Rate-capping rebellion
Note
In the 1980s changes were made to the system of government grants paid to local authorities in an attempt to reduce higher spending. Councils that were seen to be overspending would be ‘punished’ with deductions to their grant. As a result councils maintained their spending levels through increasing rates (local property tax).
The 1984 Rates Act gave the Secretary of State for the Environment the power to limit the rates set by local authorities. ‘Rent-capping’ meant it was no longer possible for local authorities to replace lost grant with increased revenue from rates. Of the 18 authorities to be rate-capped in 1985-6, 16 were under Labour control and the move was viewed by some as an attempt to silence Labour opposition to government policies.
Hackney Council joined other boroughs in outright opposition to rate-capping, with the council leader declaring they faced bankruptcy if unable to set a rate. In July 1984 Hackney councillors passed a resolution not to make spending cuts ordered by central government, or to increase rates or rents to compensate for lost grant money. This was part of a wider campaign by the rate-capped local authorities with the aim of forcing the government to stop attempting to reduce council spending. Hackney Council argued that it had lost £30 million in grant cuts since 1979, and that by using rate capping the Thatcher government was making additional cuts to its budget by nearly one third.
In March 1985 the council presented its “No Cuts” budget, aiming to keep the existing levels of jobs and services at the council without rate or rent increases. After nearly 10 hours of very heated debate across 21 and 22 May 1985, Hackney councillors agreed to adopt a budget and set an increased rate at the maximum within government limits. It was believed that to continue the ‘no rate setting’ or ‘no cuts’ campaign would cause the council to become bankrupt and put services and jobs at risk. Both Council Leader Hilda Kean and Deputy Leader Andrew Puddephatt resigned following the setting of the rate.
The 1984 Rates Act gave the Secretary of State for the Environment the power to limit the rates set by local authorities. ‘Rent-capping’ meant it was no longer possible for local authorities to replace lost grant with increased revenue from rates. Of the 18 authorities to be rate-capped in 1985-6, 16 were under Labour control and the move was viewed by some as an attempt to silence Labour opposition to government policies.
Hackney Council joined other boroughs in outright opposition to rate-capping, with the council leader declaring they faced bankruptcy if unable to set a rate. In July 1984 Hackney councillors passed a resolution not to make spending cuts ordered by central government, or to increase rates or rents to compensate for lost grant money. This was part of a wider campaign by the rate-capped local authorities with the aim of forcing the government to stop attempting to reduce council spending. Hackney Council argued that it had lost £30 million in grant cuts since 1979, and that by using rate capping the Thatcher government was making additional cuts to its budget by nearly one third.
In March 1985 the council presented its “No Cuts” budget, aiming to keep the existing levels of jobs and services at the council without rate or rent increases. After nearly 10 hours of very heated debate across 21 and 22 May 1985, Hackney councillors agreed to adopt a budget and set an increased rate at the maximum within government limits. It was believed that to continue the ‘no rate setting’ or ‘no cuts’ campaign would cause the council to become bankrupt and put services and jobs at risk. Both Council Leader Hilda Kean and Deputy Leader Andrew Puddephatt resigned following the setting of the rate.