FAQ on rate capping in Lambeth in the 1980s

There is a lot of misconception around the activities of the Lambeth Labour Councillors in the 1980s.  This simple FAQ helps sort fact from fiction.

Didn’t Labour run Lambeth Council set an illegal budget?

Lambeth never had an illegal budget. People are confusing Lambeth with Liverpool, which is a very different place. Liverpool passed an ‘unbalanced’ budget in 1984, Lambeth never did so during that period.  Whenever Lambeth was faced with cuts they increased the local rates on domestic and businesses (rates were local taxes before council tax was introduced) which offset the cuts. This approach – which was common along Labour controlled councils – led Thatcher to impose a cap on the rate level to not allow councils to raise the money they needed. This led to the struggle against rate capping of 1985-6 of which Lambeth was a key part.

The councillors actions during the first rate-capping in the 1980s were illegal

Not strictly true either. During the campaign against rate capping, 31 Labour councillors, led by Ted Knight, voted against setting a budget during their budget meetings between April and June 1985. They deferred setting the rate, which was not illegal per se but the District Auditor did charge them with “wilful misconduct”, something that Thatcher introduced in 1982 to make councillors individually responsible if a government official so decided. What “wilful misconduct” meant was not clear, but the councillors were accused of it in 1985 for not setting the rates as part of a national campaign to stop the assault on Local Government autonomy.   

The councillors challenged it in the courts. They argued that it was not unreasonable to not set a rate so long as they believed that not doing so might lead to more money from central government. The District Auditor argued that this had no basis and the judge upheld that decision which is what led to the 31 councillors being surcharged and fined £129,000 between them. This money was raised through a massive campaign by the labour movement to stop the councillors being bankrupted.


The left in the 1980s left the council bankrupt

Lambeth was never bankrupt, though of course its finances were often in a terrible way as is often the case in local government.  However this was mainly because central government cut their funding considerably from 1979 onwards. One way that the council tried to offset the cuts was a policy called “mortgaging the future” which was part of a package of creative accounting measures to offset cuts. Some of these were based on hopes of a Labour government in 1987 or 1992 which would be able to help local councils recover their losses through increasing expenditure locally. Creative accounting is a normal procedure in local government, in fact the primary reason why debt accrued was because central government cuts ate into the local budget. Further hits on Lambeth’s budget was the Poll Tax which many local residents didn’t pay because they couldn’t afford it. There was also a local campaign called Lambeth Against the Poll Tax was a very active in calling protests against this unfair tax.

Lambeth was in chaos in the 1980s

Depends what you mean by “chaos”. Lambeth was a borough with a lot of social needs, a place which had two devastating riots in 1981 and 1985 and suffered serious social deprivation and housing problems. Whilst there was a lot of inefficiency in local government and a certain amount of corruption amongst some staff and residents, was this much worse than in other boroughs? The Tory press liked to paint Lambeth as particularly bad, but wasn’t this part of the general witch hunt in the media against Labour controlled areas? No doubt if Thatcher hadn’t launched an all out war on local government then Lambeth would have been able to take more steps to resolve these problems.

In the 1990s Elizabeth Appleby QC was tasked with the government with a survey into the problems facing Lambeth in the 1980s, she concluded that whilst there had been serious problems of contract management and an ongoing delay in privatisation of local services (because the council was opposed to it) she didn’t accuse the councillors themselves of any wrongdoing.

Any ‘chaos’ was also caused by the council having their leadership wholesale removed twice in less than 7 years. First in 1985-85 when the 31 councillors were surcharged and removed from office (and barred from standing again) and again in 1992 when council leader Joan Twelves and her supporters were removed from the Labour Group by the Labour Party NEC. This was part of a witch hunt against the left in the dying days of the Kinnock leadership era which also saw a candidate imposed on the Vauxhall CLP for the 1989 by-election. By any stretch of the imagination it is hard work to maintain local services and do long term strategic thinking when things are in such flux.


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