Why Block Grant Failed

Abstract

This chapter provides an analysis of the failure of the new block grant system, and the system of expenditure targets and grant penalties which were added in 1981. It analyses whether there previously existed a constitutional convention of conformity by individual local authorities to the central government's public expenditure plans, as was increasingly asserted by government ministers during this period of crisis in central-local relations. Before doing so, we will spend some time examining the background of the crisis in the central-local relationship and the ultimate lurch in the direction of greater central control via the rate-capping proposals. The most simple explanation of the failure of the block grant and the expenditure targets is that the new instruments were operated too leniently. The task of explanation is an arduous one because the imposition of targets made the grant system a great deal more complicated. The experience of 1981 provides a particularly interesting demonstration of the importance of local political control.