It could remove general grants, which accounted for approximately 60% of the councils’ income, if they continued to overspend.

Several councils continued with their programmes of services and had their general grant cut under the earlier legislation.

However, the GLC and other councils sought to recoup the loss by increasing the amount they levied in domestic and business rates; a tax paid by companies and homeowners.

[3] The Act was successfully used to force 31 councils (30 were Labour controlled), who had initially resisted, to comply with government taxation and spending limits.

[citation needed] The domestic rates were replaced in 1990 by the Community Charge (dubbed poll tax), which was paid by more people and intended to reveal inefficient councils, who would be forced to levy a higher charge in order to fund their overspending.