The Rates Act 1984 is an Act of Parliament in the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...

, 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 Local Government Finance and Planning Act 1980 and the Local Government Finance Act 1982 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 * Rate (company), an American residential mortgage company formerly known as Guaranteed Rate * Rates (tax), a type of taxation system in the United Kingdom used to fund local government * Exchange rate, rate ...

; 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 ('beyond the powers') is a Latin phrase used in law to describe an act that requires legal authority but is done without it. Its opposite, an act done under proper authority, is ('within the powers'). Acts that are may equivalently be termed ...

'' (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, which today also gives its name to the (much larger) London Borough of Lambeth. Lambeth itself was an ancient parish in the county of Surrey. It is situated 1 mile (1.6 km) south of Charin ...

and

Liverpool Liverpool is a port City status in the United Kingdom, city and metropolitan borough in Merseyside, England. It is situated on the eastern side of the River Mersey, Mersey Estuary, near the Irish Sea, north-west of London. With a population ...

councillors did not back down and eventually the Act was used to prosecute and fine the leader of Lambeth Council,

Ted Knight Ted Knight (born Tadeusz Wladyslaw Konopka; December 7, 1923August 26, 1986) was an American actor known for playing the comedic roles of Ted Baxter in ''The Mary Tyler Moore Show'', Henry Rush in '' Too Close for Comfort'' and Judge Elihu Sm ...

, 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

{{Authority control United Kingdom Acts of Parliament 1984