Rates Act 1984
Encyclopedia
The Rates Act 1984 is an Act of Parliament
in the United Kingdom
, which controls the tax-raising powers of local authorities.
government had been at odds with several high spending Labour
controlled councils. The Local Government Finance and Planning Act 1980 and the Local Government Finance Act 1982 allowed central government to decide spending limits for individual authorities and could remove general grants, which accounted for approximately 60% of the councils’ income, if they continued to overspend. Several councils continued with their programmes of services and had their general grant cut under the earlier legislation. For example, by 1983, the Greater London Council
(GLC) had lost all its central funding.
However, the GLC and other councils sought to recoup the loss by increasing the amount they levied in domestic and business rates
; a tax paid by companies and homeowners.
(or "beyond the powers") set out in the Act could be prosecuted, banned from office for up to ten years and fined. The power to contral rates came into force for the year beginning 1 April 1985.
and Liverpool
councillors did not back down and eventually the Act was used to prosecute and fine the leader of Lambeth Council, Ted Knight
, and others. He was banned from office for ten years.
), which was paid by more people and intended to reveal inefficient councils, who would be forced to levy a higher charge in order to fund their overspending. Business rates are still levied, but at a level set by central government since 1990.
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, which controls the tax-raising powers of local authorities.
Background
The ThatcherMargaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
government had been at odds with several high spending Labour
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...
controlled councils. The Local Government Finance and Planning Act 1980 and the Local Government Finance Act 1982 allowed central government to decide spending limits for individual authorities and could remove general grants, which accounted for approximately 60% of the councils’ income, if they continued to overspend. Several councils continued with their programmes of services and had their general grant cut under the earlier legislation. For example, by 1983, 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...
(GLC) had lost all its central funding.
However, the GLC and other councils sought to recoup the loss by increasing the amount they levied in domestic and business rates
Rates (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...
; a tax paid by companies and homeowners.
Provisions
The Rates Act 1984 allowed the government to individually set caps for the increases to rates that each authority could levy. Those who acted ultra viresUltra vires
Ultra vires is a Latin phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is...
(or "beyond the powers") set out in the Act could be prosecuted, banned from office for up to ten years and fined. The power to contral rates came into force for the year beginning 1 April 1985.
Use of the Act
The Act was successfully used to force 31 councils (30 were Labour controlled), who had initially resisted, to comply with government taxation and spending limits. Of those, only LambethLondon Borough of Lambeth
The London Borough of Lambeth is a London borough in south London, England and forms part of Inner London. The local authority is Lambeth London Borough Council.-Origins:...
and 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...
councillors did not back down and eventually the Act was used to prosecute and fine the leader of Lambeth Council, Ted Knight
Ted Knight (Lambeth)
Ted Knight was a local politician in London, England who was leader of Lambeth London Borough Council from 1978.When the Conservative Government took powers through the Rates Act 1984 to limit the budgets of local councils, several left-wing Labour councils organised a rebellion in which they...
, and others. He was banned from office for ten years.
Legacy
The domestic rates were replaced in 1990 by the Community Charge (dubbed Poll TaxPoll tax
A poll tax is a tax of a portioned, fixed amount per individual in accordance with the census . When a corvée is commuted for cash payment, in effect it becomes a poll tax...
), which was paid by more people and intended to reveal inefficient councils, who would be forced to levy a higher charge in order to fund their overspending. Business rates are still levied, but at a level set by central government since 1990.