CAB128-94_A1b — Page 85

CONFIDENTIAL

ONFIDEN

Page 85

The initial responses to his announcement had virtually ignored the benefits which the community charge would bring, notably the ending of the present unfair rating system; and they had also ignored the fact that all the alternative solutions which had been proposed including, in particular, the Labour Party proposals for a capital value rate together with a local income tax were manifestly less acceptable. In moving from the present unfair system to a fair system based on the community arge, it was inevitable that there would be some losers, and purpose of the new safety net arrangements was to cushion impact on those who stood to lose. No commitments had been about the scope of any transitional arrangements beyond and it would be necessary to give very careful coderation, in the light of reactions to the proposals he had announced on the previous day, to the nature of any arrangements for transitional protection in subsequent years. Some Conservative Members from low-rated areas, as well as many of those from-rated areas, would see advantage in having the shortest ssible transitional period.

In discussion the following main points were made:

a.

Many Gokent backbenchers appeared to fail to appreciate that geholders in the areas of prudently run appreciate tha authorities were ready subsidising those in highly-rated areas, and that th safety net arrangements would greatly reduce the extent th subsidies. Most people would find it entirely reasonable there should be some transitional phasing out of these bijes so that people living in areas which had traditional a low rate bills would have a period in which to adjust the higher demands which would be placed on them. The Secretary of State for the Environment had responded posively to the criticisms of the original proposals for the say net, under which those living in gaining authorities

have received virtually

none of the gains in the first year in which the community charge would be in operation, putting forward revised proposals under which such people would gain virtually one- half of the gains in the first year.

b. The distribution of standard spending grant between authorities, which had not yet been set might provide

settle some limited scope for dealing with unexpected anomalies which might arise over the projected commu certain authorities.

charges for

calculating over

the

C. District treasurers would be following few days the community charges authorities could be expected to impose. This was

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CONFIDENTIAL

NFIDENTIAL

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