The Green Paper on local government finance

Sandilands, Roger (1986) The Green Paper on local government finance. Quarterly Economic Commentary, 11 (3). pp. 53-60. ISSN 0306-7866

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Mrs Thatcher first promised to scrap the domestic rating system in 1974 when she became leader of the Conservative Party. Since then the Layfield Commission in 1976, the Green Paper Alternatives to Domestic Rates in 1981 and a 1983 White Paper have all rejected any radical change to the domestic rating system. In particular, the local income tax, local sales tax and local poll tax alternatives were rejected as either unworkable, too costly, or too regressive. The latest Green Paper contains two main proposals. The first is to move towards the abolition of domestic rating in favour of a uniform "community charge" on all adults resident in a particular local authority. Secondly, local authorities would be deprived of the power to set local non-domestic (business) rates. At present the rate poundage varies widely throughout Britain (though less so in Scotland), reflecting differences in local authority spending per capita. Instead, central government would fix a uniform business rate poundage according to central government's view on national expenditure targets. Local authorities would collect business rates as at present, but transfer these to a central pool. These will then be redistributed to local authorities on a uniform per capita grant basis. This economic perspective will explore the viability of the new proposals.