councillor warning them of the legal dangers of delaying setting a rate. At a special council meeting called by the Conservative group on 22 March 1985, the Labour chair of the Finance Committee Harry Rutherford proposed an £83m budget which included uncommitted growth of only £300,000 instead of the £4.2m wanted by the Leader; he attracted the support of the opposition Conservative and Alliance councillors together with 12 other Labour rebels and the budget was passed. The chief whip of the Labour group Stephen Byers
Stephen Byers
Stephen John Byers is a British Labour Party politician who was the Member of Parliament for North Tyneside from 1997 to 2010; in the previous parliament, from 1992, he represented Wallsend...
said that the auditor would have to check the budget was legal. Four of the thirteen Labour rebels were suspended from the party for terms between six and twelve months, and the others were reprimanded and required to give a written undertaking to observe group policy in future.
Thamesdown
After the rate-capping of Thamesdown was announced, the Member of Parliament for SwindonSwindon (UK Parliament constituency)
Swindon was a parliamentary constituency in the town of Swindon in Wiltshire, England.It returned one Member of Parliament to the House of Commons of the Parliament of the United Kingdom from the 1918 general election until it was abolished for the 1997 general election.It was then replaced by the...
Simon Coombs
Simon Coombs
Simon Christopher Coombs , is a former British Conservative politician.Coombs was MP for Swindon from 1983 until 1997 when the seat was divided by boundary changes. Coombs stood in the new Swindon South seat but lost to Labour's Julia Drown...
(who was Parliamentary Private Secretary
Parliamentary Private Secretary
A Parliamentary Private Secretary is a role given to a United Kingdom Member of Parliament by a senior minister in government or shadow minister to act as their contact for the House of Commons; this role is junior to that of Parliamentary Under-Secretary, which is a ministerial post, salaried by...
to Kenneth Baker, the local government Minister) pressed the council to use the appeal mechanism provided in the Rates Act 1984. The ruling Labour group maintained the unity of the capped councils by refusing to appeal, and on this issue had the support of Conservative councillors. However the leadership of the Labour group was relatively moderate and wary of the 'no rate' strategy. Thamesdown seemed to some observers an odd target for capping; The Times correspondent reported local rumours that it had been selected for capping in the hope that it might appeal and be removed, thereby damaging the policy of confrontation.
On 7 March, Thamesdown passed a motion declaring its inability to set a rate. The council's Chief Executive, David Kent, wrote to all councillors after the meeting telling them that a rate had to be set by the end of March, and pressure appeared also from the Department of Health and Social Security
Department of Health and Social Security
The Department of Health and Social Security was a ministry of the British government in existence for twenty years from 1968 until 1988, and was headed by the Secretary of State for Social Services.-History:...
which warned on 21 March that there would be a problem paying Housing Benefit
Housing Benefit
Housing Benefit is a means tested social security benefit in the UK that is intended to help meet Housing costs for rented accommodation. The primary legislation governing Housing Benefit is the Social Security Contributions and Benefits Act 1992. Operationally, the governing Regulations are...
to the council if no rate was made. The council felt sufficiently concerned to avoid budget chaos that it set up a special resources sub-committee to agree emergency measures for ordering supplies. On 25 March the Mayor summoned a special council meeting for 28 March, while senior councillors discussed options with the borough solicitor. The meeting on 28 March saw prolonged disruption from the public gallery by those who supported continued defiance, and Mayor Harry Garrett called on the police to keep order. Among the councillors the decision was taken to approve a legal rate of 196.65p; a council spokesman claimed that the council would be going ahead with what it was going to do anyway.
Leicester
Initial figures for the rate cap of Leicester city council would have required it to lower rates by 57%, a level which council leader Peter SoulsbyPeter Soulsby
Sir Peter Alfred Soulsby is a British Labour Party politician and the current Mayor of Leicester. He was the Member of Parliament for Leicester South from 2005 until he resigned in order to contest the new post of mayor in April 2011...
described as "savage treatment". However later figures allowed the council to include an additional £3.7m in its budget. On 7 March 1985 the council approved a budget of £30,650,000 (significantly over the cap), but not a rate to go with it; the motion also told the Secretary of State that if the rate limit and grant penalties were withdrawn, the council could set a rate rise lower than the rate of inflation. Although this vote was unanimous, the Labour leadership soon decided that there was no point in holding out. The council came under pressure not to give in, with a letter from the 'West End Rate-Capping Campaign Group' sent to each councillor urging them to continue to set no rate, and a petition of 2,000 presented to the council opposing rate-capping by Mrs Megan Armstrong who urged the council to defy the Government even if it meant breaking the law. From the other side, the Conservative group on Leicestershire
Leicestershire
Leicestershire is a landlocked county in the English Midlands. It takes its name from the heavily populated City of Leicester, traditionally its administrative centre, although the City of Leicester unitary authority is today administered separately from the rest of Leicestershire...
county council attempted to get their authority to initiate a judicial review
Judicial review
Judicial review is the doctrine under which legislative and executive actions are subject to review by the judiciary. Specific courts with judicial review power must annul the acts of the state when it finds them incompatible with a higher authority...
as Leicester collected and passed on its precept; the attempt failed as the Liberal group opposed it.
The council leadership proposed a deficit budget at a policy committee meeting on 27 March; despite being told by city treasurer Michael Lambert that it was illegal, the committee referred it to full council the following day. Although 22 petitions containing 9,000 signatures were presented to the council meeting calling for continued defiance, the council adopted the budget; finance committee chair Graham Bett said that it was not the rate of elected councillors but of a "remote right-wing Government in London". Seven Labour councillors were absent from the meeting, continuing to support defiance.
Manchester
Graham Stringer
Graham Eric Stringer is a British Labour Party politician who is the current Member of Parliament for Blackley and Broughton having previously represented Manchester Blackley from 1997 to 2010.-Early life:...
insisted that the no rate strategy would continue. Liberal leader David Sandiford was ruled out of order by Stringer when he attempted to speak about the no rate strategy at a Policy Committee meeting on 17 March.
Legal pressure on the council leadership began early when the District Auditor wrote to the City Clerk saying that the decision not to set a rate was 'wilful misconduct'. At the special meeting of the council on 22 March, the Liberal proposed budget was defeated, but 16 Labour councillors (including the Lord Mayor) supported it. One of them, Paul Murphy, insisted the council could make a rate without job losses. A further council meeting on 25 March saw 17 Labour councillors support the Liberal budget, but it was again rejected by 52 to 23.
On the last day of the financial year, 31 March, the council met again in its fifth budgeting meeting in a month. In a six hour meeting, a left-wing amendment declaring it impossible to set a rate was defeated by 51-45, with 31 Labour councillors opposing it. A Conservative budget involving a 0.7% rate rise was voted down; the Labour chair of the Economic Development committee then proposed a 257.5p rate (a 6% rise) which was agreed by 83-1 with 12 abstentions. Graham Stringer declared that "Manchester's case and the national campaign has been weakened" but pledged that there would be no cuts and they would continue to support other councils.
Lewisham
Commitment to the no rate strategy by Lewisham, under its leader Ron Stockbridge, was strong and the council passed a motion on 7 March declaring its inability to make a rate along with many others. Lewisham worked together with the other south London boroughs of Lambeth, Southwark and Greenwich in a joint publicity campaign under the title 'Standing Together'. However the council's stance was unexpectedly ended at a council meeting on 4 April. A group of 20 trade union members had invaded the chamber prior to the start of the meeting, protesting against rate-capping and intending to prevent the council meeting from being held at all. Labour councillors then withdrew to a separate room to discuss tactics, not noticing that after an hour the demonstration had dispersed. The Conservative councillors who remained in the council chamber then quickly convened a meeting under a temporary chairman, and passed a budget reducing rates by 6%.The Labour group, incensed at being caught off guard, took legal advice but were told that the budget as approved was "more legal than not". The Conservative councillor who had led the initiative of calling the meeting claimed that Labour councillors had told him it was the best thing to happen, as it removed the threat of disqualification and surcharge while allowing Labour to blame the Conservatives locally for any service cuts. However Ron Stockbridge subsequently resigned as council leader.
Haringey
The Government had been forced to change the level of the cap on Haringey Borough Council due to the discovery that it had overpaid housing subsidy. Due to the system of penalties, the repayment of £5m required a rate rise of £16m. On 7 March, the council passed a motion in similar terms to others, declaring its inability to make a rate. At the next meeting on 4 April, all 34 members of the Labour group stuck to their decision and were joined by an Independent councillor in voting not to set a rate (23 Conservatives disagreed).However at a party meeting on 10 April the attitude of the council leadership had changed and a significant split opened up.
Council leader George Meehan proposed at a meeting of Labour Party councillors that a legal rate be set at the council meeting the day after, but was defeated by "a clear majority" in favour of delaying a rate until 29 April by which time the council would have met Ministers. Meehan then offered his resignation. At the council meeting Meehan formally proposed the legal rate and then joined with 12 other Labour councillors and the opposition Conservative group to pass it; the majority of the Labour group voted in favour of delay until 29 April. Meehan then left office and Bernie Grant
Bernie Grant
Bernard Alexander Montgomery Grant , known simply as Bernie Grant, was a politician in the United Kingdom, and was Labour member of Parliament for Tottenham at the time of his death....
succeeded him as leader.
Newham
Although not capped, Newham was severely affected by grant penalties. It had worked with the capped councils and decided to join the campaign: on 7 March the council members unanimously passed a motion declaring that they could not set a rate. Council deputy leader Alan Mattingly said that the majority of councillors would go to jail rather than cut services. It was soon clear that there was a significant split in the Labour group as Leader Jack Hart told a council meeting on 28 March that the Government would not increase their spending limit and urged members to be realistic. His ally, councillor David Gilles, proposed a budget of £151.5m. Alan Mattingly by contrast urged the council to stand firm and despite Hart's support the budget was defeated by 18 to 35; a budget proposed by the SDPSocial Democratic Party (UK)
The Social Democratic Party was a political party in the United Kingdom that was created on 26 March 1981 and existed until 1988. It was founded by four senior Labour Party 'moderates', dubbed the 'Gang of Four': Roy Jenkins, David Owen, Bill Rodgers and Shirley Williams...
was voted down by 20 to 33.
In April the council leadership received a warning from the trade unions representing council workers that their support for the council's stance was limited and "the day you stop paying wages then our fight is with you". A meeting of Labour councillors on 15 April agreed to support a budget of £150.6m, and a council meeting the following day approved it.
Sheffield
With council leader David BlunkettDavid Blunkett
David Blunkett is a British Labour Party politician and the Member of Parliament for Sheffield Brightside and Hillsborough, having represented Sheffield Brightside from 1987 to 2010...
holding a place on the Labour Party National Executive Committee
National Executive Committee
The National Executive Committee or NEC is the chief administrative body of the UK Labour Party. Its composition has changed over the years, and includes representatives of affiliated trade unions, the Parliamentary Labour Party and European Parliamentary Labour Party, Constituency Labour Parties,...
, Sheffield was one of the most prominent Labour councils of the 1980s and Blunkett was an unofficial spokesman on behalf of Labour in local government. One of the rallies held on 6 March to protest against rate-capping was held in Sheffield. On 7 March the council passed a budget (including capital spending which was not subject to the cap) of £249m, which was £31.1m over the cap; £11.8m of the gap was met from reserves. The council then passed a motion calling for income and expenditure to be reconciled and instructed the Policy Committee to prepare a detailed budget. The council did not set the rate to go with the budget but instead passed a motion declaring that it could not set a rate. Later in March the council passed a second resolution which explained that it would not set a rate until learning the outcome of Greenwich borough council's application for judicial review
Judicial review in English Law
Judicial review is a procedure in English administrative law by which the courts in England and Wales supervise the exercise of public power on the application of an individual...
which was due to be heard on 12 April.
Sheffield's own action for judicial review of its spending limit ended on 2 April when Mr Justice Woolf
Harry Woolf, Baron Woolf
Harry Kenneth Woolf, Baron Woolf, PC, FBA, , born 2 May 1933, was Master of the Rolls from 1996 until 2000 and Lord Chief Justice of England and Wales from 2000 until 2005. The Constitutional Reform Act 2005 made him the first Lord Chief Justice to be President of the Courts of England and Wales...
refused it permission, ruling that while the High Court had jurisdiction, any matter involving political judgment should be dealt with through the democratic processes; an appeal failed on 2 May. A further meeting on 24 April again postponed setting a rate. By the beginning of May, leading members of the council were acknowledging the risks of their stance: the deputy leader Rev. Alan Billings talked of "asking people to commit political suicide for the greater good", while Blunkett talked in Tribune
Tribune (magazine)
Tribune is a democratic socialist weekly, founded in 1937 published in London. It is independent but supports the Labour Party from the left...
of "those who look for corpses .. to prove that there has been a genuine struggle". Blunkett appealed for campaigners to avoid a shambles such as had happened at the GLC.
On 7 May the council came to a crunch meeting at which the council leadership put forward a motion which stopped delaying fixing a rate but instead refused to set a rate until the Government began negotiating. It was understood that this motion would invite immediate legal action. Instead, after a five hour meeting, 20 Labour councillors voted with the Liberal and Conservative groups on the council in favour of an amendment to set a rate within the cap limit; the amendment passed by 46 to 38 with one abstention. After the vote, it was noticed that the rate demands sent out by the council appeared to have been printed before the council had formally set the rate. The problems for Sheffield did not end there as the council leadership asked chief officers to implement the original budget. A report by the district auditor in July declared Sheffield's deficit budget illegal and the council had to instruct the service committees to reduce spending in line with a capped budget.
Tower Hamlets
Tower Hamlets London Borough Council, which was not capped, was in the unusual position of being unable to set a rate due to the actions of dissenting councillors from the majority group combining with the opposition. The council had a leadership from the right-wing of the Labour Party; council leader John Riley argued that the rates were high enough and that ratepayers ought not to have a massive increase. However two left-wing Labour councillors Chris Rackley and Thérèse Shanahan announced that they would join with the opposition Liberal group to support a 'no cuts' budget. Their stance attracted others and the Labour budget was defeated with nine Labour councillors voting against it.The response of the Labour leadership was to expel the nine rebels, a move opposed by the Greater London Labour Party and by the majority of Labour Party members in the borough. This move reduced the Labour group to a minority on the council. When the Mayor Bob Ashkettle attempted to put through a budget at a council meeting on 23 April with an 8% rise, legal advice was sought and the motion was ruled unconstitutional. The Liberal group was opposed to this budget, demanding extra spending. The leadership then tried to compromise, but an extra £3.5m in the budget failed to shift the Liberal opposition on 8 May. It was not until a meeting on 14 May 1985 called by the Liberal group that a rate was set by 33 votes to 10.
Hackney
Support for the no rate strategy among leading councillors in Hackney was among the strongest anywhere. The open declaration by the council of its intentions led one Hackney resident, Mourad Fleming, to go to law before the council held its budgeting meeting seeking judicial review of the council's actions. In February 1985 Fleming had been the SDPSocial Democratic Party (UK)
The Social Democratic Party was a political party in the United Kingdom that was created on 26 March 1981 and existed until 1988. It was founded by four senior Labour Party 'moderates', dubbed the 'Gang of Four': Roy Jenkins, David Owen, Bill Rodgers and Shirley Williams...
candidate in a byelection in Hackney's Clissold
Clissold (ward)
Clissold is a ward in the London Borough of Hackney. The name is derived from Clissold Crescent and the ward also borders Clissold Park in the neighbouring Lordship ward both of which form part of the Hackney North and Stoke Newington constituency....
ward which had been won by a Labour candidate pledged to the no rate strategy. On 6 March 1985 in the High Court
High Court of Justice
The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...
, Mr Justice Mann issued an interlocutory declaration that the council had a duty to set a rate which did not breach the cap and that it could not use interim borrowing powers. Notwithstanding the judgment and firm advice from the borough solicitor that the council had to set a rate, on 7 March the council passed a resolution declaring that "the council considers it would be impossible to make a rate". The resolution disguised the refusal to set a rate as a delay pending negotiation with the Secretary of State.
On 20 March, council leader Hilda Kean declared that the council would be bankrupt by the middle of April if unable to set a rate and abjured the use of creative accounting to evade the cap. The council slightly softened its policy on 28 March, declaring that it was only deferring making a rate and committing to making a legal rate in due course; a motion to stick to the previous formula was defeated by 32 to 24. The council having ignored the High Court's interlocutory declaration, Mourad Fleming's judicial review application proceeded to trial on 1 April; Fleming agreed to vary an order and let the council use borrowing powers in the 1985/86 financial year, but said that he would ask the court to appoint a receiver to run the council if no rate was set. At the end of the hearing, Mr Justice Woolf
Harry Woolf, Baron Woolf
Harry Kenneth Woolf, Baron Woolf, PC, FBA, , born 2 May 1933, was Master of the Rolls from 1996 until 2000 and Lord Chief Justice of England and Wales from 2000 until 2005. The Constitutional Reform Act 2005 made him the first Lord Chief Justice to be President of the Courts of England and Wales...
found both Hackney's resolutions of 7 March and 28 March unlawful and quashed them but refused to immediately order the council to set a rate. Instead he adjourned the case to 16 April.
Mr Justice Woolf's judgment on 16 April observed that the council "have determined, irrespective of their legal duty, not to make a rate". Having decided that this was unlawful, he then grappled with the issue of the discretion available to the council of when to set its rate which he found the council had to use reasonably and in the interests of ratepayers. Woolf again declined to issue an order of mandamus
Mandamus
A writ of mandamus or mandamus , or sometimes mandate, is the name of one of the prerogative writs in the common law, and is "issued by a superior court to compel a lower court or a government officer to perform mandatory or purely ministerial duties correctly".Mandamus is a judicial remedy which...
compelling the council to set a rate, instead stating that he would do so unless Hackney indicated it would make a rate within an acceptable timescale. After hearing submissions about what such a timescale would be, he decided to give the council "a relatively liberal period of time in which to give effect to this judgment" and fixed the end of May as the deadline. On 2 May, Hackney also lost its appeal against the ruling in its own judicial review challenge of the Secretary of State's spending guidance, and was refused leave to appeal to the House of Lords. The council was warned by the borough solicitor that the legal costs of attempting further legal challenge would probably be the subject of a surcharge of councillors.
By the middle of May it was clear that enough Labour councillors in Hackney had become willing to vote for a legal budget and that the council would not defy the court judgment. A group of Labour councillors joined with the council's Liberal group to produce an acceptable budget. An attempt to hold a budgeting meeting on 16 May was thwarted when some town hall staff locked up the building and refused to allow councillors in; when the council met on 22 May, it allowed addresses by delegations from trade unions and community groups at which the secretary of the joint shop stewards Alf Sullivan described what was proposed as "a bent budget" introduced to "cover your retreat from the fight". When the vote on the budget was called at 12:45 AM, the chamber was invaded with the result that the meeting was adjourned to the following day. On 23 May the council finally approved a legal budget put forward by Labour councillor Tony Millwood. 24 Labour councillors joined six Conservatives and three Liberals to pass it, while 26 Labour councillors remained opposed. Hilda Kean, who said the decision was a betrayal, resigned the leadership along with her deputy Andrew Puddephatt.
Southwark
Part of a group of four south London boroughs, with whom it had formed a joint publicity campaign, Southwark was strongly committed to the no rate strategy. The council duly passed a motion on 7 March declaring its inability to set a rate, and at the end of March reiterated its stance by a large majority. When the council asked ratepayers to keep paying the same rates as the previous year, the local government minister William WaldegraveWilliam Waldegrave, Baron Waldegrave of North Hill
William Arthur Waldegrave, Baron Waldegrave of North Hill, PC , is an English Conservative politician who served in the Cabinet from 1990 until 1997 and is a Life Member of the Tory Reform Group. He is now a life peer. Lord Waldegrave is also the Chairman of the Rhodes Trust and the Chairman of...
said in Parliament that until a rate was set, ratepayers need not pay anything.
While the leadership was determined not to set a rate, there were moderate Labour councillors who were willing to defy the whip to vote for a legal budget. Supporters sought to prevent them from being put in such a position. On 16 April, council leader Tony Ritchie prevented a meeting called to set a legal rate from continuing by using powers under the council's standing orders to adjourn pending new advice; the meeting lasted only two minutes. A further meeting on 24 April was also swiftly adjourned, although on this occasion it was because Ritchie collapsed and had to be taken to hospital. When the council finally met on 26 April, the chamber was invaded by members of tenants groups and council staff with the result that the meeting broke up and was cancelled by the Mayor.
On 1 May the council managed to meet, and the meeting went on for seven hours of angry debate. It resulted in a legal budget written by Labour moderates, which would have cut the rates, being voted down by the Labour leadership and the Conservative group. A further, more orderly, meeting on 8 May voted down a Conservative budget and a deficit budget proposed as a compromise by a minority faction in the Labour group. The next day, the District Auditor Brian Skinner wrote to all councillors in authorities which had not yet set rates telling them to do so without delay and certainly before the end of May deadline given by the High Court in the Hackney case. The council maintained its defiance at the next meeting on 16 May, but by a margin of only one vote (24 to 23). On 23 May, a vote to continue not setting a rate was passed only on the casting vote
Casting vote
A casting vote is a vote given to the presiding officer of a council or legislative body to resolve a deadlock and which can be exercised only when such a deadlock exists...
of the Mayor.
As the end of May deadline approached, the Conservative group leader Toby Eckersley voiced his dislike of the pressure put on him to vote for a budget featuring an increase in spending of 34% in order to solve the dispute, especially since the motion also included political criticism of the Conservative government. Finally at a meeting on 30 May, the council voted by 26 to 23 to set a rate at the maximum level allowed, although the budget did not fund £9.5m of spending commitments. The final voting showed that 25 Labour councillors had supported the budget together with one Independent, 21 Labour councillors and two Independents had opposed, while the eight Conservative and two Liberal councillors had joined one Labour councillor in abstaining.
Islington
The leader of Islington borough council, Margaret HodgeMargaret Hodge
Margaret Hodge MBE MP, also known as Lady Hodge by virtue of her husband's knighthood, is a British Labour politician, who has been the Member of Parliament for Barking since 1994. She was the first Minister for Children in 2003 and was Minister of State for Culture and Tourism at the Department...
, had chaired the meeting of the Labour London Boroughs in June 1984 at which the strategy of setting no rate had been decided upon, and according to Ken Livingstone, claimed to have come up with the idea. Hodge was one of the public leaders of the campaign and on the evening of Thursday 7 March the council organised a people's festival in the civic auditorium while the council formally voted not to set a rate. On 22 April the council published the results of an opinion poll it had commissioned which showed that 57% of people in Islington supported the council in the struggle, with 20% supporting the Government. Asked what the council should do, the poll found 37% wanted the council to continue not to set a rate, 27% wanted the council to resign and force an election on the issue, and 21% wanted the council to set a legal rate.
When the council met again on 23 April, the members had been warned by District Auditor Brian Skinner of "serious consequences" including surcharge should they decide not to set a rate; Margaret Hodge ignored the advice and commented as she moved the motion that she would not "abandon the collective unity that is so important in the struggle against the Government". However the council sent out a circular requesting ratepayers to volunteer rate payments in accordance with the previous years' demands. The council deliberately took steps to justify its delay in setting a rate by obtaining counsel's opinion; on 26 April Hodge wrote to Brian Skinner declaring that "important [specified] matters justifying such a deferral arose" and that "matters [have been] taken to minimize and cancel any possible losses which might arise".
After a series of warning letters, District Auditor Skinner was invited to Islington town hall on 8 May to meet the council leaders and discuss his draft report on Islington. Skinner found that the streets outside were full of thousands of demonstrators supporting the council, which the councillors insisted had arrived spontaneously. Despite police protection he was kicked when attempting to leave after the meeting, and had to be smuggled out lying on the back seat of a police car covered by coats. An application for an emergency debate in the House of Commons
British House of Commons
The House of Commons is the lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords . Both Commons and Lords meet in the Palace of Westminster. The Commons is a democratically elected body, consisting of 650 members , who are known as Members...
by Islington North MP Jeremy Corbyn
Jeremy Corbyn
Jeremy Bernard Corbyn is a British Labour Party politician who has been the Member of Parliament for Islington North since 1983.-Early and personal life:...
was turned down that afternoon.
As with other councils still without a budget, the auditor had ordered Islington to set a legal rate by the end of May or face an extraordinary audit. On 30 May, the Local Government committee of the Islington Labour Party narrowly voted to support a legal rate, and the following day Margaret Hodge proposed a legal budget to the council. The galleries were crowded with people urging the council to continue the fight and an amendment to continue to defer setting a rate was moved by Chris Calnan, but the amendment was lost by 34 votes to 10 with six abstentions and Islington duly set a legal rate a few hours before the deadline.
Camden
All 33 Labour councillors on Camden Borough Council voted on 7 March against setting a rate; they included Stephen Bevington who had only been elected a week before on a platform of setting no rate. The Conservative group on the council, who had supported setting the rate at the level of the cap, immediately called for surcharges on councillors where the delay in setting the rate led to financial losses for the council. At a Labour group meeting on 26 March, Alan Woods moved a motion to declare that Camden would continue to refuse to set a rate even if other boroughs gave up; with council leader Phil Turner abstaining, the motion was lost by 15 votes to 14.For the moment the council continued, citing the forthcoming judicial review action by Greenwich as justification. In the middle of April, a Labour councillor was quoted by the Hampstead & Highgate Express contemplating alternate strategies of non-compliance and worrying about drifting into surcharge and disqualification "through nothing more than indecision, confusion and default", although the council continued to vote against setting a rate at its meeting on 24 April.
Along with other councils who had set no rate, Camden was sent a statutory report by the district auditor Brian Skinner on 9 May giving them until the end of May to set a rate or face an extraordinary audit. The Conservative opposition thought this move may have been counter-productive, and the council went until 5 June before meeting. This meeting continued until 3 AM when 10 Labour councillors rebelled to vote through a budget proposed by former council leader Roy Shaw which passed by 33 to 26. Shaw, who was a member of the Audit Commission
Audit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
, had agreed with the Deputy Controller of the commission that he would be alerted before his council position came into conflict with his audit role. The budget agreed by Camden was prima facie
Prima facie
Prima facie is a Latin expression meaning on its first encounter, first blush, or at first sight. The literal translation would be "at first face", from the feminine form of primus and facies , both in the ablative case. It is used in modern legal English to signify that on first examination, a...
unbalanced and illegal as it showed expenditure of £132.46m against a cap of £117.609m, but by counting income from the GLC's 'stress borough' fund and using accounting tricks, it came into balance.
Greenwich
Greenwich had shown early interest in leading a fight against rate-capping, and its leader John Austin-WalkerJohn Austin (politician)
John Eric Austin, formerly known as John Austin-Walker, is a British Labour Party politician, who was the Member of Parliament for Woolwich from 1992 to 1997 and for Erith and Thamesmead from 1997 to 2010.-Early life:...
had signed the personal statement published in Labour Herald on 22 June 1984. The council duly passed a resolution declaring its inability to set a rate, and John Austin-Walker accepted that his refusal to cut spending "may place us beyond the law". The council brought its own proceedings for Judicial Review
Judicial review
Judicial review is the doctrine under which legislative and executive actions are subject to review by the judiciary. Specific courts with judicial review power must annul the acts of the state when it finds them incompatible with a higher authority...
against the Government's decision to cap its budget, which was set down for initial hearing on 12 April with the main hearing not until 19 June. In April the council sent out standing order forms to ratepayers which were calculated on the basis of a budget at the cap limit, but denied that this marked a concession.
On 19 April the council was warned by the District Auditor Brian Skinner that the Judge's decision in the Hackney case not to require the council to set a rate did not give Greenwich the same leeway, but on 24 April the council again refused to set a rate. The auditor followed up with a formal audit report on 9 May, giving a deadline of the end of that month to set a rate, accompanied by counsel's opinion which stated that the pending High Court case did not override the council's legal duty to make a rate. The council had obtained its own counsel's opinion that refusing to make a rate pending the outcome of the High Court case was reasonable, and the auditor's opinion took steps to nullify it by stating "A councillor cannot escape from being guilty of misconduct by relying on advice of counsel where that advice is shown to be wrong". The borough solicitor Tony Child continued to insist that the council still had discretion to refuse to make a rate.
Despite the auditor's deadline, Greenwich voted by 39 to 19 against setting a rate on 29 May, although it quietly stopped using the demand for spending concessions as a reason for its actions. A 12-hour council meeting called on Saturday 8 June eventually voted to set a rate, under two weeks before the High Court hearing on which the council had pinned its hopes. The Judicial Review went ahead but on 18 July Greenwich was notified that it had lost: Mr Justice McNeill ruled that the Government acted lawfully. Greenwich appealed but the Court of Appeal upheld the judgment.
Liverpool
Despite their doubts about the strategy, the leaders of Liverpool City Council were keen not to damage the unity of the campaign; after the previous year's experience the council believed there was no legal requirement to set a rate until June. Accordingly on budget day in 1985, Liverpool's Finance Committee chairman Tony Byrne stated that the council needed a £265m budget, but because the Government grant penalties restricted them to £222m, the council would not set a rate. There was one significant change from the past year, as the Audit Commission had appointed Tim McMahon as the new District Auditor for Liverpool at the beginning of May 1985. McMahon wrote to all councillors on 21 May warning them that not setting a rate by the end of the month would result in an extraordinary audit and asking them individually for reasons why they should not be surcharged. The council's leadership believed that the deadline really was 20 June, and had pencilled in a meeting on 14 June for setting a rate.On 10 June, the auditor sent out letters to the Liverpool councillors reporting that the council's failure to set a rate that financial year had already caused a loss of £106,103, and notifying them of an extraordinary audit under section 20 of the Local Government Finance Act 1982. According to council deputy leader Derek Hatton, the letters had the effect of prolonging the dispute: "According to McMahon's assessment of the situation, we had already broken the law. So what the hell had we to lose by doing it again?" Their continued defiance took the form of a deficit budget involving a 9% rise in rates, which was to produce £236m, but also approving £265m of spending. The budget was approved by 49 to 42 on 14 June, with five Labour councillors opposed. The council leadership saw the deficit budget as a tactic to comply with the law in one sense and so buy time.
The council was given notice of an extraordinary audit on 26 June with the auditor concentrating on the council's loss of interest on payments from the Department of Health and Social Security (which would have covered the rate rebates element in housing benefit subsidy), and on payments from the Treasury Valuer (which paid contributions in lieu of rates on crown property). The amount of both of these payments depended on the level of rates, and so no payment could be made until the level of rates was set.
Lambeth
From the start, Lambeth had been in the forefront of the campaign. Despite rumours that three might break ranks, all 34 Labour councillors present voted on 7 March 1985 not to set a rate. As the new financial year approached, Labour councillor Stewart Cakebread dissented, saying that a budget set at the cap limit would not require cuts. The Conservative group summoned an emergency meeting on 10 April 1985 but their proposal for a legal rate was defeated by 34 to 30. A second Labour councillor, Janet Boston, rebelled at a special policy committee meeting on 30 April, supporting a Conservative motion to call a special council meeting on Sunday 5 May; both Boston and Cakebread were barristerBarrister
A barrister is a member of one of the two classes of lawyer found in many common law jurisdictions with split legal professions. Barristers specialise in courtroom advocacy, drafting legal pleadings and giving expert legal opinions...
s. Meanwhile council officials estimated that the failure to set a rate by 1 May had already cost the council £170,000 in lost interest.
As had happened on other councils, the district auditor wrote to all councillors on 9 May telling them that an extraordinary audit would follow if no rate had been set by the end of the month; council leader Ted Knight insisted that the council would not set a rate at its meeting on 15 May "or any time after until the Government returns the money it has taken from us". At this meeting a third Labour councillor, Vince Leon, joined Boston and Cakebread in voting for legal budgets. Boston and Cakebread were removed from all committees by the Lambeth Labour Group at the end of the month, and Boston was told to resign her seat by her local ward Labour Party (she refused). Cakebread received the support of his branch.
The district auditor, Brian Skinner, found that his permission to use offices in Lambeth town hall allocated to NALGO was withdrawn in mid-May; he was also surprised to discover his photograph on a threatening mock 'Wanted' poster
Wanted poster
A wanted poster is a poster distributed to let the public know of an alleged criminal whom authorities wish to apprehend. They will generally include either a picture of the alleged criminal when a photograph is available, or of a facial composite image produced by a police artist...
in his local supermarket
Supermarket
A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
. Skinner's employers, the Audit Commission
Audit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
, sought police assistance in tracking down and destroying copies of the poster. After a council meeting on 5 June again rejected a legal budget (by 32-30), the Audit Commission stated that a letter would be sent immediately to all councillors who had not voted for the motion (possibly including two Conservatives who had been absent) notifying them of an extraordinary audit and possible surcharge over lost interest which by then amounted to over £270,000.
While the council finances were sustained by loans amounting to £29m from the Public Works Loan Board
Public Works Loan Board
The Public Works Loan Board was established in 1793 to provide loans to public bodies from the National Loans Fund. It today provides loans to local authorities of all types in Great Britain, primarily for capital projects, but also as a lender of last resort.The members of the PWLB are known as...
, the resignation of Labour councillor Mike Bright on 21 June 1985 put those supporting continued defiance in the minority. Bright wrote a resignation letter revealing he saw no hope of success and expected to be surcharged: "Martyrdom, however heroic, is usually the sign of a lost cause". Ted Knight described Bright as a "victim of [the state] machine". After a formal notice of an extraordinary audit was published on 18 June, 32 councillors received notice on 27 June that the auditor deemed them liable to a surcharge of £126,947. The response of the councillors was to set up a 'Fighting Fund' in their defence, which was supported at its launch by celebrities Jill Gascoine
Jill Gascoine
Jill Gascoine is a British actress and novelist. She is most widely known for her role as Detective Inspector Maggie Forbes in the 1980s television series The Gentle Touch and its spin-off series C.A.T.S. Eyes...
, Frances de la Tour
Frances de la Tour
Frances de la Tour is an English actress perhaps best known for her role as Miss Ruth Jones in the British sitcom Rising Damp, and as Madame Olympe Maxime in the film adaptation of Harry Potter and the Goblet of Fire and Harry Potter and the Deathly Hallows – Part 1.-Early life and family:De la...
, Matthew Kelly
Matthew Kelly
Matthew Kelly is an English television presenter and Olivier-award winning actor. Having been trained as a theatre actor, he first came to public prominence as a television presenter of ITV light entertainment shows such as You Bet! and Stars in Their Eyes...
, and Timothy West
Timothy West
Timothy Lancaster West, CBE is an English film, stage and television actor.-Career:West's craggy looks ensured a career as a character actor rather than a leading man. He began his career as an Assistant Stage Manager at the Wimbledon Theatre in 1956, and followed this with several seasons of...
; the Labour group debated whether Mike Bright ought to be eligible for help from the fund.
At the next council meeting on 3 July, there was uproar after members of Vauxhall
Vauxhall (UK Parliament constituency)
-Elections in the 1980s:-Elections in the 1970s:-Elections in the 1960s:-Notes and references:...
Constituency Labour Party
Constituency Labour Party
A Constituency Labour Party is an organisation of members of the British Labour Party who live in a particular UK parliamentary constituency in England, Scotland and Wales. The Labour Party in Northern Ireland has, since February 2009, been organised as a province-wide Constituency Labour Party...
unfurled a banner from the public gallery behind the Conservative group. When Conservative councillor Tony Green tore the banner down, Labour councillor Terry Rich rushed across to confront him and was only held back in a headlock by another councillor. The meeting was adjourned for 20 minutes. When it resumed, Janet Boston and Stuart Cakebread moved a legal rate which was passed by 32 to 31. The council was able to avoid cuts in planned spending with the aid of additional £5.5m housing subsidy from the Government and £6m from the Greater London Council's 'stress boroughs' scheme, the Lambeth Fighting Fund therefore claimed the campaign had been a success "in financial terms".
Aftermath
Although Lambeth was the last council to set a rate for the year, many aspects of the ratecapping fight were not settled.The extraordinary audits
On 9 September 1985 the district auditors for Lambeth and Liverpool gave notice to 81 councillors (49 from Liverpool, 32 from Lambeth) that the delay in fixing the rates was wilful misconduct and so they were required to repay the costs as a surcharge: £106,103 in Liverpool, £126,947 in Lambeth. In both cases the amount per councillor was over £2000 and therefore they were also disqualified. The district auditor found that Lambeth Borough Council had been embarked, since at least September 1984, on a political campaign against the Rates Act 1984 and the Government. Since its failure to make a rate was a political lever in that battle, the failure was wilful misconduct and therefore the councillors responsible were liable for the surcharge to make good the cost of the council's actions. The surcharged councillors from both Lambeth and Liverpool appealed to the High Court against the surcharges; when the case opened on 14 January 1986, counsel for the Lambeth councillors, Lionel Read QC, argued that the cost of delaying setting a rate was a legitimate expense in an attempt to secure more money from the Government which might have succeeded. He also argued that the loss of interest was not irrecoverable.The Lambeth Fighting Fund had raised £74,000 by the opening of the High Court case, of which £69,000 had already been spent. The council had also spent £31,050 on publicity for what it termed "Lambeth Rates Democracy", spending which was criticised by the Conservative group. The High Court delivered its judgment on 6 March 1986, finding heavily against the councils. Lord Justice Glidewell
Iain Glidewell
Sir Iain Glidewell is a former Lord Justice of Appeal, and Judge of Appeal of the High Court of the Isle of Man. He was made a privy councillor in 1985....
described the stance of the councillors as "mere political posturing"; Mr Justice Caulfield described the evidence of wilful misconduct as "crushing" and the councillors' stance as having "reached a pinnacle of political perversity".
The judgment came just before full council elections were due in Lambeth, which had elections for every seat once every four years. If the councillors appealed and lost, they would be disqualified in the middle of the term, endangering Labour control of the council. The Lambeth Labour group decided (with seven dissenting) that it was better not to appeal, accept the disqualifications and select replacement candidates for the impending elections. After holding a special meeting to transfer running of the council up to the election to a special committee consisting of three Labour councillors who had not been surcharged (Janet Boston, and two had been elected in byelections after the rate was set), the councillors were disqualified on 30 March. The Transport and General Workers Union ended financial support for the Liverpool and Lambeth councillors at the beginning of April, having spent £107,000 up to then. At the end of July 1986, the surcharged Lambeth councillors were given 21 months to pay off the surcharges; they were to pay £5,000 per month between them.
Liverpool had elections three years out of four, with one third of councillors elected in each election. The Liverpool councillors did appeal - bringing in the argument that the extraordinary audit had not notified the councillors of their right for an oral hearing to put their case before making a finding of wilful misconduct. The Court of Appeal agreed that an oral hearing ought to have been allowed, but that the subsequent High Court hearing had cured that deficiency. The councillors then appealed to the House of Lords which unanimously rejected the appeal on 12 March 1987, ruling that the auditor's procedure was fair and not prejudiced against the council. The total surcharge to be paid by 47 current and former councillors (two had died in the meantime) amounted to £333,000.
Just as the Lambeth councillors' five year disqualification was ending, they were sent further letters inviting them to attend a hearing at Lambeth Town Hall on 3 April 1991 which was to look at the final year's accounts for 1985-86. The auditor was looking into whether the council's final outturn, which showed an additional loss of interest amounting to £212,000 over and above the amount surcharged in 1986, should be the subject of a new surcharge. Former council leader Ted Knight described it as a "witch hunt", asserting that it had been a political decision by the Government to suspend the councillors from office for a further five years and that it amounted to being tried twice for the same offence. No further surcharge was levied.
Liverpool budget
Liverpool's adoption of a deficit budget for 1985/86 meant that the council quickly ran short of money. By September it was apparent that without a new source of funds, the council would be insolvent in December; as an employer it was therefore obliged to issue 90-day redundancy notices to its entire workforce. After this decision was announced on 6 September, the council's joint shop stewards called for an indefinite strike, and also occupied council buildings and prevented the council from holding a meeting to formally vote to issue the redundancy notices. The national leaderships of the trade unions attempted to restrain their local branches from going ahead with the strike, and when NALGO members voted against the strike by 7,284 to 8,152, it was called off.The redundancy notices were issued on 27 September, together with a letter from the council's leader and deputy leader (John Hamilton and Derek Hatton) explaining that there was no intention to make any employee redundant but that the notices were a legal requirement. With time running out, the council had to hire taxis to distribute the notices. At the Labour Party conference the following week, David Blunkett agreed with Hatton that the GLC's Director-General Maurice Stonefrost could offer advice to Liverpool. Stonefrost suggested increasing rates by 15%, and cutting the housing programme. The council's budget problems for the 1985-86 financial year were only solved when the council removed £23m from its capital budget to fund revenue spending, and borrowed £30m from Swiss banks to replenish the capital fund. The council also transferred £3m in loans which it had given to other Labour councils and found £3m of budget savings. The council's Finance Committee approved this plan on 26 November 1985.
The audit process
The district auditors operated under the control of the Audit CommissionAudit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
, which was a body established by (although operationally independent of) central government. Given the highly politicised fight, there was speculation that the Government was encouraging the Commission. Looking back on the history, Martin Loughlin noted that the Government did not appear to be formally directing the Commission, but that there was probably extensive consultation. The Commissioners had on 6 June 1985 directed the extraordinary audits of Lambeth and Liverpool, although by that time the district auditors were already planning to take this course. The auditors calculated the loss to the council as being the amount lost from interest payments on the amount paid by the Department of Health and Social Services and the Treasury Valuer which were unable to be paid until a rate was set; Martin Loughlin notes that this interest had instead accrued to the Government and therefore no money was lost to the public purse.
Given that other councils went into the new financial year having deliberately set no rate, and seven had incurred financial loss through their delay, Audit Commissioners considered whether to subject them to the same audits as had been ordered on Lambeth and Liverpool. As the formal notice of surcharges were being sent to the Lambeth and Liverpool councillors in autumn 1985, it was not clear to the Commissioners whether there was a significant distinction between them and the councils which had backed down earlier. At regular meetings of the Commission, deputy controller Cliff Nicholson had to give an update; his regular answer was that auditors were awaiting information from the councils before they could proceed. There were several reasons to delay action: the Lambeth and Liverpool appeals were proceeding, ratepayers were separately objecting to the accounts, and new auditors in Islington and Hackney were being challenged by the councils. The Commission also needed legal advice whether to proceed against all seven councils together, or one at a time.
A Conservative member of the Commission, Ian Coutts, became concerned at the prolonged delay. The history of the Audit Commission, "Follow the Money", notes that the controller and deputy controller had decided before the end of 1985 that having acted on Lambeth and Liverpool, it would be better to take no action on the others, and then sought reasons to justify this lack of action. One of the reasons for this stance was concern that Lambeth and Liverpool appeals might be successful; another was that no council sought to follow the same strategy in the next financial year. Writing a decade earlier, Martin Loughlin also believed that having made an example of Lambeth and Liverpool, the most confrontational councils, the Audit Commission had no need to pursue the others.
After the High Court ruled in favour of the auditor, the Commission obtained legal advice from Robert Alexander
Robert Alexander, Baron Alexander of Weedon
Robert Scott Alexander, Baron Alexander of Weedon, QC, FRSA was a British barrister, banker and Conservative politician....
QC who agreed that taking on other councils would be useless. David Blunkett agreed in an interview in New Society in March 1986 that pursuing other councils would look "highly political" and would negate what the Commission had achieved in auditing Lambeth and Liverpool. Although the district auditor for Sheffield prepared two papers in March 1987, one justifying the issue of a certificate of wilful misconduct and the other not, and obtained a legal opinion advising him to submit the first, he decided to take no action; no other auditor sought to pursue losses due to late setting of rates.
Legal changes
The Government quickly moved to cut off the chances for a repeat of the tactic of setting no rate, by introducing legislation which set a deadline for approving a budget. Professor Malcolm GrantMalcolm Grant
Malcolm John Grant, CBE is the Provost and President of University College London. He took up the post – the principal academic and administrative officer and head of UCL – on 1 August 2003. Since then, UCL has developed as one of the world's leading universities and he has tackled critical...
, a leading local government academic, regarded it as remarkable that they had neglected to block this gap in the Rates Act 1984. The Local Government Act 1986
Local Government Act 1986
The Local Government Act 1986 is an Act of the Parliament of the United Kingdom.- Section 2A :It is best known for having been amended by the notorious Section 28 of the Local Government Act 1988, which added the now-repealed Section 2A to this Act, restricting local authorities from a number of...
, which in section 1 required councils to set a rate by 1 April each year, received Royal Assent on 26 March 1986.
This Act was followed by the Local Government Act 1988
Local Government Act 1988
The United Kingdom Local Government Act of 1988 was famous for introducing the controversial Section 28 into law. In terms of the section 28 of the Local Government Act 1988, Local Authorities were prohibited from promoting in specified category of schools, "the teaching of the acceptability of...
, which gave auditors power to issue a 'prohibition order' to negate any decision by a local authority which would lead to a breach in the law, and also gave auditors the power to initiate a judicial review of any decision or failure to act which might have an effect on the council's accounts. The Audit Commission welcomed the second power in particular as it was broadly worded. The Local Government and Housing Act 1989 then required local authorities to designate one of their officers as a "Monitoring Officer" who would have the duty of alerting the Director of Finance to any legally questionable decision.
Political effects
Stewart Lansley, writing in the Labour Party journal New Socialist in July 1985, argued that the ratecapping fight had very quickly turned from councils fighting the Government into a fight within the Labour Party. He pointed out that three leaders of Labour councils had resigned when budgets were passed, and council meetings had seen angry scenes of abuse, recrimination and intimidation; dissenting councillors in Southwark had been sent white feathers. Martin Loughlin, author of "Legality and Locality", ascribed the reason for the failure of the ratecapping challenge to the councils not being as united as they appeared; some had viewed it as a direct confrontation of the Government, while the majority saw an opportunity to exploit an ambiguity in the law. Only a very small number of councils could get a majority for a blatantly unlawful policy. Labour Party leader Neil KinnockNeil Kinnock
Neil Gordon Kinnock, Baron Kinnock is a Welsh politician belonging to the Labour Party. He served as a Member of Parliament from 1970 until 1995 and as Labour Leader and Leader of Her Majesty's Loyal Opposition from 1983 until 1992 - his leadership of the party during nearly nine years making him...
told the party's Local Government committee on 10 March 1986 that there was no possibility of a Labour government extending a retrospective indemnity from surcharges.
The Labour Party conference was held in the week that Liverpool's council employees received their redundancy notices. On the morning that Labour Party leader Neil Kinnock
Neil Kinnock
Neil Gordon Kinnock, Baron Kinnock is a Welsh politician belonging to the Labour Party. He served as a Member of Parliament from 1970 until 1995 and as Labour Leader and Leader of Her Majesty's Loyal Opposition from 1983 until 1992 - his leadership of the party during nearly nine years making him...
was due to make his speech, an article by the Anglican and Roman Catholic Bishops of Liverpool David Sheppard
David Sheppard
David Stuart Sheppard, Baron Sheppard of Liverpool was the high-profile Bishop of Liverpool in the Church of England who played cricket for Sussex and England in his youth...
and Derek Worlock denounced the Militant leadership and council's "policy of confrontation". Kinnock's speech denounced "the grotesque chaos of a Labour council .. hiring taxis to scuttle round a city, handing out redundancy notices to its own workers". In the aftermath of the speech, the Labour Party National Executive Committee
National Executive Committee
The National Executive Committee or NEC is the chief administrative body of the UK Labour Party. Its composition has changed over the years, and includes representatives of affiliated trade unions, the Parliamentary Labour Party and European Parliamentary Labour Party, Constituency Labour Parties,...
suspended the Liverpool district Labour Party and ordered an investigation, which resulted eventually in the expulsion of all Militant tendency members from the Labour Party.
Ongoing ratecapping
With the use of 'creative accounting' techniques by councils to conceal spending while remaining within the law, ratecapping did not immediately lead to the reductions in local government spending for which the Government was hoping. One observer saw no evidence of redundancies through capping before 1987. The Audit Commission kept a close eye on the techniques of creative accounting, under pressure from the Department of the EnvironmentDepartment of the Environment
Department of the Environment or Department for the Environment may refer to:-Australia:* Department of the Environment and Water Resources...
which criticised the Commission's "apparent inability to date to make any impact" on it. Council practices grew more sophisticated as the number of Public Interest Reports issued by district auditors increased. However it was only legislative changes which succeeded in stopping the unorthodox financial practices. The Local Government Act 1985
Local Government Act 1985
The Local Government Act 1985 is an Act of Parliament in the United Kingdom. Its main effect was to abolish the county councils of the metropolitan counties that had been set up in 1974 by the Local Government Act 1972, along with the Greater London Council that had been established in 1965.The...
introduced automatic precept limitation for the new authorities created by it in the Metropolitan counties
Metropolitan county
The metropolitan counties are a type of county-level administrative division of England. There are six metropolitan counties, which each cover large urban areas, typically with populations of 1.2 to 2.8 million...
.
Just as the fight between local authorities and the Government over rate-capping was starting in March 1985, the Government was deciding whether to proceed with a proposal for a new form of tax for local government replace to replace Rates, which would take the form of a flat rate charge for each individual adult resident living within the area of the local authority. According to one published history of this reform, the fight and the acrimony over rate-capping helped to encourage the Government and the Prime Minister in particular to support this change. This proposal was eventually enacted as the Community Charge
Community Charge
The Community Charge, popularly known as the "poll tax", was a system of taxation introduced in replacement of the rates to part fund local government in Scotland from 1989, and England and Wales from 1990. It provided for a single flat-rate per-capita tax on every adult, at a rate set by the...
. For the 1986-87 financial year, twelve local authorities were rate-capped. Ten of them had been rate-capped the previous year (Basildon, Camden, Greenwich, Hackney, Haringey, Islington, Lambeth, Lewisham, Southwark and Thamesdown); two were newly selected, Liverpool and Newcastle upon Tyne
Newcastle upon Tyne
Newcastle upon Tyne is a city and metropolitan borough of Tyne and Wear, in North East England. Historically a part of Northumberland, it is situated on the north bank of the River Tyne...
. The following year, 1987–88, saw 20 authorities rate-capped and in 1988-89 there were 17.
In June 1990, after a favourable opinion from the Government's law officers, it was decided to use the power to issue a general limitation on local government budgets in all authorities which had been enacted in the Rates Act 1984 but had remained unused until then. This decision removed most local government financial autonomy. This 'universal capping' continued from the 1991-92 financial year until 1998-99; when it was ended the Secretary of State took reserve powers under the Local Government Act 1999 to regulate increases in the Council Tax
Council tax
Council Tax is the system of local taxation used in England, Scotland and Wales to part fund the services provided by local government in each country. It was introduced in 1993 by the Local Government Finance Act 1992, as a successor to the unpopular Community Charge...
(which had replaced the Community Charge). The Secretary of State was also allowed to require reduction in individual local authorities' budgets.
Sources
- "Rates: Proposals for Rate Limitation and Reform of the Rating System" (CmndCommand paperA command paper is a document issued by the British government and presented to Parliament. White papers, green papers, treaties, reports from Royal Commissions and various government bodies can all be released as command papers, so-called because they are presented to Parliament formally 'By Her...
. 9008), Department of the Environment and Welsh Office, 1 August 1983.
External links
- Swindon is 'Ratecapped': Live local television coverage of a public meeting in SwindonSwindonSwindon is a large town within the borough of Swindon and ceremonial county of Wiltshire, in South West England. It is midway between Bristol, west and Reading, east. London is east...
in 1984 over the ratecapping of Thamesdown borough council, from the archive of Swindon ViewpointSwindon ViewpointLocal programming in Swindon began life as Swindon Viewpoint on the 11 September 1973 as an experiment in community cable television, or Public-access television. It was managed initially by Richard Dunn, who later went on to become Head of Thames Television. This experiment started with EMI...
.