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The rate-capping rebellion was a campaign within English local councils in 1985 which aimed to force the
Conservative Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
government of
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
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 fifteen 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 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 Mayor J ...
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 () is an area of southeast London, England, south of Charing Cross. It is the principal area of the London Borough of Lewisham, and was within the historic county of Kent until 1889. It is identified in the London Plan as one ...
conceded in unique circumstances. Two councils,
Lambeth Lambeth () is a district in South London, England, in the London Borough of Lambeth, historically in the County of Surrey. It is situated south of Charing Cross. The population of the London Borough of Lambeth was 303,086 in 2011. The area e ...
and
Liverpool Liverpool is a City status in the United Kingdom, city and metropolitan borough in Merseyside, England. With a population of in 2019, it is the List of English districts by population, 10th largest English district by population and its E ...
held out for longer than others and were subjected to an extraordinary
audit An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon.” Auditing ...
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 Gordon Kinnock, Baron Kinnock (born 28 March 1942) is a British former politician. As a member of the Labour Party, he served as a Member of Parliament from 1970 until 1995, first for Bedwellty and then for Islwyn. He was the Leader of ...
.


Background


Rates

Until 1989 in Scotland and 1990 in England and Wales, local councils raised their own revenue through a tax known as
rates Rate or rates may refer to: Finance * Rates (tax), a type of taxation system in the United Kingdom used to fund local government * Exchange rate, rate at which one currency will be exchanged for another Mathematics and science * Rate (mathema ...
. 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 A precept (from the la, præcipere, to teach) is a commandment, instruction, or order intended as an authoritative rule of action. Religious law In religion, precepts are usually commands respecting moral conduct. Christianity The term is en ...
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 Party The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right. Political parties called The Conservative P ...
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 Michael Ray Dibdin Heseltine, Baron Heseltine, (; born 21 March 1933) is a British politician and businessman. Having begun his career as a property developer, he became one of the founders of the publishing house Haymarket. Heseltine served ...
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.Butler, Adonis, Travers, "Failure in British Government", p. 25-7. A table showing the penalties applied is in Grant, "Ratecapping and the Law", p. 27. 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.Butler, Adonis, Travers, "Failure in British Government", p. 28. As councils found their grants from central government cut, their response was not to cut their budgets, but to increase the rates even further to compensate.Campbell-Smith, "Follow the Money", p. 95-6. Pressure within the Government, especially from the Treasury and Chief Secretary
Leon Brittan Leon Brittan, Baron Brittan of Spennithorne, (25 September 193921 January 2015) was a British Conservative politician and barrister who served as a European Commissioner from 1989 to 1999. As a member of Parliament from 1974 to 1988, he serv ...
was applied to the Department of the Environment to take more effective action.Butler, Adonis, Travers, "Failure in British Government", p. 37. On 16 July 1982 Brittan told the conference of the
Society of Local Authority Chief Executives The Society of Local Authority Chief Executives and Senior Managers (Solace) is a representative body for senior strategic managers working in the public sector in the United Kingdom. Legally ''The Society of Local Authority Chief Executives and S ...
that continued overspending was "bound to cause central government to intervene ever more obtrusively and seek ever greater powers over local authority finances".David Walker, "Brittan seeks fewer teachers", ''The Times'', 17 July 1982, p. 3.


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 Heseltine Michael Ray Dibdin Heseltine, Baron Heseltine, (; born 21 March 1933) is a British politician and businessman. Having begun his career as a property developer, he became one of the founders of the publishing house Haymarket. Heseltine served ...
and his deputy Tom King thought it would be too complicated and possibly unconstitutional, and the
Attorney General In most common law jurisdictions, the attorney general or attorney-general (sometimes abbreviated AG or Atty.-Gen) is the main legal advisor to the government. The plural is attorneys general. In some jurisdictions, attorneys general also have exec ...
Sir Michael Havers had to give advice. When the committee reported to Cabinet on 17 January 1983 against rate limitation,
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
rejected its report and instructed Tom King (who had since been promoted to Environment Secretary) to come up with a foolproof system.Butler, Adonis, Travers, "Failure in British Government", p. 37-8.


Rate limitation proposed

King put Terry Heiser, a
civil servant The civil service is a collective term for a sector of government composed mainly of career civil servants hired on professional merit rather than appointed or elected, whose institutional tenure typically survives transitions of political leaders ...
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 Thatcher had called a
general election A general election is a political voting election where generally all or most members of a given political body are chosen. These are usually held for a nation, state, or territory's primary legislative body, and are different from by-elections ( ...
.Butler, Adonis, Travers, "Failure in British Government", p. 38. The
Conservative Party The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right. Political parties called The Conservative P ...
manifesto A manifesto is a published declaration of the intentions, motives, or views of the issuer, be it an individual, group, political party or government. A manifesto usually accepts a previously published opinion or public consensus or promotes a ...
declared: The Conservatives' victory in the election was followed on 1 August 1983 by a
white paper A white paper is a report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision. 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):"Rates: Proposals for rate limitation and reform of the rating system", Department of the Environment and Welsh Office, Cmnd. 9008, August 1983, para. 3.6, p. 15. 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 City of London Corporation, officially and legally the Mayor and Commonalty and Citizens of the City of London, is the municipal governing body of the City of London, the historic centre of London and the location of much of the United King ...
. 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.David Walker, "White Paper spells out powers to tame high-spending councils", ''The Times'', 2 August 1983, p. 4. 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 into a political fight, casting doubt on its independence.Campbell-Smith, "Follow the Money", p. 81.


Parliamentary passage of the Rates Bill

On 20 December the Rates Bill was published, with the new Environment Secretary Patrick 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 The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminst ...
and Jenkin was said to have reminded them of the
Salisbury Convention The Salisbury Convention (officially called the Salisbury Doctrine, the Salisbury-Addison Convention or the Salisbury/Addison Convention) is a constitutional convention in the United Kingdom under which the House of Lords will not oppose the s ...
which prevented the Lords from rejecting any Bill mentioned in an election manifesto.Julian Haviland and Hugh Clayton, "Rate-capping Bill faces strongest test in the Lords", ''The Times'', 21 December 1983, p. 1. The Bill was soon under criticism in Parliament by Conservative MPs Geoffrey Rippon and
Anthony Beaumont-Dark Sir Anthony Michael Beaumont-Dark (11 October 1932 – 2 April 2006) was a British politician. He was born in Birmingham on 11 October 1932, the son of a businessman. He was educated at Cedarhurst School, Solihull; Shirley College; Birmingham Co ...
,"Tory MPs attack rates capping Bill", ''The Times'', 23 December 1983, p. 4. and outside it by David Howell.Anthony Bevins, "Rates Bill attacked by Howell", ''The Times'', 5 January 1984, p. 2. When the Bill was debated on 17 January 1984, the opposition was led by former Prime Minister
Edward Heath Sir Edward Richard George Heath (9 July 191617 July 2005), often known as Ted Heath, was a British politician who served as Prime Minister of the United Kingdom from 1970 to 1974 and Leader of the Conservative Party from 1965 to 1975. Heath a ...
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.Julian Haviland, "Heath leads Tory rebellion over rate capping", ''The Times'', 18 January 1984, p. 1. 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."Rate Capping Bill must be law by summer", ''The Times'', 1 March 1984, p. 4. After making a minor concession exempting smaller councils from selective capping,"Small councils offered rate-capping exemption", ''The Times'', 7 March 1984, p. 2. 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,"Rate Capping Action forced on Government by the continual upward trend in rates", ''The Times'', 10 April 1984, p. 4. the Government regarding it as an issue of confidence which justified them summoning many Peers who rarely attended."Chief whip defends rates vote", ''The Times'', 27 April 1984, p. 4. 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,"Rate cap vote", ''The Times'', 9 May 1984, p. 1. 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

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 , native_name_lang = cy , logo = , colorcode = , leader = collective leadership(''Militant'' editorial board) , leader1_name = Ted Grant , leader1_title = Political Secretary , leader2_name = Pet ...
, a group which had a majority of the active members of the Liverpool District Labour Party which directed the activities of the council group.
Michael Crick Michael Lawrence Crick (born 21 May 1958) is an English broadcaster, journalist and author. He was a founding member of the '' Channel 4 News'' Team in 1982 and remained there until joining the BBC in 1990.Ian Burrel"Michael Crick: 'Cuts are hu ...
, "Militant", Faber & Faber, 1984, chapter 9 ''passim''. See also the majority report in "Report of the investigation into Liverpool District Labour Party", National Executive Committee of the Labour Party, 1986.
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.Taaffe and Mulhean, "Liverpool – A City that Dared to Fight"
chapter 6
pp. 101–103.
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.Hatton, "Inside Left", p. 80-1. 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 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.Hatton, "Inside Left", p. 82. Instead the six Labour rebels, 30 Liberals and 18 Conservatives voted to postpone consideration.David Walker, "Liverpool postpones its budget", ''The Times'', 30 March 1984, p. 1. 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.Hatton, "Inside Left", p. 82-3. 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."Jenkin to talk with Liverpool leaders", ''The Times'', 10 May 1984, p. 4. The council therefore postponed budgeting again until the outcome of these talks was known.Hatton, "Inside Left", p. 83. Nothing resulted from the meeting with the councillors on 7 June, with the council leadership still putting forward an illegal budget,Hugh Clayton, "Liverpool budget setback", ''The Times'', 14 June 1984, p. 2. 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.Hatton, "Inside Left", p. 84-5. The new budget involved a rate rise of 17%, which appeared to break the election commitment to hold rate rises in line with inflation – see Loughlin, "Legality and Locality", p. 187.


Reactions to Liverpool

Other commentators agreed that Liverpool's tactics had been successful: ''
The Times ''The Times'' is a British daily national newspaper based in London. It began in 1785 under the title ''The Daily Universal Register'', adopting its current name on 1 January 1788. ''The Times'' and its sister paper '' The Sunday Times'' ( ...
'' printed a
leader Leadership, both as a research area and as a practical skill, encompasses the ability of an individual, group or organization to "lead", influence or guide other individuals, teams, or entire organizations. The word "leadership" often gets v ...
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"."Danegeld in Liverpool", ''The Times'', 11 July 1984, p. 11. Within the Conservative government the political impact was immense.Baker, "The Turbulent Years", p. 105. While the Government had not wanted to engage in a major fight in 1984 at the same time as the
miners' strike Miners' strikes are when miners conduct strike actions. See also *List of strikes References {{Reflist Miners A miner is a person who extracts ore, coal, chalk, clay, or other minerals from the earth through mining. There are two s ...
, attitudes quickly hardened.Loughlin, "Legality and Locality", p. 197-8. 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.Loughlin, "Legality and Locality", p. 187.


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 Council to copy the Liverpool option and confront the Government with a deficit budget.David Walker, "Pressure on Lewisham to bring in illegal budget", ''The Times'', 31 May 1984, p. 4. 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.According to Ken Livingstone's recollection, Margaret Hodge (then leader of Islington Borough Council) claimed in 1985 to have come up with the idea. See Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 309. 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 Martin McDonnell (born 8 September 1951) is a British politician who served as Shadow Chancellor of the Exchequer from 2015 to 2020. A member of the Labour Party, he has been Member of Parliament (MP) for Hayes and Harlington since 1997. ...
, chair of the finance committee of the
Greater London Council The Greater London Council (GLC) was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council (LCC) which had covered a much smaller area. The GLC was dissolved in 198 ...
. On 22 June 1984, they signed a statement published in ''Labour Herald'' which outlined the strategy.The full text is included in Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 309-10. 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 Greenwich London Borough Council is the local authority for the Royal 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 23 wards, electin ...
was quoted saying that enough councils would join "sufficient .. to force the Government's hand".Hugh Clayton, "Labour councils may refuse to levy rates in capping protest", ''The Times'', 25 June 1984, p. 2. Especially in London the policy was approved by groups of Labour councillors, and by the Greater London Labour Party executive.Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 311. 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.David Walker, "Councillors likely to toe Labour line on rates", ''The Times'', 6 July 1984, p. 2. The host, leader of Sheffield city council
David Blunkett David Blunkett, Baron Blunkett, (born 6 June 1947) is a British Labour Party politician who has been a Member of the House of Lords since 2015, and previously served as the Member of Parliament (MP) for Sheffield Brightside and Hillsborough ...
wrote a paper for the conference which said that "collective action, achieving Government retreat, and not martyrdom, is the objective"."Local Government Legislation: The Way Forward", paper to Labour Party Local Government Conference, quoted in Loughlin, "Legality and Locality", p. 188. 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.Hugh Clayton, "Rate-fixing delay planned", ''The Times'', 9 July 1984, p. 2. 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.Loughlin, "Legality and Locality", p. 188-9.


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 Unit The Local Government information Unit (LGiU) is a local government membership body, thinktank and registered charity. Established in 1983 as a membership organisation for UK local authorities, the LGiU states that its mission is to strengthen 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.Loughlin, "Legality and Locality", p. 190. 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.Grant, "Rate Capping and the Law", p. 4. It was strongly opposed by Liverpool, where the deputy leader
Derek Hatton Derek Anthony Hatton (born 17 January 1948) is a British former politician, later a broadcaster, property developer and businessman. He gained national prominence as deputy leader of Liverpool City Council in the 1980s and was a member of the Tr ...
regarded it as "a totally negative strategy",Hatton, "Inside Left", p. 90. 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.Hatton, "Inside Left", p. 91-2. 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 supportHatton, "Inside Left", p. 90-1. and most of the other councils would soon drop out.Hatton, "Inside Left", p. 92.


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 Committee sought approval for a statement which endorsed non-compliance with the Government and called for unity, but did not explicitly support illegality.The full text of the NEC statement is at pages 295–7 of "Report of the Annual Conference of the Labour Party, 1984", . 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".See pages 127–8 of the Labour Party Conference Report for the full text. The second (composite 43) was moved by Derek Hatton on behalf of
Liverpool Broadgreen Liverpool Broadgreen was a parliamentary constituency centred on the Broadgreen suburb of Liverpool. It returned one Member of Parliament (MP) to the House of Commons of the Parliament of the United Kingdom. The constituency was created for t ...
Constituency Labour Party __NOTOC__ A constituency Labour Party (CLP) is an organisation of members of the British Labour Party who live in a particular parliamentary constituency. In England and Wales, CLP boundaries coincide with those for UK parliamentary constituenc ...
declared support for "any councils which are forced to break the law as a result of the Tory government's policies".See page 130 of the Labour Party Conference Report for the full text. On the previous day, Neil Kinnock had told the party not to "scorn legality", but the General Secretary of NUPE
Rodney Bickerstaffe Rodney Kevan Bickerstaffe (6 April 1945 – 3 October 2017) was a British trade unionist. He was General Secretary of the National Union of Public Employees (1982–1993) and UNISON (1996–2001), Britain's largest trade union at the time. He l ...
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, Baron Blunkett, (born 6 June 1947) is a British Labour Party politician who has been a Member of the House of Lords since 2015, and previously served as the Member of Parliament (MP) for Sheffield Brightside and Hillsborough ...
(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.Philip Webster, "Labour votes to support illegal council spending", ''The Times'', 4 October 1984, p. 1.


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,David Walker, "Jenkin to meet Labour group fighting rate-capping", ''The Times'', 17 January 1985, p. 2. 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.David Walker, "Jenkin firm on rate capping", ''The Times'', 5 February 1985, p. 2. 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. Peter Riddell, "Kinnock opposes illegal action on rate-capping", ''Financial Times'', 2 February 1985. Notwithstanding his criticism, 26 councils were still considering defying the law.Margaret Van Hattem, "Councils' Labour leaders move against rate-capping", ''Financial Times'', 4 February 1985.


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.Grant, "Rate Capping and the Law", p. 65. Section 2 covered rate-making authorities, section 11 applied to precepting authorities. 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 that was 10 March.Loughlin, "Locality and Legality", p. 189-90. The applicable provision was section 12(6) of the General Rate Act 1967. 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.Grant, "Rate Capping and the Law", p. 68. 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.Loughlin, "Legality and Locality", p. 186. 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.Loughlin, "Legality and Locality", p. 191.


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 The House of Commons is the name for the elected lower house of the bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of parliament. T ...
on 24 July 1984. There were 18 authorities on the list: *
Basildon District Council The Borough of Basildon is a local government district in south Essex in the East of England, centred on the town of Basildon. It was formed as the Basildon District on 1 April 1974 from the former area of Basildon Urban District and the part ...
* Brent London Borough Council * Camden London Borough Council *
Greater London Council The Greater London Council (GLC) was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council (LCC) which had covered a much smaller area. The GLC was dissolved in 198 ...
*
Greenwich London Borough Council Greenwich London Borough Council is the local authority for the Royal 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 23 wards, electin ...
*
Hackney London Borough Council Hackney London Borough Council is the local government authority for the London Borough of Hackney, London, England, one of 32 London borough councils. The council is unusual in the United Kingdom local government system in that its executive fu ...
*
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. As of 2022, Haringey is divided into 21 wards, ...
*
Inner London Education Authority The Inner London Education Authority (ILEA) was an ad hoc local education authority for the City of London and the 12 Inner London boroughs from 1965 until its abolition in 1990. The authority was reconstituted as a directly elected body corp ...
* Islington London Borough Council *
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, and one of the 32 in the United Kingdom capital of London. The council meets at Lambeth Town ...
*
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 control ...
* Lewisham London Borough Council * Merseyside County Council *
Portsmouth City Council Portsmouth City Council is the local authority of the city of Portsmouth, Hampshire, England. It is a unitary authority, having the powers of a non-metropolitan county and district council combined. It provides a full range of local government s ...
*
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. It is currently under No Overall Con ...
*
Southwark London Borough Council Southwark London Borough Council is the local authority for the London Borough of Southwark in Greater London, England. It is a London borough council, one of 32 in the United Kingdom capital of London. History There have previously been a number ...
*
South Yorkshire County Council The South Yorkshire County Council (SYCC) — also known as South Yorkshire Metropolitan County Council — was the top-tier local government authority for the metropolitan county of South Yorkshire from 1 April 1974 to 31 March 1986. A strategic ...
*
Thamesdown Borough Council The Borough of Swindon is a local government authority in South West England, centred on the urban area and town of Swindon and forming part of the ceremonial county of Wiltshire. History In 1974 the Thamesdown district of Wiltshire was crea ...
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."Jenkin curb on big spending councils", ''The Times'', 25 July 1984, p. 4. 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,Colin Rallings and Michael Thrasher, "Local Elections in Britain: A Statistical Digest", Local Government Chronicle Elections Centre, 2nd edition 2003, , p. 219. 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."Brent riot as Tories gain power", ''The Times'', 16 December 1983, p. 1. Portsmouth City Council's Conservative leader Ian Gibson called the decision to cap his budget "iniquitous",Rupert Morris, "Rate-cap councils pledge acts of defiance", ''The Times'', 25 July 1984, p. 28. 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,Hugh Clayton, "Tory council leader to oppose ministers over rate-capping", ''The Times'', 27 July 1984, p. 2. but when the matter came to a vote on 25 September the council voted not to do so.Anthony Bevins, "Jenkin attacks Labour on leak", ''The Times'', 26 September 1984, p. 2.


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.Hugh Clayton, "Capping law will force cut in rate demands", ''The Times'', 12 December 1984, p. 1. 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.David Walker, "Jenkin fixes rate for four defiant councils", ''The Times'', 31 January 1985, p. 2. 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."Jenkin says cuts must be made", ''The Times'', 7 February 1985, p. 4. 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.Philip Webster, "Jenkin bows to Labour over rate-capping debate", ''The Times'', 20 February 1985, p. 1. 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.Philip Webster, "MPs pass rate-cap proposals", ''The Times'', 26 February 1985, p. 1. 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. "Rate cap brings cuts in place of rises", ''The Times'', 27 February 1985, p. 2.


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."The Battle for Lambeth", Lambeth Fighting Fund, 1986, p. 4.


Merseyside and South Yorkshire

The two
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, with populations between 1 and 3 million. They were created in 1974 and are each di ...
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.Hugh Clayton, "Jenkin warns Liverpool that haggling over rates is ended", ''The Times'', 8 March 1985, p. 4. 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,Robin Pauley, "Labour councils retreat over rate-capping", ''Financial Times'', 8 March 1985. 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.Grant, "Rate Capping and the Law", p. 79. Council leader Keva Coombes called for extra assistance but was rebuffed by Patrick Jenkin.


GLC and ILEA

From an early stage, the GLC and its leader
Ken Livingstone Kenneth Robert Livingstone (born 17 June 1945) is an English politician who served as the Leader of the Greater London Council (GLC) from 1981 until the council was abolished in 1986, and as Mayor of London from the creation of the office ...
and finance chair
John McDonnell John Martin McDonnell (born 8 September 1951) is a British politician who served as Shadow Chancellor of the Exchequer from 2015 to 2020. A member of the Labour Party, he has been Member of Parliament (MP) for Hayes and Harlington since 1997. ...
were heavily involved in planning the campaign to defy rate-capping. Their involvement also took in the
Inner London Education Authority The Inner London Education Authority (ILEA) was an ad hoc local education authority for the City of London and the 12 Inner London boroughs from 1965 until its abolition in 1990. The authority was reconstituted as a directly elected body corp ...
which was technically a special committee of the
Greater London Council The Greater London Council (GLC) was the top-tier local government administrative body for Greater London from 1965 to 1986. It replaced the earlier London County Council (LCC) which had covered a much smaller area. The GLC was dissolved in 198 ...
, consisting of members elected to the GLC from inner London, plus one member from each of the inner
London borough The London boroughs are the 32 local authority districts that together with the City of London make up the administrative area of Greater London; each is governed by a London borough council. The present London boroughs were all created at ...
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 The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminst ...
judgment ordering it to raise public transport fares.Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 208. 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.Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 310-1. 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 The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminst ...
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.Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 311-2. 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 grey 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.Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 318. See also p. 311-2 which speculates that the budget limit did not take account of the removal of
London Regional Transport London Regional Transport (LRT) was the organisation responsible for most of the public transport network in London, England, between 1984 and 2000. In common with all London transport authorities from 1933 to 2000, the public name and operatio ...
from the GLC budget.
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.Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 316-21. 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 Illtyd Harrington (14 July 1931 – 1 October 2015) was a British Labour Party politician who served as deputy leader of the Greater London Council (1981–84) and then subsequently as chairman (1984–85). He was a political ally of Ken Livi ...
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.Robin Pauley, "GLC characters stage their own version of Spitting Image show", ''Financial Times'', 12 March 1985. 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 Stephen Bundred (born 1952) is a retired Labour Party politician and public administrator in London, England. He is unusual in having had a career in party politics before holding high-ranking apolitical public offices, including as Chief Executi ...
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. Labour Party general secretary
Larry Whitty John Lawrence Whitty, Baron Whitty, (born 15 June 1943), known as Larry Whitty, is a British Labour Party politician. Early life Born in 1943, Whitty was educated at Latymer Upper School and graduated from St John's College, Cambridge, with a ...
personally lobbied Labour councillors. Livingstone, "If Voting Changed Anything, They'd Abolish It", p. 325-6.


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,Campbell-Smith, "Follow the money", p. 96. the council leadership invited the Audit Commission to independently investigate its spending, hoping that it would vindicate the council's decisions.Hugh Clayton, "Day of challenge for the rate-capped Tories", ''The Times'', 25 September 1984, p. 16. 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 is an adjective referring to something recently made, discovered, or created. New or NEW may refer to: Music * New, singer of K-pop group The Boyz Albums and EPs * ''New'' (album), by Paul McCartney, 2013 * ''New'' (EP), by Regurgitator ...
it had higher interest payments and higher spending on managing housing.Hugh Clayton, "Spending freeze on councils is dropped after voluntary cuts", ''The Times'', 27 September 1984, p. 4. See "Value for money at Basildon: A review carried out by the Audit Commission", Audit Commission, 1984. 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 In a limited company, the liability of 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. In a company limited by shares, the li ...
– Basildon Economic Development Corporation Ltd – through which the council would contract to pay grants of £140,000 to voluntary organisations."A loophole caps it", ''Basildon Standard Recorder'', 1 March 1985, p. 1. 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."Rates legal – but swimmers go under", ''Basildon Standard Recorder'', 15 March 1985, p. 1. Later that month the council announced its plan to sell council mortgages to a merchant bank to raise capital finance to build sheltered homes for the elderly, also evading the cap."Capital idea!", ''Basildon Standard Recorder'', 22 March 1985, p. 8.


Councils joining the protest but backing down


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."No move to set rate", ''Whitley Bay Guardian'', 1 March 1985, p. 1. 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.Katherine Wright, "Decision on Rate Deferred", ''Whitley Bay Guardian'', 15 March 1985, p. 18. 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."Split in Labour as Rate set", ''Whitley Bay Guardian'', 29 March 1985, p. 2. 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."Labour group suspend four", ''Whitley Bay Guardian'', 19 April 1985, p. 2.


Thamesdown

After the rate-capping of Thamesdown was announced, the Member of Parliament for
Swindon Swindon () is a town and unitary authority with borough status in Wiltshire, England. As of the 2021 Census, the population of Swindon was 201,669, making it the largest town in the county. The Swindon unitary authority area had a population ...
Simon Coombs (who was
Parliamentary Private Secretary A Parliamentary Private Secretary (PPS) is a Member of Parliament (MP) in the United Kingdom who acts as an unpaid assistant to a minister or shadow minister. They are selected from backbench MPs as the 'eyes and ears' of the minister in the ...
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.Hugh Clayton, "Forum plan may end Tory GLC discord", ''The Times'', 17 September 1984, p. 2. 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.Hugh Clayton, "Why the axe fell on Hinton Parva", ''The Times'', 8 December 1984, p. 3. On 7 March, Thamesdown passed a motion declaring its inability to set a rate.Hugh Clayton, "Labour rate-capping revolt weakened", ''The Times'', 8 March 1985, p. 1. 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 Housing Benefit is a means-tested social security benefit in the United Kingdom that is intended to help meet housing costs for rented accommodation. It is the second biggest item in the Department for Work and Pensions' budget after the state ...
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.Joe Wise, "Crunch Meeting on Rates Fight", ''Swindon and District Messenger'', 28 March 1985, p. 1. 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.The motion was supported by all but two Labour councillors, plus two members of the Alliance and one Independent councillor. See "Hecklers halt council's rate meeting", ''Swindon and District Messenger'', 3 April 1985, p. 1.


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 Soulsby 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.Colin Vann, "Tory taunts as rate decision is put back", ''Leicester Mercury'', 8 March 1985, p. 10. Although this vote was unanimous, the Labour leadership soon decided that there was no point in holding out.Mike Callaghan, "Left must build up its links", ''Labour Herald'', 12 April 1985, p. 7. 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."Plea to city over rate-cap", ''Leicester Mercury'', 26 March 1985, p. 9. From the other side, the Conservative group on
Leicestershire County Council Leicestershire County Council is the county council for the English non-metropolitan county of Leicestershire. It was originally formed in 1889 by the Local Government Act 1888. The county is divided into 52 electoral divisions, which return a to ...
attempted to get their authority to initiate a
judicial review Judicial review is a process under which executive, legislative and administrative actions are subject to review by the judiciary. A court with authority for judicial review may invalidate laws, acts and governmental actions that are incomp ...
as Leicester collected and passed on its precept; the attempt failed as the Liberal group opposed it."Liberals to stifle court bid", ''Leicester Mercury'', 27 March 1985, p. 1. 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."Labour's budget bid 'may be illegal'", ''Leicester Mercury'', 28 March 1985, p. 19. 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".Sue Dix and Deborah Ward, "'No cuts' pledge as legal rate is fixed", ''Leicester Mercury'', 29 March 1985, p. 10. Seven Labour councillors were absent from the meeting, continuing to support defiance.


Manchester

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."Rebel councils to retain rate support grants", ''The Times'', 7 March 1985, p. 36. 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 Graham Eric Stringer (born 17 February 1950) is a British Labour Party politician serving as MP for Blackley and Broughton since 1997. Before entering Parliament, he served as leader of Manchester City Council from 1984 to 1996, and chair of ...
insisted that the no rate strategy would continue.Gerald Brown and Michael Duffy, "Libs in rate crisis move", ''
Manchester Evening News The ''Manchester Evening News'' (''MEN'') is a regional daily newspaper covering Greater Manchester in North West England, founded in 1868. It is published Monday–Saturday; a Sunday edition, the ''MEN on Sunday'', was launched in February 20 ...
'', 15 March 1985, p. 4.
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.Michael Duffy, "Left gags lone critic", ''Manchester Evening News'', 18 March 1985, p. 1. 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.Gerald Brown and Bernard Spilsbury, "No surrender on rate clash", ''Manchester Evening News'', 23 March 1985, p. 2. A further council meeting on 25 March saw 17 Labour councillors support the Liberal budget, but it was again rejected by 52 to 23.Michael Duffy, "A treble chance blow for rates", ''Manchester Evening News'', 26 March 1985, p. 3. On the last day of the financial year, 31 March, the council met again in its fifth budgeting meeting in a month.Hugh Clayton, "Councillors vote to set rate in Manchester", ''The Times'', 1 April 1985, p. 3. 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.Gerald Brown, "Rates up 6pc. as war ends", ''Manchester Evening News'', 1 April 1985, p. 3.


Councils beginning the financial year with no rate


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'.See advertisement, ''South London Press'', 15 March 1985, p. 5. 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%.Graham Taylor, "Red faces as Tories pull off Rates coup", ''South London Press'', 10 April 1985, p. 2. 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.Richard Dowden, "Tories fix rate for Labour council", ''The Times'', 6 April 1985, p. 2. 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.Hugh Clayton, "Jenkin faces propaganda defeat on 'capping' policy", ''The Times'', 25 February 1985, p. 4. 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."Council ends its defiance and issues rate demands", ''The Times'', 11 April 1985, p. 2. 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."Haringey rate", ''The Times'', 12 April 1985, p. 2. Meehan then left office and Bernie Grant succeeded him as leader."Black Leader in Haringey", ''Labour Herald'', 26 April 1985, p. 4.


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.Pat Coughtrey, "Town Hall defiant as no rate is fixed", ''Newham Recorder'', 14 March 1985, p. 11. Note that there was no legal provision to commit councillors to jail for failing to set a rate. 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 SDP was voted down by 20 to 33.Pat Coughtrey, "Defiant councillors set for clash on rates", ''Newham Recorder'', 3 April 1985, p. 13. 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.Pat Coughtrey, "Rate Rebellion fades away", ''Newham Recorder'', 18 April 1985, p. 1.


Sheffield

With council leader
David Blunkett David Blunkett, Baron Blunkett, (born 6 June 1947) is a British Labour Party politician who has been a Member of the House of Lords since 2015, and previously served as the Member of Parliament (MP) for Sheffield Brightside and Hillsborough ...
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.Grant, "Rate Capping and the Law", p. 80. 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 is a process under which executive, legislative and administrative actions are subject to review by the judiciary. A court with authority for judicial review may invalidate laws, acts and governmental actions that are incomp ...
which was due to be heard on 12 April.Hugh Clayton, "Rate-capped councils pin hopes on Greenwich", ''The Times'', 29 March 1985, p. 2. 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;Hugh Clayton, "Poll tax could 'shrink' population", ''The Times'', 3 April 1985, p. 2. an appeal failed on 2 May.Hugh Clayton, "Court ruling on rates challenge will not stop rebel councils", ''The Times'', 3 May 1985, p. 2. A further meeting on 24 April again postponed setting a rate."Councils delay fixing rate", ''The Times'', 25 April 1985, p. 3. By the beginning of May, leading members of the council were acknowledging the risks of their stance: the deputy leader
Alan Billings Alan Roy Billings (born 7 October 1942) is an Anglican priest and Labour politician who is currently the South Yorkshire Police and Crime Commissioner. Early life and education Billings was born into a working-class family in Leicester in 1942 ...
talked of "asking people to commit political suicide for the greater good", while Blunkett talked in ''
Tribune Tribune () was the title of various elected officials in ancient Rome. The two most important were the tribunes of the plebs and the military tribunes. For most of Roman history, a college of ten tribunes of the plebs acted as a check on th ...
'' 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.Hugh Clayton, "Sheffield bows to rate limit", ''The Times'', 8 May 1985, p. 1. 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."Sheffield sets a rate", ''Labour Herald'', 10 May 1985, p. 2. 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.Grant, "Rate Capping and the Law", p. 5. 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.Will Smith, "Big Rate Rumpus!", ''East London Advertiser'', 22 March 1985, p. 1. Their stance attracted others and the Labour budget was defeated with nine Labour councillors voting against it."No rate in 12 councils", ''Labour Herald'', 5 April 1985, p. 4. 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."Nine expelled in Tower Hamlets", ''Labour Herald'', 5 April 1985, p. 2. This move reduced the Labour group to a minority on the council.Will Smith, "Labour rebels get the boot", ''East London Advertiser'', 5 April 1985, p. 40. 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."It's still no rate", ''East London Advertiser'', 26 April 1985, p. 1. The leadership then tried to compromise, but an extra £3.5m in the budget failed to shift the Liberal opposition on 8 May."It's a £175-an-hour no rate stalemate", ''East London Advertiser'', 10 May 1985, p. 1. 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."New rate set", ''East London Advertiser'', 17 May 1985, p. 1.


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 SDP candidate in a byelection in Hackney's Clissold ward which had been won by a Labour candidate pledged to the no rate strategy."London Borough Council Election Results, 8 May 1986", London Residuary Body, 1986, p. 102. 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 Creative accounting is a euphemism referring to accounting practices that may follow the letter of the rules of standard accounting practices, but deviate from the spirit of those rules with questionable accounting ethics—specifically distort ...
to evade the cap.Hugh Clayton, "Hackney in danger of bankruptcy", ''The Times'', 21 March 1985, p. 2. 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.Hugh Clayton, "Court move to press Hackney on rates", ''The Times'', 30 March 1985, p. 2. At the end of the hearing, Mr Justice Woolf found both Hackney's resolutions of 7 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.Hugh Clayton, "City increases rate by record 43%", ''The Times'', 4 April 1985, p. 2. 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.Grant, "Rate Capping and the Law", p. 69-70. Woolf again declined to issue an order of ''
mandamus (; ) is a judicial remedy in the form of an order from a court to any government, subordinate court, corporation, or public authority, to do (or forbear from doing) some specific act which that body is obliged under law to do (or refrain fr ...
'' 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.Grant, "Rate Capping and the Law", p. 70. 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."Council spending guidance valid" (Law Report), ''The Times'', 11 May 1985, p. 10. 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 staff at Hackney Town Hall staff locked up the building and refused to allow councillors in;Hugh Clayton, "Rates showdown that could feed rebellion", ''The Times'', 23 May 1985, p. 14. 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."Lib-Lab budget thwarted", ''Labour Herald'', 24 May 1985, p. 2. 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."Hackney sets rate and Kean resigns", ''Labour Herald'', 31 May 1985, p. 4.


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 Waldegrave 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.Hugh Clayton, "High Court sets May deadline for council to fix legal rate", ''The Times'', 17 April 1985, p. 2. 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."Uproar prevents councillors setting a rate", ''The Times'', 27 April 1985, p. 2. 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."Rates aid hope for Scots", ''The Times'', 9 May 1985, p. 2. 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."District Auditor warns rebels", ''South London Press'', 14 May 1985, p. 2. The council maintained its defiance at the next meeting on 16 May, but by a margin of only one vote (24 to 23)."Rates defiance", ''The Times'', 17 May 1985, p. 1. On 23 May, a vote to continue not setting a rate was passed only on the
casting vote A casting vote is a vote that someone may exercise to resolve a tied vote in a deliberative body. A casting vote is typically by the presiding officer of a council, legislative body, committee, etc., and may only be exercised to break a deadlock ...
of the Mayor.Hugh Clayton, "Alliance makes further gains in control of shire counties", ''The Times'', 24 May 1985, p. 2. 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% to solve the dispute, especially since the motion also included political criticism of the Conservative government.Hugh Clayton, "Fear that curbs may fuel revolt", ''The Times'', 28 May 1985, p. 2. 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."Rates climbdown", ''The Times'', 31 May 1985, p. 1. 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.''South London Press'', 4 June 1985.


Islington

The leader of Islington borough council, Margaret Hodge, 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.David Walker, "In search of life after rate-capping", ''The Times'', 7 March 1985, p. 10. 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.John Carvel, "Rebel rate-cap councillors 'face penalties soon'", ''The Guardian'', 23 April 1985, p. 30. 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".Steven Miller, "Auditor is defied", ''Labour Herald'', 26 April 1985, p. 1. However the council sent out a circular requesting ratepayers to volunteer rate payments in accordance with the previous years' demands.Anne McHardy, "Sheffield prints maximum rate bills", ''The Guardian'', 1 May 1985, p. 4. 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 pecifiedmatters justifying such a deferral arose" and that "matters
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taken to minimize and cancel any possible losses which might arise".Loughlin, "Legality and Locality", p. 199 n. 371. 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.Campbell-Smith, "Follow the Money", p. 103-4. An application for an emergency debate in the
House of Commons The House of Commons is the name for the elected lower house of the bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of parliament. T ...
by Islington North MP
Jeremy Corbyn Jeremy Bernard Corbyn (; born 26 May 1949) is a British politician who served as Leader of the Opposition and Leader of the Labour Party from 2015 to 2020. On the political left of the Labour Party, Corbyn describes himself as a socialis ...
was turned down that afternoon."Pit debate refused", ''The Times'', 9 May 1985, p. 4. 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,Hugh Clayton, "Deadline passes for rate rebels", ''The Times'', 1 June 1985, p. 2. 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."No alternative but to fight on, says Lambeth Leader", ''Labour Herald'', 7 June 1985, p. 4.


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."Stage is set in Camden", ''Labour Herald'', 15 March 1985, p. 7. 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."Tories claim rates win", ''Hampstead and Highgate Express'', 15 March 1985, p. 84. 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."Single vote cracks the no-rate wall", ''Hampstead and Highgate Express'', 29 March 1985, p. 1. 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 The Ham & High, officially the Hampstead & Highgate Express is a weekly paid newspaper published in the London Borough of Camden by Archant. The newspaper is priced at £1 and is published every Thursday. History Founded in 1860, from 1862 it ...
'' contemplating alternate strategies of non-compliance and worrying about drifting into surcharge and disqualification "through nothing more than indecision, confusion and default","Switch in Camden rate-cap strategy on cards", ''Hampstead and Highate Express'', 19 April 1985, p. 1. 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 ten Labour councillors rebelled to vote through a budget proposed by former council leader Roy Shaw which passed by 33 to 26.Steve Masterson, "Fight goes on", ''Labour Herald'', 14 June 1985, p. 4. 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.Campbell-Smith, "Follow the Money", p. 105. 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.Grant, "Rate Capping and the Law", p. 79-80.


Greenwich

Greenwich had shown early interest in leading a fight against rate-capping, and its leader John Austin-Walker 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".Hugh Clayton, "Labour councils threaten chaos on rate capping", ''The Times'', 9 March 1985, p. 32. The council brought its own proceedings for
judicial review Judicial review is a process under which executive, legislative and administrative actions are subject to review by the judiciary. A court with authority for judicial review may invalidate laws, acts and governmental actions that are incomp ...
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.Hugh Clayton, "Rate issues at heart of council elections", ''The Times'', 15 April 1985, p. 2. 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,Grant, "Rate Capping and the Law", p. 71. 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.Hugh Clayton, "Court move prolonging rates revolt", ''The Times'', 13 May 1985, p. 4. Despite the auditor's deadline, Greenwich voted by 39 to 19 against setting a rate on 29 May,"Two councils to delay rates", ''The Times'', 30 May 1985, p. 2. 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.Hugh Clayton, "Tories seek deadline for rate fixing", ''The Times'', 10 June 1985, p. 2. 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."Cuts order to health authority", ''The Times'', 19 July 1985, p. 2. Greenwich appealed but the Court of Appeal upheld the judgment."Government's rate-capping order is lawful" (Law Report), ''The Times'', 19 December 1985, p. 4.


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.Hatton, "Inside Left", p. 94. 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.Hatton, "Inside Left", p. 94. 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.Campbell-Smith, "Follow the Money", p. 99. 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.Hatton, "Inside Left", p. 95. 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,Hatton, "Inside Left", p. 95. 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?"Hatton, "Inside Left", p. 96. 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.Hugh Clayton, "Liverpool fixes legal rate but budget is higher than projected income", ''The Times'', 15 June 1985, p. 2. The council leadership saw the deficit budget as a tactic to comply with the law in one sense and so buy time.Hatton, "Inside Left", p. 97. 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.Loughlin, "Legality and Locality", p. 191.


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.Stewart Morris, "No Surrender", ''South London Press'', 12 March 1985, p. 21. As the new financial year approached, Labour councillor Stewart Cakebread dissented, saying that a budget set at the cap limit would not require cuts.Stewart Morris, "Rebel in the ranks", ''South London Press'', 26 March 1985, p. 1. The Conservative group summoned an emergency meeting on 10 April 1985 but their proposal for a legal rate was defeated by 34 to 30.Graham Taylor, "Council bosses admit defeat in rate cap row", ''South London Press'', 12 April 1985, p. 2. 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
barrister A barrister is a type of lawyer in common law jurisdictions. Barristers mostly specialise in courtroom advocacy and litigation. Their tasks include taking cases in superior courts and tribunals, drafting legal pleadings, researching law and givin ...
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."Breaking ranks", ''South London Press'', 3 May 1985, p. 2. 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"."District Auditor warns rebels", ''South London Press'', 14 May 1985, p. 2. At this meeting a third Labour councillor, Vince Leon, joined Boston and Cakebread in voting for legal budgets.Stewart Morris, Anna Pukas, "Rates 'Time Bomb' is Ticking Away", ''South London Press'', 17 May 1985, p. 2. Boston and Cakebread were removed from all committees by the Lambeth Labour Group at the end of the month,"Rate rebels' snub", ''South London Press'', 24 May 1985, p. 2. and Boston was told to resign her seat by her local ward Labour Party (she refused). Cakebread received the support of his branch.Stewart Morris, "Rates rebel told to quit", ''South London Press'', 4 June 1985, p. 3. The district auditor, Brian Skinner, found that his permission to use offices in
Lambeth Town Hall Lambeth Town Hall, also known as Brixton Town Hall, is a municipal building at the corner of Brixton Hill and Acre Lane, Brixton, London. The town hall, which is the headquarters of Lambeth London Borough Council, is a Grade II listed buildin ...
allocated to
NALGO The National and Local Government Officers' Association was a British trade union representing mostly local government "white collar" workers. It was formed in 1905 as the National Association of Local Government Officers, and changed its full ...
was withdrawn in mid-May;Lesley Johnson, "District Auditor gets the boot", ''South London Press'', 24 May 1985, p. 2. 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.The poster declared "This is Mr Skinner / He wants your dinner" and urged "If you see this man, act on sight!". Campbell-Smith, "Follow the Money", p. 104-5. 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.Lesley Johnson, "Day of judgment for the rate rebels", ''South London Press'', 7 June 1985, p. 1. While the council finances were sustained by loans amounting to £29m from the Public Works Loan Board,Stewart Morris, "Voyage into the unknown for rate wrangle enemies", ''South London Press'', 14 June 1985, p. 6. 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".Stewart Morris, "Rate rebels are 'doomed'", ''South London Press'', 2 July 1985, p. 2. Ted Knight described Bright as a "victim of he statemachine".Lesley Johnson, "'I quit' says rate rebel councillor", ''South London Press'', 25 June 1985, p. 2. After a formal notice of an extraordinary audit was published on 18 June,Notice of Public Right (advertisement), ''South London Press'', 18 June 1985, p. 8. 32 councillors received notice on 27 June that the auditor deemed them liable to a surcharge of £126,947.Stewart Morris, "Rebels count the cost of defiance", ''South London Press'', 28 June 1985, p. 2. The response of the councillors was to set up a 'Fighting Fund' in their defence, which was supported at its launch by the prominent actors
Jill Gascoine Jill Viola Gascoine (11 April 1937 – 28 April 2020) was an English actress and novelist. She portrayed Detective Inspector Maggie Forbes in the 1980s television series '' The Gentle Touch'' and its spin-off series '' C.A.T.S. Eyes''. In the ...
,
Frances de la Tour Frances J. de Lautour (born 30 July 1944), better known as Frances de la Tour, is an English actress. She is known for her role as Miss Ruth Jones in the television sitcom '' Rising Damp'' from 1974 until 1978. She is a Tony Award winner and th ...
, Matthew Kelly, and
Timothy West Timothy Lancaster West, CBE (born 20 October 1934) is an English actor and presenter. He has appeared frequently on both stage and television, including stints in both ''Coronation Street'' (as Eric Babbage) and ''EastEnders'' (as Stan Carte ...
;"Support Role by Stars", ''South London Press'', 28 June 1985, p. 2. the Labour group debated whether Mike Bright ought to be eligible for help from the fund.Stewart Morris, "Rebels count the cost of defiance", ''South London Press'', 28 June 1985, p. 2. At the next council meeting on 3 July, there was uproar after members of
Vauxhall Vauxhall ( ) is a district in South West London, part of the London Borough of Lambeth, England. Vauxhall was part of Surrey until 1889 when the County of London was created. Named after a medieval manor, "Fox Hall", it became well known for ...
Constituency Labour Party __NOTOC__ A constituency Labour Party (CLP) is an organisation of members of the British Labour Party who live in a particular parliamentary constituency. In England and Wales, CLP boundaries coincide with those for UK parliamentary constituenc ...
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.Lesley Johnson, "Uproar!", ''South London Press'', 5 July 1985, p. 1. 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,Lesley Johnson, "Budget council's defiance", ''South London Press'', 30 July 1985, p. 4. the Lambeth Fighting Fund therefore claimed the campaign had been a success "in financial terms"."He Was Only The District Auditor, but...", Lambeth Fighting Fund, 1986, p. 4.


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 £2,000 and therefore they were also disqualified.Hugh Clayton, Peter Davenport, "Rebel councillors' £233,000 penalty", ''The Times'', 10 September 1985, p. 1. 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.Grant, "Rate Capping and the Law", p. 71-2. 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."Rates fight 'legal'", ''South London Press'', 21 January 1986, p. 2. The Lambeth Fighting Fund had raised £74,000 by the opening of the High Court case, of which £69,000 had already been spent.Hugh Clayton, "Cash threat to Lambeth rebels' case", ''The Times'', 9 January 1986. The council had also spent £31,050 on publicity for what it termed "Lambeth Rates Democracy", spending which was criticised by the Conservative group.Lesley Johnson, "Tory Storm at Publicity", ''South London Press'', 14 January 1986, p. 4. 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"."Judges rap rebels for wilful misconduct", ''South London Press'', 7 March 1986, p. 3. 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.Stewart Morris, "Knight's rebels to go", ''South London Press'', 27 March 1986, p. 1. 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.Stewart Morris, "Power bid by Tories hit by rule change", ''South London Press'', 2 April 1986, p. 2. The
Transport and General Workers' Union The Transport and General Workers' Union (TGWU or T&G) was one of the largest general trade unions in the United Kingdom and Ireland – where it was known as the Amalgamated Transport and General Workers' Union (ATGWU) to differentiate ...
ended financial support for the Liverpool and Lambeth councillors at the beginning of April, having spent £107,000 up to then."Cash lifeline to Militant cut by union", ''Daily Express'', 4 April 1986, p. 2. 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.Hugh Clayton, "Lambeth rates rebels given time to pay surcharge of £105,000", ''The Times'', 31 July 1986. 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.Loughlin, "Legality and Locality", p. 193. The total surcharge to be paid by 47 current and former councillors (two had died in the meantime) amounted to £333,000.Campbell-Smith, "Follow the Money", p. 106. 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.Peter Victor, "Lambeth losses could bring further ban on councillors", ''The Times'', 4 April 1991. 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,Hatton, "Inside Left", p. 99. the council's joint shop stewards called for an indefinite strike,"Liverpool unions call for indefinite strike in fight against job cuts", ''The Times'', 17 September 1985, p. 2. and also occupied council buildings and prevented the council from holding a meeting to formally vote to issue the redundancy notices.Hatton, "Inside Left", p. 100. The national leaderships of the trade unions attempted to restrain their local branches from going ahead with the strike,David Felton, Hugh Clayton, "Union 'establishment moves to thwart activists over strike", ''The Times'', 23 September 1985, p. 2. and when NALGO members voted against the strike by 7,284 to 8,152, it was called off.Peter Davenport, "Militants defeated over all-out Liverpool strike", ''The Times'', 25 September 1985, p. 1. 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.Hatton, "Inside Left", p. 101-2. 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.Hatton, "Inside Left", p. 107-8. 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.Hatton, "Inside Left", p. 110; Grant, "Rate Capping and the Law", p. 86.


The audit process

The district auditors operated under the control of the Audit Commission, 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.Loughlin, "Legality and Locality", p. 198. 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.Campbell-Smith, "Follow the Money", p. 105-6. 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.Loughlin, "Legality and Locality", p. 198. 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 2008 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.Campbell-Smith, "Follow the Money", p. 106-9. 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.Loughlin, "Legality and Locality", p. 198-9. After the High Court ruled in favour of the auditor on Liverpool and Lambeth, 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.Campbell-Smith, "Follow the Money", p. 110-11.


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 Grant Sir Malcolm John Grant, , (born 29 November 1947) is a barrister, academic lawyer, and former law professor. Born and educated in New Zealand, he was the ninth President and Provost of University College London – the head as well as principa ...
, a leading local government academic, regarded it as remarkable that they had neglected to block this gap in the
Rates Act 1984 The Rates Act 1984 is an Act of Parliament in the United Kingdom, which controls the tax-raising powers of local authorities. Background The Thatcher government had been at odds with several high spending Labour controlled councils. The Loc ...
.Grant, "Rate Capping and the Law", p. 69. The
Local Government Act 1986 The Local Government Act 1986 (c 10) is an Act of the Parliament of the United Kingdom. The Local Government Act 1986 was passed primarily in response to the use of publicity by the Greater London Council in its attempt to prevent the passing ...
, 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 The United Kingdom Local Government Act 1988 is an Act of the United Kingdom Parliament. It was famous for its controversial section 28. This section prohibited local authorities from promoting, in a specified category of schools, "the teachin ...
, which gave auditors power to issue a 'prohibition order' to negate any decision by a local council 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.Campbell-Smith, "Follow the Money", p. 172-3. The
Local Government and Housing Act 1989 Local may refer to: Geography and transportation * Local (train), a train serving local traffic demand * Local, Missouri, a community in the United States * Local government, a form of public administration, usually the lowest tier of administra ...
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.Campbell-Smith, "Follow the Money", p. 173-4.


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.''New Socialist'', July 1985, p. 5. 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.Loughlin, "Legality and Locality", p. 197. Labour Party leader
Neil Kinnock Neil Gordon Kinnock, Baron Kinnock (born 28 March 1942) is a British former politician. As a member of the Labour Party, he served as a Member of Parliament from 1970 until 1995, first for Bedwellty and then for Islwyn. He was the Leader of ...
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."Kinnock Cash Row with Left", ''Daily Express'', 11 March 1986, p. 24. 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 Gordon Kinnock, Baron Kinnock (born 28 March 1942) is a British former politician. As a member of the Labour Party, he served as a Member of Parliament from 1970 until 1995, first for Bedwellty and then for Islwyn. He was the Leader of ...
was due to make his speech, an article by the Anglican and Roman Catholic Bishops of Liverpool David Sheppard and
Derek Worlock Derek John Harford Worlock CH (4 February 1920 – 8 February 1996) was an English prelate of the Roman Catholic Church and Archbishop of Liverpool. Life Worlock was born in St John's Wood, London, on 4 February 1920, the son of Captain ...
denounced the Militant leadership and council's "policy of confrontation".
Derek Worlock Derek John Harford Worlock CH (4 February 1920 – 8 February 1996) was an English prelate of the Roman Catholic Church and Archbishop of Liverpool. Life Worlock was born in St John's Wood, London, on 4 February 1920, the son of Captain ...
, David Sheppard, "Stand up to Liverpool's Militants", ''The Times'', 1 October 1985, p. 16.
Kinnock's speech denounced "the grotesque chaos of a Labour council — ''a Labour council'' — hiring taxis to scuttle round a city, handing out redundancy notices to its own workers".Julian Haviland, "Kinnock speech a masterpiece, say moderates", ''The Times'', 2 October 1985, p. 1. In the aftermath of the speech, the Labour Party National Executive Committee suspended the Liverpool district Labour Party and ordered an investigation,Anthony Bevins, "Liverpool party suspended for Labour inquiry", ''The Times'', 28 November 1985, p. 1. which resulted eventually in the expulsion of all Militant tendency members from the Labour Party.


Ongoing rate capping

With the use of 'creative accounting' techniques by councils to conceal spending while remaining within the law, rate capping 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 London Government Handbook" ed. Michael Hebbert, Tony Travers (Greater London Group, London School of Economics), Cassell, 1988, p. 157. The Audit Commission kept a close eye on the techniques of creative accounting, under pressure from the
Department of the Environment An environmental ministry is a national or subnational government agency politically responsible for the environment and/or natural resources. Various other names are commonly used to identify such agencies, such as Ministry of the Environment, ...
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.Campbell-Smith, "Follow the Money", p. 167-73. The
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 six county councils of the metropolitan counties that had been set up in 1974, 11 years earlier, by the Local Government Act 1972 ...
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 council. 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.Butler, Adonis, Travers, "Failure in British Government", p. 65. 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 ( RP: , ), or simply Newcastle, is a city and metropolitan borough in Tyne and Wear, England. The city is located on the River Tyne's northern bank and forms the largest part of the Tyneside built-up area. Newcastle is ...
."Rate rises next year should be in low single figures", ''The Times'', 26 July 1985, p. 4. 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.Butler, Adonis, Travers, "Failure in British Government", pp. 164–5. 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 The Local Government Act 1999 is an Act of Parliament in the United Kingdom, applicable to a wide range of local authorities in England and Wales. It was promoted by a Labour government, in the first years of the First Blair ministry, and was d ...
to regulate increases in the
Council Tax Council Tax is a local taxation system used in England, Scotland and Wales. It is a tax on domestic property, which was introduced in 1993 by the Local Government Finance Act 1992, replacing the short-lived Community Charge, which in turn re ...
(which had replaced the Community Charge). The Secretary of State was also allowed to require reduction in individual local authorities' budgets."Councillor's Guide to Local Authority Finance" edited by Rita Hale and Anna Capaldi, CIPFA, 2002–2003, pp. 17–18.


References


Sources

* * * * * * * * "Rates: Proposals for Rate Limitation and Reform of the Rating System" ( Cmnd. 9008), Department of the Environment and Welsh Office, 1 August 1983. *


External links


GLC / ILEA Meeting
Thames News report on the preparations for the GLC's budget meeting (7 March 1985)
Post GLC
Thames News interviews with Ken Livingstone and Patrick Jenkin (11 March 1985)
Ratecapping Hackney
Hackney council leader Hilda Kean explains her position to Thames News (3 April 1985)
Southwark demo
Islington leader Margaret Hodge comments after Southwark appears ready to set a rate (1 May 1985)
Hackney and Southwark
Hackney's challenge fails, while Southwark's meeting sees protests (2 May 1985)
Methodist Central Hall Rally
Thames News coverage of a rally of ratecapped councils. (13 May 1985)
Ted Knight
Lambeth council leader Ted Knight responds to the District Auditor's letter (10 June 1985)
Lambeth sets a rate
Fighting at the meeting when Lambeth finally set its rate (4 July 1985)
Swindon is 'Ratecapped'
Live local television coverage of a public meeting in
Swindon Swindon () is a town and unitary authority with borough status in Wiltshire, England. As of the 2021 Census, the population of Swindon was 201,669, making it the largest town in the county. The Swindon unitary authority area had a population ...
in 1984 over the ratecapping of Thamesdown borough council, from the archive of
Swindon Viewpoint Swindon Viewpoint was a local community cable TV channel based in, and serving Swindon. It has been through several incarnations, including its early experimental phase, its main phase in the 1970s and 1980s, its 1990s phase where it operated und ...
. {{DEFAULTSORT:Rate-Capping Rebellion 1985 in England Government audit Politics of the London Borough of Brent Politics of the London Borough of Camden Politics of the Royal Borough of Greenwich Politics of the London Borough of Hackney Politics of the London Borough of Haringey Politics of the London Borough of Islington Politics of the London Borough of Lambeth History of Leicester Politics of the London Borough of Lewisham Politics of Liverpool Politics of Manchester History of Sheffield Politics of the London Borough of Southwark Politics of the London Borough of Tower Hamlets History of Tyne and Wear History of Wiltshire Local taxation in England Tax resistance in the United Kingdom 1985 in British politics Rates in the United Kingdom