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
Labour or labor may refer to:
* Childbirth, the delivery of a baby
* Labour (human activity), or work
** Manual labour, physical work
** Wage labour, a socioeconomic relationship between a worker and an employer
** Organized labour and the labour ...
controlled councils. The
Local Government Finance and Planning Act 1980
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 administrat ...
and the
Local Government Finance Act 1982
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 ...
allowed central government to decide spending limits for individual authorities. It could remove general grants, which accounted for approximately 60% of the councils’ income, if they continued to overspend. Several councils continued with their programmes of services and had their general grant cut under the earlier legislation. For example, by 1983, the
Greater London Council
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 ...
(GLC) had lost all its central funding.
However, the GLC and other councils sought to recoup the loss by increasing the amount they levied in domestic and business
rates
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 ...
; a tax paid by companies and homeowners.
Provisions
The Rates Act 1984 allowed the government to individually set caps for the increases to rates that each authority could levy. Those who acted ''
ultra vires'' (or "beyond the powers") set out in the Act could be prosecuted, banned from office for up to ten years and fined. The power to control rates came into force for the year beginning 1 April 1985.
Use of the Act
The Act was successfully used to force 31 councils (30 were Labour controlled), who had initially resisted, to comply with government taxation and spending limits. Of those, only
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 expe ...
and
Liverpool councillors did not back down and eventually the Act was used to prosecute and fine the leader of Lambeth Council,
Ted Knight, and others. He was banned from office for ten years.
Legacy
The domestic rates were replaced in 1990 by the
Community Charge (dubbed poll tax), which was paid by more people and intended to reveal inefficient councils, who would be forced to levy a higher charge in order to fund their overspending. Business rates are still levied, but at a level set by central government since 1990.
[Atkinson, H. & Wilks-Heeg, S., ''Local Government from Thatcher to Blair: The Politics of Creative Autonomy'', (2000)]
References
{{UK legislation
United Kingdom Acts of Parliament 1984