Rate-capping rebellion

The rate-capping rebellion was a campaign within English local councils in 1985 which aimed to force the Conservative government of Margaret Thatcher 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 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 conceded in unique circumstances. Two councils, Lambeth and Liverpool held out for longer than others and were subjected to an extraordinary audit 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.

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