Downing Street Years - Margaret Thatcher [409]
The essential point, I felt, was to ensure that central government stepped in to protect the victims of what was essentially an arbitrary abuse of power by irresponsible local authorities. Arguments about accountability and the prospects for long-term improvement simply had to take second place.
So on Sunday morning, before I began work with my advisers at Chequers on drafting my speech to the Central Council, I rang the Chancellor, John Major. I told him that I had been reading the papers relating to community charge capping for 1990–91. I had a number of fundamental concerns. The first was political. When the community charge system had been developed we had assumed that if authorities persisted with high levels of spending, the blame for the resultant high community charges would fall on them rather than the Government. But that was not in fact happening. The public were blaming us and indeed the spending levels of a number of Conservative-controlled councils as well. Second, the impact of high community charges was falling on those in the middle income groups — what might be called the ‘conscientious middle’. Those on low incomes were well protected by the various rebate arrangements. Indeed, we were having to meet a much higher public spending bill than expected for community charge rebates because the charges themselves were so high. This would be given a further twist because, since the levels of community charge were pushing up the RPI, that would carry through into a higher than expected uprating for all social security benefits next autumn. The new system was not yet bringing about increased accountability. Nor did it seem to me that this was likely to materialize in the second year either. We could give some modest protection to charge payers in 1990–91 if we went ahead with the current proposals for charge capping, and indeed we must do so. But the effect on average bills would be marginal, at best. We therefore needed to consider radical further measures in relation to 1991–2.
The main option seemed to be the introduction of a direct central control over levels of local authority spending; for example, laying down that expenditure by each authority could be no more than a certain percentage above a Standard Spending Assessment (SSA) — that is the level at which the authority needed to spend to deliver a certain nationally uniform standard of service. That, however, would need to be matched by a substantial increase in the level of government grant to local authorities, perhaps with a larger proportion of the total in the form of specific grants for particular services. I saw no reason why it should not be possible for this dual approach to reduce total public spending by local authorities. We would then have to consider whether to continue with the community charge as the sole means of financing expenditure above the level allowed for, given that at present all the extra expenditure fell on the charge. An alternative would be to place some of the burden of higher spending on the business rate. All this pointed to the need for a major internal review which would have to be carried out very speedily. It would be necessary to indicate publicly that some kind of review was under way, although the terms and manner of such an announcement needed careful thought.
John Major did not dissent from my judgement that a radical review was necessary. He also agreed that the changes we came up with must control total public expenditure. I finished by saying that I would speak very soon to Environment ministers to tell them what I wanted done.
In one form or another I was to pursue this approach over the months ahead — until, as I shall describe, unexpected legal advice caused me to revise my views about the best practical way forward. I did not, though, even then alter the view which I had now come to about the future