Editing Michael Heseltine (section)

====Local government finance====
In 1979 the Conservatives were strongly represented in local government, as a result of the unpopularity of the outgoing Labour government. Four of the five council associations were Conservative-controlled. Heseltine was able to persuade them to rein in their spending by 1% each year. Whereas previously overspending councils had received extra rate support grants from Whitehall, after six months Heseltine announced a list of fourteen overspending councils who were to have their grant ''cut'', most of them inner London councils and only one of them, Hammersmith & Fulham, Conservative controlled. The move appeared blatantly political as many of the other 114 overspenders were Conservative councils. Council leaders who came to appeal to Heseltine were often humiliated by being interrogated about their budget, to demonstrate their lack of detailed knowledge, before the council treasurer was allowed to speak.<ref>Crick 1997, pp. 210–1.</ref>

From 1980 to 1981 relations with local government became increasingly confrontational, as Labour made large gains in local elections, with a new generation of council leaders such as [[Ken Livingstone]] in [[Greater London Council|London]] and [[David Blunkett]] in Sheffield seeking to generate employment through their councils. Council spending now began to rise again, largely as a result of increases by the GLC, Merseyside and West Midlands councils; whereas Labour votes tended to be poorer and eligible for rate rebates, the burden of higher spending tended to fall on businesses and middle class homeowners. Although councils had already suffered deep cuts under Labour in the 1970s, Heseltine was under pressure from Thatcher and from Conservative MPs and newspapers to cut more. Heseltine's initial suggestion, that councils who wanted to increase the rates be forced to submit to re-election, was rejected by the Cabinet, in favour of a proposal that such increases be put to referendum (in Coventry, voters had recently voted by over 7:1 for spending cuts rather than a supplementary rate increase). This proposal in turn was attacked by Conservative backbenchers, both as an infringement of council freedom and a risky precedent for national taxation, both in the Environment Committee and in the debate on a bill which Heseltine introduced and had to withdraw. Heseltine then banned supplementary rates and imposed stiffer sanctions on overspending councils.<ref>Crick 1997, pp. 211–3.</ref>

Thatcher's 1974 pledge to abolish the rates and replace them with a new form of local government funding was still in force. However, the 1979 manifesto made clear that income tax cuts took priority over rates reform. Thatcher also blocked the upward revaluation of property rating values in 1982. A review of rates reform was begun in 1981, in which his junior minister [[Tom King, Baron King of Bridgwater|Tom King]] personally spoke to every single backbench Conservative MP to canvass opinion about the various options. A Green Paper was produced in December 1981, recommending that no single alternative to the rates suggested itself. Thatcher wrote "I will not tolerate failure in this area" in the margin of the report and in the summer of 1982 a new committee was set up under Willie Whitelaw, only to come to much the same conclusion (The eventual solution, a "poll tax", was rejected both by the Green Paper and by Whitelaw's committee).<ref>Crick 1997, pp. 214–5.</ref>

Heseltine resisted demands by [[Leon Brittan]], the [[Chief Secretary to the Treasury]] with whom he already enjoyed a somewhat antagonistic relationship, that central government have power to cap the spending of local authorities. He argued that the worst offenders were the large metropolitan counties (which, ironically, he had helped to create a decade earlier) and that the simplest solution was simply to abolish them. In the event, the 1983 manifesto, after Heseltine had moved to his next job, committed the Conservatives both to abolition of the metropolitan boroughs and to rate capping. When Heseltine objected after the election, Thatcher gave him "one of the most violent rebukes I have ever witnessed in Cabinet" according to [[Jim Prior]], who believed that the issue helped fuel the hostility between Heseltine and Thatcher and Brittan, which would later exhibit itself as the Westland Affair.<ref>Crick 1997, pp. 215–6.</ref>

In opposition, in the late 1970s, Heseltine had been committed to reducing central government control over local government. In the 1980s, the opposite happened, with no less than 50 Acts of Parliament reducing the powers of local government. In Crick's view, although he opposed both rate capping and the poll tax, the overall trend towards centralisation was too strong for him to resist. During his time at Environment Heseltine also brought in compulsory competitive tendering for council services, and helped set up the [[Audit Commission (United Kingdom)|Audit Commission]], whose initial role was to act as an independent supervisor of district auditors of council activities.<ref>Crick 1997, pp. 216–8.</ref>