Downing Street Years - Margaret Thatcher [407]
I moved Chris Patten to become Secretary of State for the Environment later that summer. By now Conservative back-benchers were becoming extremely restive. In July they had given Nick Ridley’s last major statement as Environment Secretary — announcing the grant settlement — a rough reception. Many of them did not really understand the new system and the changes that they wanted were often mutually contradictory. Nick had at least been able to meet one of their most pressing concerns by announcing a £100 million scheme to ease the transition in areas with low rateable values, which faced large increases under the new system. But there was no doubt that the back-benchers wanted more, and their worries grew during the autumn. I received regular and depressing reports from the whips.
In early September Chris Patten, with my approval, began a review of the operation of the charge. A couple of days before, as I was about to leave for the Prime Minister’s traditional autumn visit to Balmoral, Ken Baker (now the Party Chairman) had sent me in great secrecy research conducted by Central Office in ten Conservative marginal seats. This confirmed the scale of the political problem we faced. On the assumption of a 7 per cent increase in local spending the following year, 73 per cent of households and 82 per cent of individuals would lose from the introduction of the charge in 1990 compared with the rates in the previous year. If spending increased by 11 per cent the figures would rise to 79 per cent and 89 per cent respectively. Though these figures did not take account of extensive rebates, on any calculation they were pretty bad.
Now that dual running had been dropped, the only way in which we could limit the losses of individuals or households generally — as opposed to the losses of areas, which it was the function of the by now extremely unpopular ‘safety net’ to iron out — was by a new scheme altogether. Chris Patten and the Treasury accordingly worked up a proposal for ‘transitional relief’.
Chris favoured a massive programme of transitional relief for households to limit losses to £2 a week — that is £2 a week on the basis of what we thought local authorities should spend (the CCSS), which many of them of course would exceed. Even in this limited form the scheme might cost as much as £1,500 million. Ken Baker — never backward when it came to public spending — wanted a very costly scheme too. The Treasury argued for something much more modest, targetted on the worst losers. All of this was against a difficult public expenditure round and a worsening economic situation with rising inflation. I told Chris Patten that transitional relief on the scale he was proposing was out of the question, but I also pressed the Treasury hard to take a positive and co-operative attitude. I held a meeting at the end of September to try to get agreement. I brought the two sides closer together and concluded by saying that it was essential that the scheme should be sufficiently generous to defuse genuine criticism but that it must be clear that this was indeed the last word and that the Government would not make further money available for 1990–91.
Discussions continued up to the eve of the Party Conference where David Hunt, the Local Government minister, announced a scheme costing £1.2 billion over three years. The scheme would ensure