Rate Capped Local Authorities (Hansard, 14 March 1985)

§ Mr. Patrick Jenkin

On 7 March, or shortly after, the four precepting rate limited authorities set precepts within the precept limits approved by Parliament. Portsmouth, Basildon and Brent have set rates within their rate limits. However, many of the rate limited rating authorities and some other high spending Labour-controlled councils, have claimed that they have taken a principled stand against the provisions of the Rates Act 1984, by refusing to fix a rate. In fact they have done nothing of the sort. Each council knew quite well that it did not have to fix a rate on 7 March, and that a decision could be postponed without immediate legal consequences. The terms of the resolutions they have passed clearly demonstrate this.

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These authorities have repeatedly said that they intend to "negotiate" with Government to seek the withdrawal of the Rates Act, the rewriting of the rate support grant settlement and the payment of substantial sums in additional grant to support higher levels of spending. Their spokesman, Councillor Blunkett, has written to me asking to bring a group of councils to engage in such "negotiations".

I wish to make two things clear. First, there is no question of the Government reconsidering the rate limits or the precept limits or the rate support grant settlement for 1985–86, all of which Parliament has approved. There will be no "negotiations". Secondly, while I am prepared to meet the local authority associations to discuss issues of general concern, or to meet individual authorities where they have genuine local issues to raise with me, I see no purpose in a further meeting with the ad hoc and unrepresentative group led by Councillor Blunkett. Nearly half of that group have now complied with the law and set rates or precepts. I look to the remainder to follow this example.

No rating authority can now have any excuse for delay in carrying out its duty to make a lawful rate. But if any authorities are still considering delay they should be clear about the consequences.

In addition to covering their own expenditure, rating authorities must rate to cover precepts issued to them by county councils and other bodies. In London the first payments in respect of the Metropolitan police precept and the London Regional Transport levy fall due on 12 April. Where rating authorities fail to pay over an instalment by the due date, it is open to the precepting authority to charge interest on the amount outstanding.

For block grant purposes, where an authority fails to provide an estimate of its spending for the forthcoming year, I must make my own best estimate of their expenditure to calculate their grant entitlement.

The Government have carefully considered their liability to make certain payments to rating authorities where no rate has been made. I am advised that in these circumstances the following payments should not be made — because the rates to which they relate are not being paid—rate rebate subsidy; grants towards rate relief for disabled persons and institutions; compensation to local authorities for loss of rate income in enterprise zones; and contributions in lieu of rates on Crown and diplomatic properties. Authorities will not therefore begin to receive these payments until they fix their rates.

Finally, I should remind all councillors that if a failure to rate leads to a loss or deficiency and the auditor considers that this results from wilful misconduct, then those responsible may be surcharged. If the total loss amounts to more than £2,000, disqualification follows automatically. In the light of the statements that have been made by certain councillors about their intention to break the law, I have no doubt that auditors will be watching developments very closely.