The most common and most likely answer to this crossword clue is the 4 plus 3 letter word RATE CAP
R
A
T
E
C
A
P
Buddy explains!
The straight part
We know that "(UK) government imposition (on local councils)" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case (uk) government imposition (on local councils) = rate cap.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.