COVERING
Ref.
A04311
MR.
WHIT M O R E
Cabinet;
You
February
w i l l r e c a l l that no r e c o r d w a s c i r c u l a t e d of
last Thursday's
Cabinet.
19th
discussion of Industrial Affairs
at
W e have now produced a M o s t
Confidential R e c o r d and I enclose a copy.
two copies w i l l be kept i n this
office.
The other
I should
be
g r a t e f u l i f y o u c o u l d r e t u r n y o u r c o p y to m e i n due
course.
/
D.J.
23rd February,
1981
WRIGHT
Copy No. /
of 3 copies
SECRET
MOST
CONFIDENTIAL
TO
RECORD C C ( 8 1 ) 7th C O N C L U S I O N S ,
Thursday,
19 F e b r u a r y
MINUTE
4
1981
INDUSTRIAL
AFFAIRS
T H E S E C R E T A R Y O F S T A T E F O R E N E R G Y s a i d that the N a t i o n a l
C o a l B o a r d ' s ( N C B ) r e c e n t a n n o u n c e m e n t o f a p r o g r a m m e of p i t
Coal
c l o s u r e s h a d b e e n s e i z e d on b y m i l i t a n t s i n the N a t i o n a l U n i o n o f
M i n e w o r k e r s ( N U M ) a s a n e x c u s e f o r c o n f r o n t a t i o n w i t h the
Government.
T h e r e had been m u c h d i s t o r t i o n and m i s r e p r e s e n t a t i o n
of the N C B p r o p o s a l s a n d c o n s e q u e n t l y m u c h f e a r a n d c o n c e r n a m o n g
ordinary mineworkers.
Unofficial s t r i k e s had o c c u r r e d and it had
r a p i d l y b e c o m e a p p a r e n t that a f u l l - s c a l e de facto n a t i o n a l c o a l s t r i k e
w o u l d h a v e b e g u n o n the f o l l o w i n g M o n d a y , 23 F e b r u a r y , i f s t e p s h a d
n o t b e e n t a k e n to d e f u s e t h e s i t u a t i o n .
Consequently after consulting
the P r i m e M i n i s t e r a n d o t h e r s e n i o r c o l l e a g u e s h e h a d t a k e n p a r t the
p r e v i o u s e v e n i n g i n j o i n t t a l k s w i t h the N C B a n d the t h r e e m i n i n g
unions.
H i s r e m i t h a d b e e n to m a k e t h e m i n i m u m c o n c e s s i o n s
n e c e s s a r y to a v o i d a n a t i o n a l c o a l s t r i k e .
In the e v e n t he h a d f e l t i t
n e c e s s a r y to m a k e t w o s t a t e m e n t s .
F i r s t that, w h i l e c o a l i m p o r t s
w o u l d i n a n y c a s e f a l l f r o m l\ m i l l i o n t o n n e s i n 1 9 8 0 to b\ m i l l i o n
t o n n e s i n 1 9 8 1 , t h e G o v e r n m e n t w o u l d b e p r e p a r e d to l o o k , w i t h a
v i e w t o m o v e m e n t , a t w h a t c o u l d b e d o n e to r e d u c e t h i s f i g u r e
t o w a r d s i t s i r r e d u c i b l e m i n i m u m , i e those q u a l i t i e s of c o a l not
p r o d u c e d d o m e s t i c a l l y ; a n d s e c o n d that the N C B a n d the u n i o n s s h o u l d
s t a n d b a c k f r o m the G o v e r n m e n t ' s f i n a n c i a l c o n s t r a i n t s a n d d i s c u s s a
p a t t e r n o f p r o p o s a l s f o r c l o s u r e s c o n s i s t e n t w i t h P l a n f o r C o a l a n d the
severe economic realities.
In t h i s e v e n t the G o v e r n m e n t w o u l d be
p r e p a r e d to d i s c u s s the f i n a n c i a l c o n s t r a i n t s w i t h a n o p e n m i n d a n d
a l s o w i t h a v i e w to m o v e m e n t .
U n d e r c o n t i n u e d p r e s s u r e f r o m the
u n i o n s i d e , S i r D e r e k E z r a h a d t h e n s a i d t h a t i n the l i g h t o f the
G o v e r n m e n t ' s w i l l i n g n e s s t o r e v i e w t h e f i n a n c i a l c o n s t r a i n t s o n the
i n d u s t r y the N C B w o u l d w i t h d r a w t h e i r c l o s u r e p r o p o s a l s a n d r e .
e x a m i n e t h e p o s i t i o n i n c o n s u l t a t i o n w i t h the u n i o n s .
The Secretary
of State f o r E n e r g y c o n c l u d e d that, w h i l e he c o u l d n o t be c e r t a i n that
t h e s e c o n c e s s i o n s w o u l d a v e r t a n a t i o n a l s t r i k e , he w a s s u r e that
nothing l e s s w o u l d have done so.
It h a d b e e n a g r e e d t h a t the t h r e e
p a r t i e s s h o u l d m e e t a g a i n o n the f o l l o w i n g W e d n e s d a y , 2 5 F e b r u a r y .
J
In d i s c u s s i o n t h e r e w a s u n a n i m o u s s u p p o r t f o r the d e c i s i o n s t a k e n
a n d the a c t i o n s o f the S e c r e t a r y o f S t a t e f o r E n e r g y .
A national coal
s t r i k e a t t h i s j u n c t u r e w o u l d h a v e b e e n v e r y d a m a g i n g , n o t l e a s t to
p r i v a t e f i r m s s t r u g g l i n g to c o p e w i t h t h e r e c e s s i o n .
T h u s , w h i l e the
p o s i t i o n r e a c h e d c o u l d h a v e u n f o r t u n a t e r e p e r c u s s i o n s , the a l t e r n a t i v e
would have been far w o r s e .
1
SECRET
SECRET
In f u r t h e r
d i s c u s s i o n the f o l l o w i n g m a i n p o i n t s w e r e
made:­
a.
The G o v e r n m e n t had been s e r i o u s l y m i s l e d by p r i o r
a s s u r a n c e s f r o m the N C B t h a t a n a c c e l e r a t e d c l o s u r e
p r o g r a m m e w o u l d be a c c e p t e d , a l b e i t r e l u c t a n t l y , b y the
miners.
T h e r e a l i t y w a s that the N C B h a d g a m b l e d a n d
lost.
b.
It w a s i m p o r t a n t t o r e c o g n i s e t h a t t h e N C B h a d n o t
p r o m i s e d t o h a l t p i t c l o s u r e s b u t t o d i s c u s s t h e m w i t h the
N U M a g a i n s t the b a c k g r o u n d of P l a n f o r C o a l .
This had
e n v i s a g e d c l o s u r e s a n d M r G o r m l e y , t h e P r e s i d e n t o f the
N U M , had p u b l i c l y a c k n o w l e d g e d that s o m e c l o s u r e s w e r e
necessary.
c.
The present settlement could have repercussions
elsewhere.
The fishing industry, for example, might
s e i z e o n the G o v e r n m e n t ' s w i l l i n g n e s s to t a k e a c t i o n o n
c o a l i m p o r t s a s a p r e c e d e n t f o r the a c t i o n t h e y w a n t e d o n
i m p o r t s of f i s h .
M o r e o v e r , although pay and c l o s u r e s
w e r e d i f f e r e n t m a t t e r s , s o m e u n i o n s , e g i n the w a t e r i n d u s t r y ,
m i g h t b e e n c o u r a g e d t o a d o p t a m o r e m i l i t a n t a p p r o a c h to
their current pay negotiations.
T H E P R I M E M I N I S T E R , s u m m i n g up the d i s c u s s i o n , s a i d that
C a b i n e t e n d o r s e d the a c t i o n t a k e n b y the S e c r e t a r y o f State f o r E n e r g y
It h a d b e e n r e p o r t e d d u r i n g the m e e t i n g o f the C a b i n e t that the N U M
E x e c u t i v e h a d r e j e c t e d t h a t m o r n i n g a p r o p o s a l to b a l l o t t h e m i n e ­
w o r k e r s seeking e n d o r s e m e n t for an a l l - o u t strike and this news was
welcome.
N e v e r t h e l e s s the s i t u a t i o n w o u l d r e m a i n d e l i c a t e f o r s o m e
t i m e a n d u n o f f i c i a l a c t i o n m i g h t be c o n t i n u e d i n s o m e a r e a s .
It w a s
t h u s n e c e s s a r y f o r the G o v e r n m e n t to be v e r y c i r c u m s p e c t i n p u b l i c
c o m m e n t , e v e n t h o u g h t h i s m i g h t m e a n that, f o r the t i m e b e i n g , t h e y
c o u l d n o t d e p l o y a f u l l r e s p o n s e to c r i t i c s a m o n g t h e i r o w n s u p p o r t e r s .
T h e b e s t c o u r s e w o u l d b e to s t i c k c l o s e l y t o t h e w o r d s u s e d b y t h e
S e c r e t a r y o f S t a t e f o r E n e r g y a n d to a v o i d g l o s s o r i n t e r p r e t a t i o n .
A r o b u s t d e f e n c e o f the G o v e r n m e n t ' s a c t i o n s at t h i s t i m e m i g h t w e l l
u n d e r m i n e e l e m e n t s i n t h e N U M w h o w e r e d o i n g t h e i r b e s t to c o n t r o l
the s i t u a t i o n .
The Cabinet ­
1.
T o o k n o t e , w i t h a p p r o v a l , o f the
s u m m i n g up of t h e i r d i s c u s s i o n .
2
SECRET
Prime Minister's
SECRET
NEGOTATIONS
IN T H E W A T E R
INDUSTRY
Previous
Reference:
CC(81) 1st
Conclusions,
Minute 5
T H E S E C R E T A R Y O F S T A T E F O R T H E E N V I R O N M E N T said
t h a t the i n d i c a t i o n s w e r e that the G e n e r a l a n d M u n i c i p a l " W o r k e r s
U n i o n - the l a r g e s t i n the w a t e r i n d u s t r y - w o u l d r e j e c t the
c u r r e n t p a y o f f e r o f 10 p e r c e n t , t h o u g h o p i n i o n i n t h e o t h e r t w o
main unions involved was more evenly balanced.
The National
W a t e r C o u n c i l ( N W C ) w o u l d be m e e t i n g the u n i o n s f o r m a l l y o n
2 5 F e b r u a r y , a n d S i r R o b e r t M a r s h a l l , C h a i r m a n of the N W C ,
w o u l d a i m to a c h i e v e a n e g o t i a t e d s e t t l e m e n t a t t h a t m e e t i n g ,
w i t h o u t g i v i n g the u n i o n s i d e a n o p t i o n f o r a f u r t h e r p r o t r a c t e d
round of consultation w i t h their m e m b e r s .
Sir Robert Marshall
h a d i n d i c a t e d t h a t i t m i g h t b e n e c e s s a r y f o r t h e N W C to o f f e r
1 1 p e r c e n t , o r e v e n 12 p e r c e n t t o a c h i e v e a s e t t l e m e n t , a n d
h a d b e e n l e f t i n n o d o u b t t h a t the G o v e r n m e n t a t t a c h e d g r e a t
i m p o r t a n c e to a c h i e v i n g the l o w e s t p r a c t i c a b l e f i g u r e .
It w a s
d e s i r a b l e t h a t the g a s i n d u s t r y n e g o t i a t i n g m e e t i n g o n 24 F e b r u a r
s h o u l d n o t r e s u l t i n a n e n h a n c e d o f f e r w h i c h w o u l d e n c o u r a g e the
s a m e u n i o n s , r e p r e s e n t i n g t h e w a t e r w o r k e r s , to a t t e m p t to
l e a p f r o g i t at t h e i r m e e t i n g w i t h the N W C o n the f o l l o w i n g d a y .
In d i s c u s s i o n , i t w a s s u g g e s t e d t h a t i n s p i t e o f the r e s u l t s
e m e r g i n g f r o m the u n i o n c o n s u l t a t i o n , the m a s s o f w a t e r w o r k e r s
m i g h t b e u n w i l l i n g to f a c e the c o n s e q u e n c e s o f a n a l l - o u t s t r i k e .
T h e G o v e r n m e n t s h o u l d do m o r e to m o b i l i s e p u b l i c i t y a b o u t the
c o n s e q u e n c e s of a s t r i k e f o r the p u b l i c , a n d the
reasonableness
of the p a y i n c r e a s e n o w o f f e r e d i n c o m p a r i s o n w i t h that a v a i l a b l e
to m a n y o t h e r w o r k e r s w h o , m o r e o v e r , d i d n o t e n j o y
comparable security of employment.
It w a s n o t e d t h a t the
a t t i t u d e o f s u p e r v i s o r y staff, w h o s e c o - o p e r a t i o n w o u l d be v i t a l
i n m a i n t a i n i n g s u p p l i e s i f the m a n u a l s w i t h d r e w t h e i r l a b o u r ,
w a s s t i l l u n c e r t a i n a n d d i f f i c u l t to p r e d i c t .
In S c o t l a n d , h o w e v e r
the s u p e r v i s o r s w e r e l o c a l a u t h o r i t y e m p l o y e e s and i n s o m e c a s e
s u b j e c t to a c l o s e d s h o p .
It m i g h t b e p a r t i c u l a r l y d i f f i c u l t f o r
t h e m to c o - o p e r a t e w i t h the G o v e r n m e n t e v e n i f they w a n t e d to.
The Cabinet ­
PRIVATE
T H E S E C R E T A R Y OF STATE F O R INDUSTRY
SECTOR STEEL
B r i t i s h Steel C o r p o r a t i o n ( B S C ) and Guest,
r e p o r t e d t h a t the
K e e n and Nettlefolds,
h a d n o w r e a c h e d a g r e e m e n t o n a j o i n t c o m p a n y to
their rod,
bar and w i r e interests,
be m a d e o n 20 F e b r u a r y .
rationalise
and an announcement
would
T h e n e w c o m p a n y w o u l d be o f a
s u b s t a n t i a l s i z e a n d w o u l d be i n the p r i v a t e
sector.
The B S C
was a l s o engaged i n d i s c u s s i o n s of other p o s s i b i l i t i e s for
c o l l a b o r a t i o n w i t h the p r i v a t e
3
S E C R E T
sector,
but these w e r e not
yet
SECRET
finalised.
The a g r e e m e n t reached and those which might follow
would reduce the l e v e l of complaints about unfair competition f r o m
the B S C , s o m e of w h i c h w e r e i n a n y c a s e m i s c o n c e i v e d b e c a u s e
m u c h of the r e a l c o m p e t i t i o n c a m e f r o m i m p o r t s .
Nevertheless
the B S C w e r e v e r y c o n s c i o u s o f the n e e d to a v o i d c h a r g e s of u n f a i r
c o m p e t i t i o n a n d M r M a c G r e g o r h a d u n d e r t a k e n to l o o k p e r s o n a l l y
at any c o m p l a i n t s r a i s e d by M e m b e r s of P a r l i a m e n t .
F i n a l l y , - t h e S E C R E T A R Y O F S T A T E F O R E N E R G Y s t r e s s e d that
the i n f o r m a t i o n w h i c h he h a d g i v e n C a b i n e t w a s c o m m e r c i a l l y
s e n s i t i v e and should be r i g o r o u s l y safeguarded u n t i l announcements
were made.
The Cabinet ­
3.
Cabinet
T o o k note.
Office
23 F e b r u a r y
1981.
4
SECRET
C OM
ft
F/DBNTIAL
Cabinet,
T n u r s d a y 19 M a r c h 1981
S i r R o b e r t A r m s t r o n g h a s d e c i d e d t h a t a l u l l r e c o r d o £ l a at T h u r s d a y ' s
d i s c u s s i o n i n C a b i n e t o n t h e C i v i l S e r v i c e 1'uopute s n o u l d oe s e n t s e p a r a t e l y
those directly c o n c e r n e d .
I e n c l o s e a c o p y wttfc t h i s l e t t e r .
to J o h n 'Wiggins ( T r e a s u r y ) a n d J i m B u c i d o y ( C i v i l S e r v i c e
T h e r e i e no r e f e r e n c e
to
w s p i e s a l s o go
Department),
to the e x i s t e n c e of t h i s r e c o r d i n the C a b i n e t
m i n u t e s a n d I s h o u l d b e g r a t e f u l i f i t c o u l d n o t b e r e f e r r e d t o o r quoted f r o m .
It s h o u l d a l s o be s e e n o n l y b y t h e P e r m a n e n t S e c r e t a r i e s i n the T r e a s u r y a n d
t h e C S D a n d the C h a i r m a n o f the B o a r d o i ' I n l a n d R e v e n u e .
In d u e c o u r s e ,
1 s h o u l d be g r a t e f u l ii. c o p i e s c o u l d be r e t u r n e d to m e
i n the C i i n e t O i ' i i c c .
T>. J . W R I G H T
(E J Wright)
P r i v a t e Secretary
Clive Wbitrnore £ s q
C O Ni" ID K N T I A I*
C o p y N o . V of 4 C o p i e s
MOST CONFIDENTIAL
T O
C C ( 8 1 ) 12th C O N C L U S I O N S ,
RECORD MINUTE
4
T h u r s d a y 19 M a r c h 1981
CIVIL
SERVICE
DISPUTE
Previous
Reference:
C C ( 8 1 ) 11th
Conclusions,
Minute 4
T H E L O R D P R E S I D E N T O F T H E C O U N C I L s a i d that the c o n t i n g e n c y
a r r a n g e m e n t s to d e a l w i t h t h e c u r r e n t i n d u s t r i a l a c t i o n i n t h e C i v i l
S e r v i c e were generally working satisfactorily, with Departments
on n o t i c e to c o n s u l t the C i v i l S e r v i c e D e p a r t m e n t o n a n y u n e x p e c t e d
or major difficulties.
A n i n t e r d e p a r t m e n t a l g r o u p of o f f i c i a l s w o u l d
be putting f o r w a r d r e c o m m e n d a t i o n s i n e a r l y A p r i l for an o r d e r e d and
a g r e e d s y s t e m of p a y d e t e r m i n a t i o n i n the l o n g e r t e r m and, i f
n e c e s s a r y , f o r i n t e r i m a r r a n g e m e n t s i n 1982.
Pending consideration
of t h e s e p r o p o s a l s , w h i c h c o u l d f o r m a b a s i s for r e s o l v i n g the p r e s e n t
d i s p u t e , he r e c o m m e n d e d that so f a r as p o s s i b l e the G o v e r n m e n t
s h o u l d a v o i d d o i n g a n y t h i n g w h i c h m i g h t p r o v o k e the u n i o n s to
escalate their industrial action.
A p r o b l e m had, however, a r i s e n i n
t h e I n l a n d R e v e n u e w h i c h c o u l d c a l l f o r a c t i o n w h i c h m i g h t l e a d to
escalation.
U n d e r the c o n t i n g e n c y a r r a n g e m e n t s now i n f o r c e 80 p e r
cent of P a y A s Y o u E a r n ( P A Y E ) r e v e n u e w a s s t i l l flowing and,
p r o v i d e d that the b a n k i n g unions d i d not s u c c e e d i n m a k i n g good t h e i r
t h r e a t to t a k e a c t i o n i n s y m p a t h y w i t h the C i v i l S e r v i c e u n i o n s , t h e s e
a r r a n g e m e n t s s h o u l d c o n t i n u e to w o r k .
T h e y d i d not, h o w e v e r ,
p r o v i d e f o r d e a l i n g w i t h the r e m a i n i n g 20 p e r cent of r e v e n u e w h i c h
w a s m a d e up of r e l a t i v e l y s m a l l cheques sent i n a total of a r o u n d
900, 000 s e p a r a t e l e t t e r s a m o n t h .
T h e Inland R e v e n u e judged that
a c t i o n s h o u l d n o w b e t a k e n to d e a l w i t h t h e s e r e c e i p t s , i f t h o s e s t a f f
c u r r e n t l y h e l p i n g u n d e r t h e c o n t i n g e n c y a r r a n g e m e n t s w e r e n o t to l o s e
morale.
T h e y r e c o m m e n d e d t h a t the l e t t e r s s h o u l d be d i v e r t e d to
250 l o c a l o f f i c e s w h e r e a t o t a l of 9, 000 staff w o u l d be a s k e d on
F r i d a y 20 M a r c h to d e a l w i t h t h e m .
If t h e y r e f u s e d to do s o , t h e y
would be i s s u e d with T e m p o r a r y R e l i e f f r o m Duty ( T R D ) notices on
M o n d a y 23 M a r c h a n d , i f n e c e s s a r y , s e n t h o m e u n d e r the T R D
p r o c e d u r e s on the f o l l o w i n g day.
It w a s u n c e r t a i n h o w t h e s t a f f
c o n c e r n e d w o u l d r e s p o n d and t h e r e was undoubtedly a r i s k that such a
m o v e w o u l d l e a d to e s c a l a t i o n o f i n d u s t r i a l a c t i o n b o t h w i t h i n the
Inland Revenue and elsewhere.
T H E C H A N C E L L O R O F T H E E X C H E Q U E R s a i d that of the n o r m a l
P A Y E r e c e i p t s of a b o u t £ 2 \ b i l l i o n a m o n t h a p p r o x i m a t e l y
£ 4 2 5 m i l l i o n w e r e not being dealt with.
Those grades co-operating
u n d e r the c o n t i n g e n c y a r r a n g e m e n t s w e r e a l r e a d y f a c i n g c r i t i c i s m
f r o m the u n i o n s , a n d t h e r e h a d been a d e m o n s t r a t i o n o u t s i d e the
I n l a n d R e v e n u e ' s B u s h H o u s e office that m o r n i n g .
There was a r i s k
t h a t t h e i r m o r a l e a n d t h e i r r e a d i n e s s to c o n t i n u e to c o - o p e r a t e w i t h
t h e m a n a g e m e n t w o u l d s u f f e r i f a c t i o n w e r e n o t t a k e n to d e a l w i t h t h e
20 p e r c e n t of r e v e n u e o u t s t a n d i n g .
If t h e m e a s u r e s p r o p o s e d w e r e
to l e a d to t h e s u s p e n s i o n of 9, 000 staff, t h i s w o u l d c o s t the u n i o n s
about £ 7 5 0 , 000 a w e e k i n s u p p o r t i n g t h o s e s u s p e n d e d ;
this
p r e s s u r e o n t h e i r funds c o u l d be h e l p f u l i n b r i n g i n g i n d u s t r i a l a c t i o n
to a n e n d .
T H E A T T O R N E Y G E N E R A L s a i d t h a t i t w o u l d be i n o r d e r to
i m p l e m e n t T R D a r r a n g e m e n t s f o r staff r e f u s i n g to take on w o r k of a
t y p e w h i c h t h e y m i g h t n o r m a l l y b e e x p e c t e d to c a r r y out, p r o v i d e d
that t h e y w e r e not r e q u i r e d to u n d e r t a k e a n u n r e a s o n a b l e a m o u n t of
o v e r t i m e i n o r d e r to do s o .
In d i s c u s s i o n i t w a s p o i n t e d out that i t w a s a s u b s t a n t i a l a c h i e v e m e n t
that u n d e r the c o n t i n g e n c y a r r a n g e m e n t s 80 p e r cent of P A Y E ­
revenue was unaffected.
It w a s u n c l e a r t h a t t h e f u r t h e r a c t i o n
p r o p o s e d w o u l d h a v e any u s e f u l effect; i f the 250 offices w e r e a l r e a d y
f u l l y o c c u p i e d w i t h t h e i r p r e s e n t w o r k l o a d , the staff c o u l d r e a s o n a b l y
c l a i m t h a t t h e y d i d n o t h a v e t i m e to d e a l w i t h a n y e x t r a w o r k , the
T R D p r o c e d u r e s c o u l d not be o p e r a t e d , and e x t r a r e c e i p t s would not
be s e c u r e d .
T h e G o v e r n m e n t ' s a t t e m p t to i n t r o d u c e t h e p r o p o s e d
a r r a n g e m e n t s , and any suspensions which d i d result, could however
p r o v o k e a n e s c a l a t i o n of i n d u s t r i a l a c t i o n b e f o r e the G o v e r n m e n t w e r e
r e a d y to c o m e f o r w a r d w i t h t h e p r o p o s a l s f o r d e t e r m i n i n g p a y i n
f u t u r e y e a r s w h i c h m i g h t b r i n g the p r e s e n t d i s p u t e to a n e n d .
Any
p r e m a t u r e e s c a l a t i o n o f the d i s p u t e w o u l d a d d to the d i f f i c u l t i e s o f
n e g o t i a t i n g the i n t r o d u c t i o n of a r e v i s e d s y s t e m .
R a t h e r than take
a c t i o n w h i c h m i g h t e s c a l a t e the d i s p u t e at t h i s stage, it w o u l d be
b e t t e r f o r t h e G o v e r n m e n t t o e m p h a s i s e i t s i n t e n t i o n to p u t f o r w a r d
p r o p o s a l s i n A p r i l f o r n e w a r r a n g e m e n t s a n d to a r g u e that t h i s
j u s t i f i e d a r e d u c t i o n of i n d u s t r i a l a c t i o n i n the m e a n t i m e .
In f u r t h e r d i s c u s s i o n i t w a s p o i n t e d out that the B r i t i s h B r o a d c a s t i n g
C o r p o r a t i o n ' s ( B B C ' s ) r a d i o r e p o r t of the d e m o n s t r a t i o n that day
outside B u s h H o u s e had been b i a s e d i n tone and unhelpful i n
r e v e a l i n g h o w the envelopes c o n t a i n i n g h i g h v a l u e cheques w e r e
coded.
If the t r a n s c r i p t of the b r o a d c a s t b o r e out the i m p r e s s i o n of
b i a s , c o n s i d e r a t i o n s h o u l d be g i v e n to c o m p l a i n i n g to the B B C .
T H E P R I M E M I N I S T E R , s u m m i n g up the d i s c u s s i o n , s a i d that the
C a b i n e t a g r e e d that for the t i m e b e i n g the Inland R e v e n u e s h o u l d not
a t t e m p t to i n t r o d u c e a n y s p e c i a l a r r a n g e m e n t s to d e a l w i t h t h e 2 0 p e r
cent of P A Y E p a y m e n t s w h i c h w e r e not b e i n g h a n d l e d d u r i n g the
present industrial action.
2
The Cabinet
-
Invited the C h a n c e l l o r of the E x c h e q u e r and
L o r d P r e s i d e n t of the C o u n c i l :
the
i.
T o k e e p u n d e r r e v i e w the Inland
Revenue's arrangements for dealing with
P a y A s Y o u E a r n r e c e i p t s d u r i n g the p r e s e n t
C i v i l S e r v i c e i n d u s t r i a l d i s p u t e a n d to r e p o r t
f u r t h e r i n t h e w e e k b e g i n n i n g 23 M a r c h .
ii.
T o c o n s i d e r w h e t h e r the t r a n s c r i p t of
the B r i t i s h B r o a d c a s t i n g C o r p o r a t i o n ' s r a d i o
b r o a d c a s t on the d e m o n s t r a t i o n o u t s i d e the
Inland R e v e n u e ' s B u s h H o u s e offices that
m o r n i n g j u s t i f i e d c o m p l a i n t s to the
C o r p o r a t i o n of b i a s i n r e p o r t i n g .
Cabinet Office
2 0 M a r c h 1981
3
HOST
To
CCUFIDKNTIPTL
Cc
{^() IS^
C^cUvxu^)
fLECOKD
HtH
6
CONFIDENTIAL
ONE COPY
MOST
CONFIDENTIAL
ONLY
RECORD
TO
C C ( 8 1 ) 15th C O N C L U S I O N S ,
Thursday 9 April
PAY OF MPs,
MINISTERS
AND JUNIOR
MINISTERS IN
THE HOUSE
OF LORDS
Previous
References:
CC(81) 2nd
Conclusions,
Minute 7 and
CC(81) 6th
Conclusions,
Minute 1
MINUTE
5
1981
THE CHANCELLOR OF THE DUCHY OF LANCASTER AND
P A Y M A S T E R G E N E R A L s a i d that the C h a i r m a n o f the T o p
S a l a r i e s R e v i e w B o d y ( T S R B ) h a d r e c e n t l y a s k e d w h e t h e r the
G o v e r n m e n t s t i l l w i s h e d the B o d y to c a r r y out a r e v i e w o f
M e m b e r s ' o f P a r l i a m e n t ( M P s ' ) a n d M i n i s t e r s ' p a y f o r 1981.
T h e H o u s e o f C o m m o n s w o u l d e x p e c t t h e r e to be s u c h a r e v i e w
i n a c c o r d a n c e w i t h the G o v e r n m e n t ' s u n d e r t a k i n g .
The best
o u t c o m e i n p r e s e n t c i r c u m s t a n c e s w o u l d be f o r t h e T S R B n o t to
p u t f o r w a r d n e w s a l a r y l e v e l s b u t to r e c o m m e n d , a s t h e y h a d
d o n e f o r o t h e r g r o u p s a n d w o u l d be w i l l i n g to do f o r M P s , the
f u l l i m p l e m e n t a t i o n o f t h e i r 1980 r e c o m m e n d a t i o n s a s s o o n a s
possible.
T h e R e v i e w B o d y s h o u l d , h o w e v e r , be a s k e d to a d v i s e
on the updating of P a r l i a m e n t a r y a l l o w a n c e s .
It w o u l d t h e n b e
f o r t h e G o v e r n m e n t to d e c i d e w h a t r e c o m m e n d a t i o n s , i f a n y , to
m a k e f o r M P s ' p a y this y e a r , b e a r i n g i n m i n d that the r e s o l u t i o n
p a s s e d by the H o u s e of C o m m o n s l a s t y e a r m e a n t that a n M P ' s
s a l a r y w o u l d be i n c r e a s e d f r o m £11, 750 to £ 1 3 , 1 5 0 i n J u n e .
This
w o u l d b e a n i n c r e a s e o f 12 p e r c e n t b u t h a d t o b e c o m p a r e d w i t h
t h e £ 1 3 , 7 50 r e c o m m e n d e d i n 1 9 8 0 b y t h e T S R B f o r t h e t h i r d s t a g e
of the i m p l e m e n t a t i o n of t h e i r r e c o m m e n d a t i o n s of the p r e v i o u s
year.
In t h e i r m e m o r a n d u m he a n d the L o r d P r e s i d e n t h a d set
out a n u m b e r of options.
T h e House of C o m m o n s would expect a
f u r t h e r i n c r e a s e b e y o n d t h a t d u e to c o m e i n t o e f f e c t i n J u n e , a n d
i t w a s h i s c o n s i d e r e d j u d g m e n t , w i t h w h i c h the C h i e f W h i p a g r e e d ,
that the m i n i m u m a c c e p t a b l e i n c r e a s e w o u l d be a f u r t h e r i n c r e a s e
o f 6 p e r c e n t o n the t h i r d s t a g e s a l a r y o f £ 1 3 , 1 5 0 a l r e a d y due to
c o m e i n t o e f f e c t o n 13 J u n e , t o £ 1 3 , 9 5 0 .
If s i m i l a r i n c r e a s e s
w e r e g i v e n to M i n i s t e r s , the r e s u l t i n g s a l a r i e s w o u l d be t h o s e
d e s c r i b e d i n option D of his paper.
I n d i s c u s s i o n i t w a s a r g u e d , i n s u p p o r t o f a n i n c r e a s e to £ 1 3 , 9 5 0 ,
that M P s s t i l l b e l i e v e d that they h a d been u n f a i r l y p e n a l i s e d by
t h e d e c i s i o n o f t h e G o v e r n m e n t i n 1979 t o i m p l e m e n t t h e
r e c o m m e n d a t i o n s then m a d e by the T S R B i n t h r e e a n n u a l s t a g e s .
T h e G o v e r n m e n t h a d to be m i n d f u l o f f e e l i n g s i n the H o u s e .
They
n e e d e d the g o o d w i l l of t h e i r s u p p o r t e r s i n P a r l i a m e n t , and a
f u r t h e r p r o l o n g e d d i s p u t e about M P s ' p a y , i n the c o u r s e o f w h i c h
t h e G o v e r n m e n t m i g h t w e l l b e d e f e a t e d , w o u l d be v e r y d a m a g i n g .
1
CONFIDENTIAL
CONFIDENTIAL
O n t h e o t h e r h a n d i t w a s a r g u e d t h a t t h e G o v e r n m e n t o u g h t n o t to
p r o p o s e a n y i n c r e a s e i n M P s ' p a y a b o v e t h e f i g u r e o f £ 1 3 , 150
a l r e a d y agreed for next June (option B ) .
This would represent
a n i n c r e a s e o f a b o u t 12 p e r c e n t .
To propose any higher figure
w o u l d be s e e n to be q u i t e out o f l i n e w i t h o t h e r p a y s e t t l e m e n t s
i n both the p u b l i c a n d the p r i v a t e s e c t o r s .
A n y early announce­
m e n t o f s u c h a p r o p o s e d f i g u r e w o u l d m a k e i t m o r e d i f f i c u l t to
achieve satisfactory settlements i n coming negotiations.
If
o p t i o n D w e r e a d o p t e d M P s w o u l d r e c e i v e £ 2 0 0 m o r e than the
T S R B h a d r e c o m m e n d e d i n t h e i r 1980 r e p o r t , w h i l e the p a y o f
s e n i o r c i v i l s e r v a n t s , s e n i o r o f f i c e r s i n the a r m e d f o r c e s a n d
the j u d i c i a r y , who w e r e l i k e l y to r e c e i v e a f u r t h e r i n c r e a s e of
o n l y about 6 p e r cent, w o u l d r e m a i n w e l l b e l o w the f i g u r e
r e c o m m e n d e d by the T S R B f o r 1980.
The Government should
n o t be s e e n to e n v i s a g e w o r s e t r e a t m e n t f o r i t s o w n e m p l o y e e s
than for M P s .
O p t i o n B h a d the a d d i t i o n a l advantages of not
r e q u i r i n g a n y o v e r t a c t i o n by the G o v e r n m e n t and not p r o d u c i n g
f i g u r e s e x a c t l y c o r r e s p o n d i n g , as option C w o u l d have done, w i t h
those r e c o m m e n d e d by the T S R B .
In f u r t h e r d i s c u s s i o n , i t w a s s u g g e s t e d that,
took a final d e c i s i o n ,
b e f o r e the C a b i n e t
some i n f o r m a l and confidential soundings
s h o u l d be m a d e o f o p i n i o n i n the H o u s e of C o m m o n s .
It w a s
o b j e c t e d to t h i s t h a t to do so m i g h t l e a d to a r e n e w e d c a m p a i g n
for m u c h h i g h e r i n c r e a s e s o f the s c a l e i l l u s t r a t e d i n option E ,
a n d a n y i n d i c a t i o n that M P s m i g h t r e c e i v e i n c r e a s e s of between
15 p e r c e n t a n d 2 0 p e r c e n t w o u l d b e a g r a v e e m b a r r a s s m e n t
Government i n current negotiations.
It m i g h t t h e r e f o r e be
f o r t h e G o v e r n m e n t to a n n o u n c e i t s d e c i s i o n ,
at the a p p r o p r i a t e
to
better
without consultation,
time.
T H E P R I M E M I N I S T E R s u m m i n g up t h i s p a r t of the d i s c u s s i o n ,
s a i d t h a t t h e C a b i n e t a g r e e d t h a t t h e T S R B s h o u l d be i n v i t e d to
p r o d u c e a n e w r e p o r t o n the p a y of M P s and M i n i s t e r s on the
s u g g e s t e d i n C(81) 13.
basi
The Cabinet had had a useful p r e l i m i n a r y
d i s c u s s i o n o f t h e d i f f i c u l t p r o b l e m o f t h e p a y o f M P s f o r 1981,
r e c o g n i s e d the i m p o r t a n c e of not b e i n g defeated
C o m m o n s o n the i s s u e .
to r e a c h a n y d e c i s i o n a n d ,
and
i n the H o u s e of
T h e C a b i n e t w e r e not yet i n a p o s i t i o n
s i n c e the m a t t e r
c o u l d be
deferred
until some c u r r e n t negotiations had been completed, they
agreed
t h a t t h e y w o u l d r e s u m e t h e i r d i s c u s s i o n at a l a t e r d a t e .
They
could not usefully give further
c o n s i d e r a t i o n to t h e p a y o f
M i n i s t e r s f o r 1981 u n t i l t h e y h a d r e a c h e d d e c i s i o n s o n t h e p a y o f
MPs.
CONFIDENTIAL
CONFIDENTIAL
T H E L O R D P R E S I D E N T O F T H E C O U N C I L s a i d that the C a b i n e t
h a d p r e v i o u s l y d e c i d e d t h a t a n i n c r e a s e o f a b o u t £ 3 , 500 s h o u l d
be m a d e i n the r e m u n e r a t i o n of J u n i o r M i n i s t e r s i n the H o u s e of
L o r d s , who d i d not r e c e i v e any P a r l i a m e n t a r y salary, and some
of w h o m w e r e i n c o n s i d e r a b l e f i n a n c i a l d i f f i c u l t i e s .
In their
m e m o r a n d u m he a n d the C h a n c e l l o r of the D u c h y h a d been a b l e
to m a k e p r o p o s a l s f o r a c h i e v i n g the C a b i n e t ' s o b j e c t i v e w h i c h ,
u n l i k e e a r l i e r p r o p o s a l s , d i d not r e q u i r e p r i m a r y l e g i s l a t i o n .
T h e M i n i s t e r i a l a n d O t h e r S a l a r i e s A c t 197 5 g a v e t h e P r i m e
M i n i s t e r d i s c r e t i o n to f i x t h e s a l a r i e s o f c e r t a i n M i n i s t e r s ,
i n c l u d i n g M i n i s t e r s of State, w i t h i n a r a n g e .
It w a s n o w p r o p o s e d
t h a t a l l M i n i s t e r s o f S t a t e s h o u l d i n f u t u r e be p a i d at the top o f the
r a n g e , w h i l e M i n i s t e r s of State i n the C o m m o n s s h o u l d r e c e i v e a
f i g u r e at the b o t t o m of the r a n g e .
T h e r a t e s of s a l a r y p r e s e n t e d
i n the 1975 A c t w e r e m a x i m a , a n d the A c t a l l o w e d f o r the p a y m e n t
of s a l a r i e s l o w e r than the m a x i m a s p e c i f i e d i n the A c t ; i t was
t h e r e f o r e p r o p o s e d that i n future the m a x i m u m s a l a r y f o r
P a r l i a m e n t a r y S e c r e t a r i e s w o u l d be f i x e d at the l e v e l c o n s i d e r e d
a p p r o p r i a t e f o r those i n the L o r d s , with P a r l i a m e n t a r y
S e c r e t a r i e s i n t h e C o m m o n s b e i n g p a i d £ 3 , 500 l e s s .
He proposed
t h a t t h e s e c h a n g e s s h o u l d be m a d e w h e n o t h e r M i n i s t e r i a l s a l a r i e s
were next i n c r e a s e d .
P a r a l l e l . i n c r e a s e s w o u l d be g i v e n b y O r d e r
i n C o u n c i l to o f f i c e - h o l d e r s a n d W h i p s i n the L o r d s .
THE PRIME MINISTER,
s u m m i n g up a b r i e f d i s c u s s i o n ,
s a i d that
t h e C a b i n e t w e r e g l a d to n o t e t h a t a w a y h a d b e e n f o u n d to
the a g r e e d i n c r e a s e s
make
f o r J u n i o r M i n i s t e r s i n the L o r d s without
p r i m a r y l e g i s l a t i o n a n d a g r e e d t h e p r o p o s a l s i n p a r a g r a p h 13 o f
C(81) 1 3 .
C a r e s h o u l d be t a k e n that this d e c i s i o n r e m a i n e d
confidential u n t i l d e c i s i o n s had been taken about
salaries
Ministerial
generally.
The Cabinet ­
1.
T o o k note that the P r i m e M i n i s t e r
would
a r r a n g e f o r the C h a i r m a n of the T o p S a l a r i e s R e v i e w
B o d y to be i n f o r m e d that the G o v e r n m e n t w o u l d be
c o n t e n t f o r the R e v i e w B o d y to r e p o r t o n the p a y o f
M e m b e r s o f P a r l i a m e n t a n d M i n i s t e r s i n 1981 w i t h o u t
recommending new salary rates,
b u t to u r g e
full implementation of their earlier
as soon as p o s s i b l e .
instead
recommendations
The Review Body would
h o w e v e r be a s k e d to a d v i s e o n the u p - d a t i n g o f
P a r l i a m e n t a r y a l l o w a n c e s i n the u s u a l w a y .
2.
A g r e e d to r e s u m e
t h e i r d i s c u s s i o n of the
p a y of M e m b e r s o f P a r l i a m e n t a n d M i n i s t e r s at
a future
meeting.
3
CONFIDENTIAL
CONFIDENTIAL
3.
A p p r o v e d t h e p r o p o s a l s i n p a r a g r a p h 13 o f
C ( 8 1 ) 13 o n t h e m e t h o d s f o r g i v i n g e f f e c t t o t h e i r
e a r l i e r d e c i s i o n s i n p r i n c i p l e to i n c r e a s e t h e
r e m u n e r a t i o n of M i n i s t e r s of State and P a r l i a m e n t a
S e c r e t a r i e s i n the H o u s e of L o r d s , as a b a s i s f o r
proceeding when next there was a general increase
in Ministerial salaries.
Cabinet
Office
10 A p r i l 1981
4
CONFIDENTIAL
Ind^p.
SUBJECT
#
MOST CONF/oennfin.
2 1
No.
ccrtio
/ ? « • / .
Contents
Date
Copy N o . I of 5 Copies
MOST CONFIDENTIAL
T O
RECORD CC(81) 20th C O N C L U S I O N S ,
MINUTE
4
T h u r s d a y 21 M a y 1981
CIVIL
SERVICE
PAY
Previous
Reference:
C C ( 8 1 ) 19th
Collusions,
Mfmite 4
T H E L O R D P R E S I D E N T O F T H E C O U N C I L s a i d t h a t at the m a i n
c o n f e r e n c e s o f the C i v i l S e r v i c e u n i o n s m o t i o n s h a d b e e n p a s s e d at t h e m
w h i c h w o u l d e n a b l e the u n i o n s to s t e p up the s e v e r i t y of t h e i r a c t i o n i f
the l e a d e r s h i p so d e c i d e d .
D e c i s i o n s on whether there should i n fact
b e a n i n t e n s i f i c a t i o n of a c t i o n w e r e r e s e r v e d to the C o u n c i l o f C i v i l
S e r v i c e U n i o n s ( C C S U ) w h o w o u l d be m e e t i n g e a r l y i n the f o l l o w i n g w e e k
to d e c i d e the c o u r s e of a c t i o n to f o l l o w .
The conference resolutions
e n v i s a g e d the p o s s i b i l i t y of a f u l l - s c a l e s t r i k e l a s t i n g for f i v e d a y s ; on
b a l a n c e he j u d g e d it i m p r o b a b l e that the unions w o u l d f o l l o w this c o u r s e
b e c a u s e only a m i n o r i t y of c i v i l servants might actually c o m p l y with
such a decision.
A n all-out strike for a shorter period or intensifica­
t i o n of s e l e c t e d a c t i o n on p r e s e n t l i n e s w a s m o r e l i k e l y .
T h e fact that
t h e r e w a s a gap of a few d a y s b e t w e e n the ending of the u n i o n
c o n f e r e n c e s a n d t h e i m p l e m e n t a t i o n o f a n y d e c i s i o n to i n t e n s i f y a c t i o n
m i g h t b e t h o u g h t to o f f e r a n e a r l y o p p o r t u n i t y to o p e n d i s c u s s i o n s , but
t h i s m i g h t n o t p r o v e to b e f e a s i b l e , g i v e n the a t t i t u d e a d o p t e d at the
u n i o n c o n f e r e n c e s and the C C S U ' s i n t e r n a l a r r a n g e m e n t s ( w h e r e b y a l l
t h e u n i o n s h a d to be r e p r e s e n t e d at a n y t a l k s w i t h G o v e r n m e n t ) .
It w a s
t h e r e f o r e n o w l i k e l y that the s i t u a t i o n w o u l d get w o r s e b e f o r e i t got
better, and the dispute would p r o b a b l y last for some t i m e yet.
There
w a s l i t t l e a l t e r n a t i v e f o r G o v e r n m e n t but to s i t m a t t e r s out a n d a w a i t
developments.
In the m e a n t i m e c o n t i n g e n c y p l a n s to m i t i g a t e the
e f f e c t s of t h e s t r i k e w e r e o p e r a t i n g w e l l , a n d thought w a s b e i n g g i v e n to
a n u m b e r o f p o s s i b i l i t i e s f o r a c t i o n b y G o v e r n m e n t w h e n the m o m e n t
seemed opportune.
THE CHIEF SECRETARY,
T R E A S U R Y r e p o r t e d that there was l i t t l e
c h a n g e i n the s i t u a t i o n i n the r e v e n u e
Departments.
T H E S E C R E T A R Y O F S T A T E F O R T R A D E r e p o r t e d that the a i r traffic
c o n t r o l l e r s ' a c t i o n i n the d i s p u t e h a d s e t t l e d d o w n to a p a t t e r n .
H e a t h r o w A i r p o r t w a s r e g u l a r l y d i s r u p t e d but G a t w i c k A i r p o r t w a s
w o r k i n g n o r m a l l y f o r m o s t of the t i m e .
The dispute was causing
f i n a n c i a l l o s s to t h e a i r l i n e s a n d o n e A m e r i c a n a i r l i n e w a s s e e k i n g
c o m p e n s a t i o n f r o m the G o v e r n m e n t .
S u b j e c t to l e g a l a d v i c e , i t w a s
u n l i k e l y that they had a substantive c a s e for t h i s .
THE FOREIGN AND COMMONWEALTH SECRETARY
s i t u a t i o n at the P a s s p o r t
Office was deteriorating,
r e l a t i o n to a p p l i c a t i o n s f o r n e w
passports.
Saca\txs a
s a i d that the
particularly in
T H E S E C R E T A R Y O F S T A T E F O R T R A N S P O R T s a i d that h i s m a i n
p r o b l e m s c o n c e r n e d the D r i v e r a n d V e h i c l e L i c e n s i n g C e n t r e at
Swansea.
M a i l w a s n o w getting i n a n d out, but i t h a d not yet b e e n
p o s s i b l e to get i n n e w s u p p l i e s o f n i t r o g e n .
F o r the p u b l i c the m a i n
p r o b l e m w a s t h a t n e w d r i v e r s w e r e u n a b l e to get p r o v i s i o n a l d r i v i n g
lie ences.
T H E M I N I S T E R O F A G R I C U L T U R E , F I S H E R I E S A N D F O O D said that
h i s D e p a r t m e n t ' s c o m p u t e r at G u i l d f o r d was now affected.
The action
t h e r e w a s p r e v e n t i n g the p a y m e n t of g r a n t s to f a r m e r s a n d the p a y m e n t
of M o n e t a r y C o m p e n s a t i o n A m o u n t s to the t r a d e .
F a r m e r s were also
being d e p r i v e d of V a l u e A d d e d T a x refunds.
W h i l e the a c t i o n h a d o n l y
j u s t s t a r t e d , the s u m s of m o n e y w e r e s i g n i f i c a n t i n r e l a t i o n to f a r m e r s '
incomes.
T h e r e was s o m e d i s c u s s i o n both of the m e a s u r e s
m i g h t t a k e i n r e s p o n s e to f u r t h e r
G o v e r n m e n t s h o u l d s e e k to s e t t l e the d i s p u t e ,
reached or
w h i c h the G o v e r n m e n t
e s c a l a t i o n and of the b a s i s on w h i c h
the
but no c o n c l u s i o n s w e r e
required.
T H E PRIME MINISTER,
s u m m i n g up the d i s c u s s i o n , s a i d that the
C a b i n e t w e r e a g r e e d that no f u r t h e r
steps s h o u l d be taken by the
G o v e r n m e n t i n the p r e s e n t d i s p u t e u n t i l the s c a l e and n a t u r e of any a c t i o n
to be t a k e n b y the C i v i l S e r v i c e u n i o n s f o l l o w i n g the m e e t i n g of the
next week were known.
n e c e s s a r y after the
T h e C a b i n e t w o u l d r e v e r t to the i s s u e s
Recess.
The Cabinet Took note.
Cabinet
Office
2 6 M a y 1981
2
as
CCSU
SUBJECT
SECRET AND PERSONAL
•MBaBgonnMBHsoanim
GAmim OPPICI
4 t h June 1961 j R e f : A05024
A
•••••••••••
11 JUN198T
] R U N G INtTRUCntNS
PILE No.
Cabinet:
T h u r s d a y 4l.h June 1 9 " !
T h e r e c o r d o f t o d a y ' s C a b i n e t d i s c u s s i o n o n the C i v i l S e r v i c e P a y
!
d i s p u t e h a s b e e n p r o d u c e d a s a Mc:. t C o n f i d e n t i a l U n c o r d .
I enclose a copy
w i t h t h i s I s t t e r w h i c h a l s o goes to J o h n W i g g i n s ( T r e a s u r y ) a n d J i m B u c M e y
(CSD).
T h e C a b i n e t C o n c l u s i o n s c o n t a i n n o r e f e r e n c e t o the e x i s t e n c e of t h i s
record.
It s h o u l d not,
therefore,
06 r e f e r r e d to o r quoted f r o m .
I s h o u l d a l s o e m p h a s i s e t h e c o n s i d e r a b l e s e n s i t i v i t y of t h i s r e c o r d .
It i s not b e i n g c c p i c d to any o t h e r G o v e r n m e n t D e p a r t m e n t a n d n e e d s to be
protected.
I s h o u l d , t h e r e f o r e , be g r a t e f u l i f J o h n W i g g i n s a n d J i m B u c k l e y
c o u l d e n s u r e that the r e c o r d d o e s not l e a v e t h e i r P r i v a t e O f f i c e s a n d that the
o n l y o f f i c i a l s to s e e i t a r e t h e i r P e r m a n e n t S e c r e t a r i e s ,
In due c o u r s e ,
X s h o u l d be g r a t e f u l i f c o p i e s c o u l d be r e t u r n e d to m e
i n the C a b i n e t O f f i c e .
(D. J .
Wright)
C , A . W h i tmo r e , E s q
SECRET AND PERSONAL
Copy No. I
of 4 C o p i e s
SECRET
MOST CONFIDENTIAL
RECORD T O
CC(81) Zlst C O N C L U S I O N S ,
T h u r s d a y 4 June
CIVIL
SERVICE
PAY
Previous
Reference:
0;(81)
20th
Conclusions,
Minute 4
MINUTE
5
1981
T H E L O R D P R E S I D E N T O F T H E C O U N C I L s a i d t h a t the C o u n c i l o f
C i v i l S e r v i c e U n i o n s h a d g i v e n n o t i c e on 26 M a y that, u n l e s s
negotiations took p l a c e o r a r b i t r a t i o n was a g r e e d by 8 June, they would
e x t e n d t h e i r p r e s e n t s e l e c t i v e i n d u s t r i a l a c t i o n to a r e a s o f w o r k w h i c h
had not hitherto been affected.
They had, however, asked for talks
w i t h t h e C i v i l S e r v i c e D e p a r t m e n t w i t h a v i e w to s e e i n g w h e t h e r t h e
d i s p u t e c o u l d b e r e s o l v e d w i t h o u t r e s o r t to s u c h f u r t h e r a c t i o n .
In the
l i g h t o f t h o s e t a l k s , he j u d g e d t h a t a m a j o r i t y o f the l e a d e r s o f the
9 C i v i l S e r v i c e U n i o n s w e r e g e n u i n e i n t h e i r w i s h t o b r i n g t h e d i s p u t e to
an end and that they had not a s k e d for a r e s u m p t i o n of d i s c u s s i o n s s i m p l y
to t r y to r e g a i n s o m e p u b l i c s u p p o r t f o r t h e i r c a . s e .
A l t h o u g h the d e t a i l s
w e r e s t i l l f o r d i s c u s s i o n , i t w a s l i k e l y that a g r e e m e n t c o u l d be r e a c h e d
o n w i d e - r a n g i n g t e r m s o f r e f e r e n c e f o r a n i n q u i r y i n t o the l o n g e r t e r m
a r r a n g e m e n t s for determining C i v i l Service pay.
The unions would
e x p e c t t h a t a r b i t r a t i o n w o u l d be a g a i n a v a i l a b l e to t h e m i n 1982 b u t t h e y
a p p e a r e d to r e c o g n i s e t h a t the G o v e r n m e n t h a d to r e t a i n u l t i m a t e c o n t r o l
o f C i v i l S e r v i c e p a y a.nd, t h e r e f o r e , to h a v e a p o w e r t o o v e r r i d e ,
subject
to P a r l i a m e n t a p p r o v a l , a n a r b i t r a l a w a r d .
H e j u d g e d that f r o m 1981
t h e y m i g h t b e w i l l i n g t o r e c o m m e n d t h e i r m e m b e r s to a c c e p t a n i n c r e a s e
o f l\ p e r c e n t , b u t n o t t h e 7 p e r c e n t w h i c h t h e G o v e r n m e n t h a d s o f a r
offered.
A f t e r c a r e f u l e x a m i n a t i o n of the f i g u r e s , he w a s s a t i s f i e d t h a t
a l\ p e r c e n t i n c r e a s e c o u l d b e a c c o m m o d a t e d w i t h i n a c a s h l i m i t o f
6 p e r cent without further planned r e d u c t i o n s i n C i v i l S e r v i c e staff
numbers;
t h i s w a s n o w p o s s i b l e b e c a u s e the r u n d o w n o f n u m b e r s h a d
p r o v e d to be f a s t e r t h a n h a d b e e n a s s u m e d e a r l i e r i n the y e a r .
The
a d d i t i o n a l \ p e r c e n t w o u l d c o s t a b o u t £ 2 5 m i l l i o n f o r the i n d u s t r i a l a n d
non-industrial Service together.
H e would offer an i n c r e a s e of
l\ p e r c e n t o n l y i f , f o l l o w i n g p r i o r s o u n d i n g s , h e w a s s a t i s f i e d t h a t u n i o n
l e a d e r s w o u l d b e w i l l i n g to p u t i t to t h e i r m e m b e r s , a l b e i t w i t h o u t a
r e c o m m e n d a t i o n , a n d t h a t t h i s w a s l i k e l y to l e a d t o a n e n d t o t h e d i s p u t e .
H e i n v i t e d the C a b i n e t to g i v e h i m a u t h o r i t y f o r t h i s c o u r s e o f a c t i o n .
If,
o n the o t h e r h a n d , he c o u l d o f f e r no f u r t h e r c o n c e s s i o n s he s a w no c h a n c e
o f a s e t t l e m e n t b e i n g r e a c h e d a n d t h e c e r t a i n t y o f a n e s c a l a t i o n i n the
industrial action.
A f t e r a f e w m o n t h s i t m i g h t w e l l be that t h i s a c t i o n
w o u l d c o l l a p s e a n d the G o v e r n m e n t c o u l d i m p o s e a s e t t l e m e n t , but t h i s
w o u l d be a t the e x p e n s e o f i n c r e a s i n g c o s t s to the G o v e r n m e n t a n d o f
i n c r e a s i n g c r i t i c i s m f r o m the p u b l i c .
1
SECRET
SECRET
In d i s c u s s i o n o f the i n c r e a s e to be o f f e r e d f o r 1981 the f o l l o w i n g w e r e
t h e m a i n p o i n t s m a d e i n s u p p o r t o f i n c r e a s i n g t h e o f f e r t o l\ p e r c e n t : ­
a.
T h e r e s u m e d t a l k s b e t w e e n the u n i o n s a n d the
Civil
S e r v i c e D e p a r t m e n t had offered a p o s s i b i l i t y , w h i c h was
open until 8 June,
o f b r i n g i n g the d i s p u t e to a n e n d .
While
industrial opinion would obviously prefer a settlement
of
7 p e r cent i t w a s l i k e l y that they w o u l d find a s e t t l e m e n t
l e s s than 8 per cent acceptable,
p a r t i c u l a r l y i f this
of
could
be a c c o m m o d a t e d w i t h i n the 6 p e r c e n t c a s h l i m i t o n C i v i l
S e r v i c e p a y w h i c h the G o v e r n m e n t h a d a l w a y s m a d e
clear
w a s the p r i m a r y d i s c i p l i n e o n the C i v i l S e r v i c e p a y b i l l .
A
settlement
for
o f l\
p e r c e n t w o u l d be the s a m e a s that
reached
l o c a l a u t h o r i t y m a n u a l w o r k e r s a n d f o r the t e a c h e r s .
If
i t s a w a r d w a s e f f e c t i v e i n b r i n g i n g the p r e s e n t d i s p u t e to a n
end,
for
i t w o u l d be w i d e l y r e g a r d e d as a v e r y s u c c e s s f u l
the
b.
outcome
Government.
If no c o n c e s s i o n s w e r e made,
moderate,
of t h e i r m e m b e r s h i p .
facing,
the p r e s e n t ,
Civil Service Union leaders
relatively
w o u l d l o s e the
support
The G o v e r n m e n t would then r i s k
b o t h i n the p r e s e n t d i s p u t e a n d i n l a t e r y e a r s ,
It c o u l d b e
m o r e hostile and militant union leadership.
d a m a g i n g to t h e G o v e r n m e n t i f , a s a r e s u l t o f a
dispute,
a much
protracted
its relationship with its employees was soured
and
embittered.
c.
I f the i n d u s t r i a l a c t i o n w e r e to be e s c a l a t e d the
a n d the d i s r u p t i o n s to s e r v i c e s ,
would
F a i l u r e s to r e c o r d n a t i o n a l i n s u r a n c e
increase
to b e p a i d .
Short t e r m benefits
a c c u r a t e l y and,
good,
were
the l e v e l o f p e n s i o n s
c o u l d not be
while under-payments
sharply.
contributions
a l r e a d y m a k i n g i t i m p o s s i b l e to d e t e r m i n e
costs,
calculated
w o u l d h a v e to be
i t w o u l d be v e r y d i f f i c u l t to c l a w b a c k
made
over-payments,
w i t h the r e s u l t t h a t n e t p u b l i c e x p e n d i t u r e w o u l d
increase.
If a c t i o n w e r e t o b e e s c a l a t e d i n D e p a r t m e n t o f E m p l o y m e n t
a n d S o c i a l S e c u r i t y o f f i c e s , i t m i g h t b e c o m e i m p o s s i b l e to
i n t r o d u c e f r o m A p r i l 1982 the t a x a t i o n o f u n e m p l o y m e n t
benefit;
a n d the u p r a t i n g of s o c i a l s e c u r i t y b e n e f i t s
a n d the p a y m e n t o f
c h i l d b e n e f i t c o u l d be affected.
cash flow
Farmers'
already suffering f r o m delays in payments
d u e to
C o n t r a c t s f o r w o r k to b e c a r r i e d o u t b y p r i v a t e
w e r e not being i s s u e d ,
as a result.
was
them.
sector
a n d s o m e f i r m s c o u l d go out o f
I n d u s t r i a l a c t i o n b y the a i r t r a f f i c
firms
business
controllers
w a s c o n t i n u i n g a n d the a i r l i n e s h a d a l r e a d y l o s t £ 2 0 m i l l i o n
revenue which would increase
to c o n t i n u e f o r a n o t h e r
w o u l d be n e c e s s a r y
to £ 4 5 m i l l i o n i f the a c t i o n w e r e
four weeks.
Emergency legislation
to d e a l w i t h the d e l a y s i n p r o c e s s i n g
i n the S c o t t i s h c o u r t s .
2
SECRET
cases
SECRET
T h e m a i n a r g u m e n t s i n s u p p o r t of m a k i n g no i n c r e a s e b e y o n d
p r e s e n t offer of 7 per cent w e r e : ­
d.
E v e n i f l\
the
p e r cent could be a c c o m m o d a t e d w i t h i n a
6 p e r c e n t c a s h l i m i t , the G o v e r n m e n t w a s f i r m l y c o m m i t t e d
to i t s o f f e r o f 7 p e r c e n t .
A f u r t h e r i n c r e a s e n o w w o u l d be
w i d e l y c r i t i c i s e d as u n n e c e s s a r y and as weak.
A l t h o u g h the
s h o r t - f a l l o n r e v e n u e , r e s u l t i n g f r o m a c t i o n b y the s t a f f of
the I n l a n d R e v e n u e a n d C u s t o m s a n d E x c i s e , w a s n o w i n the
o r d e r o f £ 3 - 2>\ b i l l i o n , m o s t o f t h i s w o u l d b e r e c o u p e d
l a t e r i n t h e y e a r w h e n t h e a c t i o n w a s o v e r ; the m o n e t a r y
f i g u r e s w h i c h w e r e d u e to be p u b l i s h e d s h o r t l y w e r e l i k e l y
to s t r i k e c o m m e n t a t o r s a s b e i n g s u r p r i s i n g l y g o o d , a n d
w o u l d u n d e r m i n e the u n i o n s ' c l a i m s t h a t t h e i r a c t i o n w a s
d a m a g i n g the G o v e r n m e n t ' s e c o n o m i c p o l i c i e s .
The unions'
m o r a l e w a s d e c l i n i n g a n d t h e i r c o n f i d e n c e w e a k e n e d b y the
r e a l i s a t i o n that p u b l i c o p i n i o n g e n e r a l l y s u p p o r t e d the
G o v e r n m e n t a n d t h a t t h i s s u p p o r t c o u l d be r e i n f o r c e d i f the
a c t i o n w e r e to b e e s c a l a t e d .
A g a i n s t this b a c k g r o u n d ,
i n d u s t r i a l , financial and C o n s e r v a t i v e P a r t y b a c k - b e n c h
o p i n i o n w a s l i k e l y to b e h i g h l y c r i t i c a l o f a n y i n c r e a s e i n
the p r e s e n t o f f e r o f 7 p e r c e n t .
L o c a l authorities, which
h a d c o n f o r m e d w i t h the G o v e r n m e n t ' s o b j e c t i v e that t h e y
should reach pay settlements within their cash limits, would
b e c r i t i c a l i f the G o v e r n m e n t w e r e n o w to go b a c k o n i t s
d e c l a r e d i n t e n t i o n o f g i v i n g n o m o r e t h a n 7 p e r c e n t to i t s
own employees.
A n y i n c r e a s e beyond 7 per cent would add
c o n s i d e r a b l y to the p r e s e n t d i f f i c u l t i e s of r e a c h i n g a s e t t l e ­
m e n t o f 6 p e r c e n t f o r the N a t i o n a l H e a l t h S e r v i c e g r o u p s .
e.
E v e n i f the u n i o n l e a d e r s h i p w e r e to r e c o m m e n d t h e i r
m e m b e r s t o a c c e p t l\ p e r c e n t , t h e r e w a s n o g u a r a n t e e t h a t
this w o u l d be a c c e p t e d .
T h e G o v e r n m e n t w o u l d t h e n be f a c e d
w i t h the p r o s p e c t o f e i t h e r c o n t i n u i n g i n d u s t r i a l a c t i o n o r y e t
further concessions.
It w a s , m o r e o v e r , q u e s t i o n a b l e w h e t h e r
a l\ p e r c e n t i n c r e a s e c o u l d b e a c c o m m o d a t e d w i t h i n a
6 per cent cash l i m i t .
The present assumptions could prove
w r o n g i f l a t e r i n the y e a r n e w d e m a n d s - f o r e x a m p l e , f o r
t h e p a y m e n t o f u n e m p l o y m e n t b e n e f i t - w e r e to c h e c k t h e f a l l
i n staff n u m b e r s .
f.
In s t a n d i n g f i r m o n the p r e s e n t o f f e r the
Government
c o u l d c o n t i n u e to p o i n t o u t t h a t t w o s u b s t a n t i a l c o n c e s s i o n s
a l r e a d y b e e n o f f e r e d to the u n i o n s .
It h a d b e e n a g r e e d
had
that
t h e r e s h o u l d be g r e a t e r f l e x i b i l i t y i n 1982 i n the o p e r a t i o n o f
cash limits.
A wide ranging and independent i n q u i r y had
o f f e r e d w i t h a v i e w to i n t r o d u c i n g n e w a r r a n g e m e n t s f o r
longer term.
been
the
( A l t h o u g h i t w a s n o t e d t h a t the u n i o n s c o u l d w e l l
r e g a r d t h i s a s m o r e l i k e l y to b r i n g b e n e f i t s
r a t h e r t h a n to t h e m s e l v e s . )
3
SECRET
to the
Government
SECRET
\
In f u r t h e r
d i s c u s s i o n the f o l l o w i n g w e r e the m a i n p o i n t s
made:­
g.
C o n s i d e r a t i o n s h o u l d n o w b e g i v e n to i m p o s i n g , w i t h
e f f e c t f r o m A p r i l 1 9 8 1 , the p r o p o s e d 7 p e r c e n t i n c r e a s e
for the n o n - i n d u s t r i a l C i v i l S e r v i c e .
It w a s l i k e l y t h a t
i n d u s t r i a l c i v i l servants would then also accept 7 per cent
f r o m July 1981.
T h e r i s k o f this c o u r s e was that c i v i l
s e r v a n t s w o u l d r e c e i v e i n c r e a s e d pay but m a n y of t h e m m i g h t
c o n t i n u e to s u p p o r t i n d u s t r i a l a c t i o n f o r m o r e c o n c e s s i o n s .
T h e a l t e r n a t i v e of i m p o s i n g a 7 p e r cent settlement on those
w h o w e r e w o r k i n g a t a s p e c i f i e d d a t e w o u l d l e a d to t h e d r a w i n g
of i n v i d i o u s a n d u n s a t i s f a c t o r y d i s t i n c t i o n s ; m a n y of those
w h o w e r e p u r p o r t i n g to w o r k w e r e i n p r a c t i c e s u p p o r t i n g
continuing industrial action.
h.
There were considerable disadvantages
arbitration,
in offering
s u b j e c t to P a r l i a m e n t a r y o v e r r i d e ,
i n 1982.
In p r a c t i c e i t c o u l d be v e r y d i f f i c u l t f o r the G o v e r n m e n t
to
s e c u r e P a r l i a m e n t a r y a p p r o v a l f o r the o v e r r i d i n g o f a n
a r b i t r a l a w a r d w h i c h w a s h i g h e r t h a n the G o v e r n m e n t w o u l d
w i s h b u t n o t so m u c h h i g h e r a s to be p a t e n t l y
unacceptable.
If a s a r e s u l t the C i v i l S e r v i c e w e r e to r e c e i v e i n c r e a s e s
in
1982 h i g h e r t h a n t h o s e f o r w h i c h the G o v e r n m e n t h a d p l a n n e d ,
public expenditure would increase
programmes
adverse
(or other p u b l i c
expenditure
w o u l d h a v e to be c u t b a c k ) a n d t h e r e w o u l d be
effect on other pay settlements,
an
b o t h i n the p u b l i c
s e c t o r a n d the p r i v a t e . ;
T H E P R I M E M I N I S T E R s u m m i n g up the d i s c u s s i o n s a i d t h a t the C a b i n e t
a g r e e d o n b a l a n c e t h a t t h e r e s h o u l d be n o i n c r e a s e i n the p r e s e n t o f f e r ,
to w h i c h the G o v e r n m e n t w a s f i r m l y a n d p u b l i c l y c o m m i t t e d , o f
7 p e r c e n t f o r the n o n - i n d u s t r i a l C i v i l S e r v i c e f r o m A p r i l 1 9 8 1 .
They
f u r t h e r a g r e e d t h a t t h e r e s h o u l d b e n o c o m m i t m e n t to a r b i t r a t i o n o n p a y
i n 1 9 8 2 ; s u c h a c o m m i t m e n t , e v e n i f i t w e r e s u b j e c t to P a r l i a m e n t a r y
o v e r r i d e , c o u l d p r o v e to b e e x t r e m e l y c o s t l y b o t h i n t e r m s o f the C i v i l
S e r v i c e p a y b i l l a n d the c o n s e q u e n c e s f o r o t h e r p a y s e t t l e m e n t s .
In
e x p l a i n i n g i t s d e c i s i o n to s t a n d f i r m o n t h e p r e s e n t o f f e r , t h e G o v e r n m e n t
h a d a n e x c e l l e n t c a s e to d e p l o y : i n a d d i t i o n to o f f e r i n g a 7 p e r c e n t p a y
i n c r e a s e i n 1 9 8 1 , i t h a d a c c e p t e d g r e a t e r f l e x i b i l i t y i n the o p e r a t i o n of
the c a s h l i m i t s y s t e m i n 1 9 8 2 , a n d p r o p o s e d a n i n d e p e n d e n t a n d w i d e ­
r a n g i n g i n q u i r y i n t o the a r r a n g e m e n t s f o r the l o n g e r t e r m .
Moreover
i t w a s the c a s e that c i v i l s e r v a n t s e n j o y e d g r e a t e r j o b s e c u r i t y t h a n
p r i v a t e s e c t o r e m p l o y e e s , h a d the b e n e f i t o f i n f l a t i o n p r o o f e d p e n s i o n s
a n d b e n e f i t t e d i n : m a n y c a s e s f r o m the s y s t e m o f a n n u a l i n c r e m e n t s .
It w a s a l s o r e l e v a n t t h a t the 7 p e r c e n t p a y i n c r e a s e o n o f f e r to t h e m
r e p r e s e n t e d s o m e t h i n g n e a r e r t o a 10 p e r c e n t i n c r e a s e i n a n n u a l p a y
c o m p a r e d w i t h l a s t y e a r w h e n the a g r e e d i n c r e a s e h a d b e e n s t a g e d .
If
the d i s p u t e c o n t i n u e d i t w o u l d be n e c e s s a r y to c o n s i d e r f u r t h e r the c a s e
for i m p o s i n g the s e t t l e m e n t of 7 p e r c e n t w i t h effect f r o m 1 A p r i l 1981.
4
SECRET
SECRET
The Cabinet
-
Agreed:­
1.
T h a t t h e r e s h o u l d b e no i n c r e a s e i n the o f f e r
of 7 p e r c e n t o n the p a y of n o n - i n d u s t r i a l c i v i l
servants f r o m A p r i l 1981.
2.
T h a t n o u n d e r t a k i n g s h o u l d b e g i v e n to a l l o w
a r b i t r a t i o n o n C i v i l S e r v i c e pay i n 1982.
Cabinet
4 June
Office
1981
5
SECRET
In'jftx..
S U BJ E C T
No.
Contents
Date
C o p y N o 1 of 2 copies
SECRET
MOST
CONFIDENTIAL
RECORD TO
CC(81) 24th C O N C L U S I O N S ,
T h u r s d a y 18 J u n e
MINUTE
1981
CONFIDENTIALITY
T H E F O R E I G N A N D C O M M O N W E A L T H S E C R E T A R Y drew attention
OF
to the r e p o r t s i n the P r e s s a n d b r o a d c a s t i n g m e d i a the p r e v i o u s
CABINET
PROCEEDINGS
a f t e r n o o n a n d t h a t m o r n i n g o n the C a b i n e t ' s d i s c u s s i o n o f e c o n o m i c
s t r a t e g y o n 17 J u n e .
If the p r o c e e d i n g s o f the C a b i n e t w e r e
c o n t i n u e to b e d i v u l g e d i n t h a t d e g r e e o f d e t a i l ,
the
to
confidentiality
w h i c h w a s n e c e s s a r y to s u s t a i n c o n f i d e n c e a n d t r u s t a m o n g c o l l e a g u e s
c o u l d no l o n g e r be s u s t a i n e d .
T h i s could have a serious effect upon
t h e r e a d i n e s s o f m e m b e r s o f the C a b i n e t t o d i s c l o s e c o n f i d e n t i a l
i n f o r m a t i o n a n d to s p e a k t h e i r m i n d s at m e e t i n g s o f the C a b i n e t .
In d i s c u s s i o n t h e r e w a s m u c h s u p p o r t f o r w h a t the F o r e i g n a n d
Commonwealth Secretary had said.
It w a s n o t j u s t t h a t t h e a c c o u n t s
i n the n e w s p a p e r s h a d p u t a g l o s s o n the p r o c e e d i n g s , i n t e r m s o f
r e p o r t s t h a t the v i e w s o f o n e g r o u p h a d p r e v a i l e d a g a i n s t t h o s e o f
a n o t h e r , b u t t h e r e h a d a l s o b e e n f a c t u a l a c c o u n t s o f the n a t u r e o f the
C h a n c e l l o r o f the E x c h e q u e r ' s p a p e r , the o r d e r i n w h i c h M i n i s t e r s
h a d s p o k e n a n d the c o n t e n t o f w h a t t h e y h a d s a i d .
N o doubt m e m b e r s
of the P a r l i a m e n t a r y L o b b y a c t e d l i k e a t e a m of s l e u t h s , p i e c i n g
together information f r o m different sources.
I t w o u l d b e u n w i s e to
s u p p o s e t h a t P r e s s O f f i c e r s w e r e t o b l a m e , a n d the s t o r i e s a p p e a r e d
i n the P r e s s l o n g b e f o r e the m i n u t e s w e r e c i r c u l a t e d .
The sources
o f the i n f o r m a t i o n m u s t be a m o n g t h o s e w h o w e r e p r e s e n t a t the
m e e t i n g , a n d t h e c h a n n e l s b y w h i c h t h e i n f o r m a t i o n r e a c h e d the P r e s s
m u s t b e a s s u m e d to b e p r i m a r i l y p o l i t i c a l .
It w a s s u g g e s t e d t h a t
m e m b e r s o f t h e C a b i n e t n e e d e d to b r i e f t h e i r j u n i o r M i n i s t e r s a n d
P a r l i a m e n t a r y P r i v a t e S e c r e t a r i e s a b o u t the o u t c o m e o f m e e t i n g s o f
t h e C a b i n e t , i n o r d e r t h a t t h e y s h o u l d b e a b l e to d e f e n d G o v e r n m e n t
p o l i c i e s ; b u t b r i e f i n g s o f t h i s k i n d n e e d e d to b e u n d e r t a k e n w i t h g r e a t
c a u t i o n , i f t h e y w e r e n o t to b e c o m e s o u r c e s o f u n a u t h o r i s e d a n d
u n w a n t e d d i s c l o s u r e s to the P r e s s .
THE PRIME
MINISTER,
s u m m i n g up the d i s c u s s i o n , s a i d t h a t ,
in
v i e w o f the i n t e r e s t t a k e n b y the P r e s s i n the m e e t i n g o f the p r e v i o u s
d a y ' s C a b i n e t , i t h a d b e e n n e c e s s a r y f o r h e r P r e s s S e c r e t a r y to g i v e
g u i d a n c e to t h e L o b b y a f t e r t h e m e e t i n g .
She h a d t o l d the C a b i n e t
a t t h e m e e t i n g t h e n a t u r e o f t h e g u i d a n c e to b e g i v e n ;
and the
w h i c h he h a d a c t u a l l y g i v e n f o l l o w e d w h a t she h a d s a i d ,
guidance
going beyond
i t o n l y to the e x t e n t o f e m p h a s i s i n g the n e e d f o r k e e p i n g p u b l i c
expenditure under control.
W h i l e i t w a s n e c e s s a r y f o r the
of G o v e r n m e n t t h a t d e c i s i o n s t a k e n b y the C a b i n e t s h o u l d be
1
SECRET
conduct
SECRET
d i s s e m i n a t e d to t h o s e r e q u i r e d to t a k e a c t i o n u p o n t h e m , a n d w h i l e i t
w a s n o d o u b t o n o c c a s i o n d e s i r a b l e t h a t s o m e i n d i c a t i o n o f the r e a s o n s
f o r the C a b i n e t ' s d e c i s i o n s s h o u l d be g i v e n to M i n i s t e r i a l c o l l e a g u e s
o r s e n i o r o f f i c i a l s b e f o r e the m i n u t e s w e r e c i r c u l a t e d , the g e n e r a l
rule should be,
a s i t h a d b e e n i n the p a s t , that j u n i o r M i n i s t e r s a n d
s e n i o r o f f i c i a l s s h o u l d r e l y u p o n the c i r c u l a t e d m i n u t e s f o r t h e i r
k n o w l e d g e o f C a b i n e t d e c i s i o n s a n d the r e a s o n s f o r t h e m .
Members
of the C a b i n e t s h o u l d be e x t r e m e l y c a u t i o u s a b o u t d i v u l g i n g d e t a i l s
o f p r o c e e d i n g s i n C a b i n e t , e v e n to M i n i s t e r i a l c o l l e a g u e s i n t h e i r
own D e p a r t m e n t s , and should not i n any c i r c u m s t a n c e s d i s c l o s e
t h e m to j o u r n a l i s t s .
The Cabinet Took
note.
Cabinet
Office
19 J u n e
1981
2
SECRET
Index
SUBJECT
No.
Contents
Date
SECRET
MOST
(Qv^
CONFIDENTIAL
TO
CC(81) 26th
<
ce,^-*j ^
ULja
^'
RECORD
CONCLUSIONS
T h u r s d a y 2 J u l y 1981
NORTHERN
IRELAND
Previous
Reference;
CC(81) 25th
Conclusions,
Minute 4
A t the end of the C a b i n e t ' s m e e t i n g on 2 J u l y (CC(81) 26th
C o n c l u s i o n s ) t h e r e was an i n f o r m a l d i s c u s s i o n of the s i t u a t i o n
r e l a t i n g to N o r t h e r n I r e l a n d , d u r i n g w h i c h the f o l l o w i n g p o i n t s
were made:a.
T h e r e w e r e i n c r e a s i n g l y disturbing signs of an
e r o s i o n of international confidence i n B r i t i s h p o l i c y i n
the l i g h t o f the c o n t i n u i n g h u n g e r s t r i k e at the M a z e
Prison.
T h e d i f f i c u l t i e s w h i c h this w o u l d c a u s e f o r the
G o v e r n m e n t w h e n f u r t h e r h u n g e r s t r i k e r s b e g a n to d i e
s h o u l d not be u n d e r e s t i m a t e d ; they w o u l d c o m p o u n d what
w o u l d i n a n y c a s e be a n e x t r e m e l y s e r i o u s s i t u a t i o n i n
t e r m s of s e c u r i t y and p u b l i c o r d e r .
T h e p r o b l e m was no
l o n g e r s o l e l y one of e n s u r i n g that the G o v e r n m e n t ' s s t a n c e
was p r o p e r l y understood.
T h e r e w a s a r e a l n e e d to a v o i d
that stance being condemned, h o w e v e r u n f a i r l y , as
inflexible.
O n the o t h e r h a n d , a n y g e s t u r e to r e d u c e the
a p p e a r a n c e o f i n f l e x i b i l i t y w a s l i a b l e to be i n t e r p r e t e d ,
both by the P r o t e s t a n t c o m m u n i t y and by the I r i s h
R e p u b l i c a n A r m y ( I R A ) , as a p r e l u d e to c a p i t u l a t i o n .
It
w a s i n a n y c a s e n o t e a s y to s e e w h a t g e s t u r e m i g h t be
possible.
I d e a l l y s o m e i n d e p e n d e n t body s h o u l d be i n v i t e d
to s a t i s f y i t s e l f , a n d c e r t i f y p u b l i c l y , that the G o v e r n m e n t ' s
attitude o n the p r i s o n r e g i m e was both h u m a n e and
reasonable.
B u t the E u r o p e a n C o m m i s s i o n f o r H u m a n
R i g h t s h a d m a d e c l e a r t h a t t h e y w e r e n o t w i l l i n g to p l a y
any r o l e i n the a b s e n c e of any s p e c i f i c c o m p l a i n t .
The
G o v e r n m e n t could not of c o u r s e m a k e such a c o m p l a i n t
a g a i n s t t h e m s e l v e s ; t h e p r i s o n e r s w e r e n o t p r e p a r e d to
do so; a n d t h o u g h a n o t h e r G o v e r n m e n t c o u l d i n t h e o r y f i l l
the gap i t w a s q u e s t i o n a b l e w h e t h e r i t w o u l d be w i s e to
t r y to s t i m u l a t e t h i s .
It w a s e n c o u r a g i n g that the I r i s h
C o m m i s s i o n for Justice and Peace (ICJP) had welcomed
the S e c r e t a r y of State f o r N o r t h e r n I r e l a n d ' s r e c e n t s t a t e ­
m e n t o n the p r i s o n r e g i m e .
Their continuing involvement
m i g h t p r o v e h e l p f u l , t h o u g h i t w o u l d be u n d e s i r a b l e t h a t
t h e y s h o u l d be a l l o w e d t o a s s u m e t h e r o l e o f i n t e r m e d i a r y
between the s t r i k e r s and the G o v e r n m e n t .
But it could
not a l t e r the u n d e r l y i n g p r o b l e m , w h i c h w a s b e c o m i n g
i n c r e a s i n g l y c l e a r : the hunger s t r i k e r s ' r e a l a i m w a s not
to a l t e r p r i s o n c o n d i t i o n s but to b r i n g a b o u t a B r i t i s h
w i t h d r a w a l f r o m the P r o v i n c e and the u n i f i c a t i o n of I r e l a n d .
1
SECRET
SECRET
b.
T h e d i f f i c u l t y of the G o v e r n m e n t ' s p o s i t i o n s e e m e d
c e r t a i n to be i n c r e a s e d b y t h e e v o l v i n g O p p o s i t i o n a t t i t u d e
towards I r i s h unity as an u l t i m a t e objective.
The expected
s p e e c h by M r J a m e s C a l l a g h a n i n the N o r t h e r n I r e l a n d
d e b a t e l a t e r t h a t d a y m i g h t p r o v e to be a w a t e r s h e d .
As
a f o r m e r P r i m e M i n i s t e r and L e a d e r of the O p p o s i t i o n h i s
views would c a r r y special weight.
He had already
i n d i c a t e d p r i v a t e l y that he thought the B r i t i s h " g u a r a n t e e "
s h o u l d a p p l y n o t to N o r t h e r n I r e l a n d as a t e r r i t o r y but to
i t s i n h a b i t a n t s ; the t e r r i t o r y s h o u l d b e c o m e i n d e p e n d e n t ,
with transitional arrangements under which B r i t i s h troops
and B r i t i s h financial assistance would r e m a i n available
f o r a l i m i t e d p e r i o d ; but t h o s e o f i t s i n h a b i t a n t s w h o w a n t e d
to r e m a i n c i t i z e n s of the U n i t e d K i n g d o m s h o u l d be
g u a r a n t e e d the r i g h t to do s o .
It w a s not c e r t a i n t h a t he
w o u l d be a s e x p l i c i t a s t h i s i n h i s f o r t h c o m i n g s p e e c h .
B u t the w h o l e c o n t e x t of the c u r r e n t B r i t i s h d e b a t e about
N o r t h e r n I r e l a n d w o u l d be a l t e r e d i f the q u e s t i o n h e
a d d r e s s e d was not whether B r i t i s h p o l i c y was w i n n i n g o r
l o s i n g i n the s t r u g g l e t h e r e , but w h e t h e r i t w a s a s t r u g g l e
i n w h i c h B r i t a i n o u g h t a n y l o n g e r to be i n v o l v e d at a l l .
His views might well receive m a s s i v e support f r o m public
opinion i n Britain, where there was already a widespread
feeling i n favour of B r i t i s h w i t h d r a w a l .
It c o u l d be
a r g u e d , i n d e e d , that the w a t e r s h e d was a l r e a d y p a s s e d .
T h e d e c i s i v e m o m e n t h a d been the F e r m a n a g h b y - e l e c t i o n ,
and the c h o i c e of a n i m p r i s o n e d t e r r o r i s t h u n g e r s t r i k e r
to r e p r e s e n t a N o r t h e r n I r i s h c o n s t i t u e n c y at W e s t m i n s t e r .
M a n y people i n B r i t a i n n o w b e l i e v e d that a settlement of
the c o m p l e x p r o b l e m s o f the a r e a w o u l d be m o r e e a s i l y
r e a c h e d by the I r i s h on t h e i r o w n and that continued
B r i t i s h i n v o l v e m e n t c o u l d o n l y m e a n the futile s a c r i f i c e
of further B r i t i s h l i v e s .
c.
W h a t e v e r the state of B r i t i s h o p i n i o n , w i t h d r a w a l
w o u l d n o t be a n e a s y p r o p o s i t o n f o r a n y G o v e r n m e n t .
C i v i l w a r a n d m a s s i v e b l o o d s h e d w e r e l i k e l y to be the
i m m e d i a t e r e s u l t i n N o r t h e r n Ireland, and the trouble
c o u l d e a s i l y s p r e a d to the l a r g e I r i s h c o m m u n i t i e s i n s o m e
major cities in Great Britain.
In a n y c a s e , the p r e s e n t
g u a r a n t e e to t h e P r o v i n c e w a s e n s h r i n e d i n s t a t u t e a n d
c o u l d o n l y be m o d i f i e d b y n e w l e g i s l a t i o n .
The passage
of t h i s w o u l d be a n o c c a s i o n f o r t u r b u l e n c e a s w e l l a s
controversy.
E v e n the s u g g e s t i o n of a w i t h d r a w a l c o u l d
l e a d to s e r i o u s u n r e s t i n W e s t e r n S c o t l a n d .
2
SECRET
SECRET
d.
S i n c e the i m m e d i a t e p r o b l e m w a s h o w to a v o i d a
n e w s e r i e s of deaths of hunger s t r i k e r s , i t was for
c o n s i d e r a t i o n w h e t h e r t h e y c o u l d n o t be k e p t a l i v e b y
c o m p u l s o r y feeding.
If d o n e i n t r a v e n o u s l y b y m o d e r n
m e t h o d s this s h o u l d not i n v o l v e the v i o l e n t s c e n e s
a s s o c i a t e d w i t h the f o r c i b l e feeding of hunger s t r i k i n g
p r i s o n e r s i n the p a s t .
O n the o t h e r h a n d , i t w a s u n c e r t a i n
w h e t h e r the p r i s o n d o c t o r s w o u l d be w i l l i n g to c o - o p e r a t e ;
a n d i f i n t r a v e n o u s f e e d i n g l e d to a l l the p r o t e s t i n g
p r i s o n e r s c o m i n g out o n h u n g e r s t r i k e the a u t h o r i t i e s
w o u l d be f a c e d w i t h the e n o r m o u s t a s k o f s u s t a i n i n g t h e m
by s u c h m e t h o d s i n d e f i n i t e l y .
In a n y c a s e , the i m p l i c a t i o n s
for the r u n n i n g of p r i s o n s e l s e w h e r e i n the U n i t e d K i n g d o m
w o u l d n e e d to be c a r e f u l l y w e i g h e d .
T h e d e c i s i o n by the
L a b o u r G o v e r n m e n t o f the d a y to a b a n d o n f o r c i b l e f e e d i n g
h a d b e e n t a k e n w i t h the f u l l s u p p o r t of the C o n s e r v a t i v e
Opposition.
The step had been widely w e l c o m e d by p u b l i c
o p i n i o n b o t h at h o m e a n d a b r o a d , a n d h a d b e e n e m u l a t e d
by a n u m b e r of other G o v e r n m e n t s i n E u r o p e .
Neverthe­
l e s s the p o s s i b i l i t y o f i n t r a v e n o u s feeding d e s e r v e d s e r i o u s
study.
M o r e g e n e r a l l y , t h e r e w a s no doubt o f the
i m p o r t a n c e of a v o i d i n g f u r t h e r h u n g e r s t r i k e deaths i f at
all possible.
THE PRIME MINISTER,
further
s u m m i n g up the d i s c u s s i o n , s a i d that
t h o u g h t w o u l d n e e d to be g i v e n to a l l p o s s i b l e c o u r s e s o f
a c t i o n i n r e g a r d to N o r t h e r n I r e l a n d ,
however difficult
B u t i t w o u l d f i r s t be n e c e s s a r y to a w a i t t h e
unpalatable.
of the f o r t h c o m i n g debate i n P a r l i a m e n t ,
the M i n i s t e r of State,
The Cabinet -
Cabinet
a n d the m e e t i n g
outcome
which
Northern Ireland Office ( M r A l i s o n ) was
have with her on 3 J u l y .
Took
or
note.
Office
7 J u l y 1981
3
SECRET
to
Inde^
SUBJECT
CtilL
No.
PAY
Contents
cc
(Et)x^
urns
Date
10 D O W N I N G
STREET
CONFIDENTIAL AND PERSONAL
Covering
CABINET
70 Whitehall, L o n d o n
OFFICE
T
Telephone 01-233 ^3 9
S W I A 2AS
From the Secretary of the Cabinet: Sir Robert A r m s t r o n g
Ref.
SECRET
KCB.CVO
f o y
10 J u l y 1981
AO5231
C i v i l Service Pay: Cabinet 9 July
I enclose
discussions
a c o p y of the M o s t C o n f i d e n t i a l R e c o r d of the
on C i v i l Service pay on 9 July.
was not m e n t i o n e d i n the
be r e f e r r e d
I am
to o r
The existence
C a b i n e t C o n c l u s i o n s and i t s h o u l d not,
s e n d i n g c o p i e s to J o h n W i g g i n s ( T r e a s u r y ) ,
therefore,
In due c o u r s e ,
J i m Buckley (CSD)
I s h o u l d be g r a t e f u l i f t h e y too w o u l d
e n s u r e that the R e c o r d i s not r e f e r r e d
w i t h a r e a l n e e d to k n o w i t s
to a n d t h a t i t i s o n l y s e e n b y o f f i c i a l s
contents.
I s h o u l d be g r a t e f u l i f c o p i e s
c o u l d be r e t u r n e d t o
Office.
(D J W r i g h t )
Private Secretary
C A Whitmore
Record
quoted.
and R i c h a r d Dykes (Employment).
i n the C a b i n e t
Cabinet's
of this
Esq
CONFIDENTIAL AND PERSONAL
me
"
SECRET Copy No,
MOST CONFIDENTIAL
TO
CC(81) 27th
Copies
RECORD CONCLUSIONS
T h u r s d a y 9 J u l y 1981
CIVIL
SERVICE
DISPUTE
T H E L O R D P R E S I D E N T O F T H E C O U N C I L said that there had r e c e n t l y
b e e n s o m e p a r t i a l a b a t e m e n t of the i n d u s t r i a l a c t i o n i n the n o n ­
i n d u s t r i a l C i v i l S e r v i c e ; staff of the P a s s p o r t Office w e r e n o w w o r k i n g
n o r m a l l y ; t h e r e h a d b e e n a c o n s i d e r a b l e f a l l i n g off of d i s r u p t i o n s i n
M i n i s t r y of Defence establishments;
the A i r T r a f f i c C o n t r o l l e r s w e r e
not t a k i n g any a c t i o n this week.
T h e u n i o n s a p p e a r e d to be c o n t i n u i n g
to c o n c e n t r a t e on the r e v e n u e D e p a r t m e n t s , S c o t t i s h c o u r t s , S o c i a l
S e c u r i t y and D e p a r t m e n t of E m p l o y m e n t o f f i c e s , and the s e c t i o n of the
P a y m a s t e r G e n e r a l ' s Office dealing with public sector pensions.
If
t h e G o v e r n m e n t w e r e to d e c i d e not to i m p r o v e o n i t s p r e s e n t p a y o f f e r ,
it w a s l i k e l y that i n d u s t r i a l a c t i o n w o u l d e v e n t u a l l y c r u m b l e , but it
c o u l d w e l l c a r r y o n f o r s o m e t i m e i n p a r t i c u l a r a r e a s a n d t h e c o s t s to
the G o v e r n m e n t and the p r o b l e m s of r e c o v e r i n g f r o m the a c t i o n w e r e
mounting.
If, o n t h e o t h e r h a n d , t h e C a b i n e t w i s h e d to b r i n g t h e
d i s p u t e to a n e n d i t m i g h t be p o s s i b l e to do so b y a s t i c k a n d c a r r o t
approach.
H e c o u l d w r i t e to t h e C o u n c i l o f C i v i l S e r v i c e U n i o n s
( C C S U ) t h a t a f t e r n o o n to t e l l t h e m t h a t the G o v e r n m e n t h a d d e c i d e d
that u n l e s s the u n i o n s c a l l e d off t h e i r c a m p a i g n of i n d u s t r i a l a c t i o n by
16 J u l y , t h e d a t e o f 1 A p r i l 1981 f o r t h e p a y i n c r e a s e w o u l d b e w i t h d r a w n
and the o p e r a t i v e date decided l a t e r .
H e would then instruct a senior
o f f i c i a l of h i s D e p a r t m e n t to a p p r o a c h t h e S e c r e t a r y o f the C C S U
p r i v a t e l y o n F r i d a y 10 J u l y t o e x p l o r e t h e p o s s i b l e o u t l i n e s o f a
s e t t l e m e n t w h i c h the u n i o n s m i g h t b e w i l l i n g to r e c o m m e n d to t h e i r
m e m b e r s a s a d e q u a t e to b r i n g t h e d i s p u t e to a n e n d .
The official
w o u l d m a k e it c l e a r that M i n i s t e r s h a d not a u t h o r i s e d any
c o n c e s s i o n s ; the a p p r o a c h w o u l d be c o u c h e d i n t e r m s of a p e r s o n a l
e x p l o r a t i o n to s e e w h e t h e r t h e r e w e r e a n y p r o p o s a l s w h i c h m i g h t b e
put to M i n i s t e r s f o r c o n s i d e r a t i o n , w i t h s o m e d e g r e e of p r o b a b i l i t y
that they w o u l d be accepted.
T h e e l e m e n t s of a s o l u t i o n w h i c h m i g h t
be e x p l o r e d w e r e : ­
l.
r e s t o r a t i o n of the o p e r a t i v e d a t e to 1 A p r i l ;
ii.
c o n s i d e r a t i o n b y the G o v e r n m e n t of one u n i o n n o m i n e e
for the i n q u i r y ;
p l u s either or both of the
following:
1
SECRET SECRET iii.
t h e o f f e r f o r 1981 t o b e i n c r e a s e d t o l\
2 per
cent to be f i n a n c e d w i t h i n e x i s t i n g D e p a r t m e n t a l
l i m i t s by further
p e r cent,
reductions i n C i v i l S e r v i c e staff
the
extra
cash
costs;
iv.
an i m p r o v e m e n t on the p r e s e n t a r b i t r a t i o n f o r m u l a for
1982 (that t h e G o v e r n m e n t w a s n o t c o m m i t t e d to a r b i t r a t i o n f o r
1982 b u t d i d n o t r u l e i t out) o n o n e o f t h e f o l l o w i n g l i n e s :
a.
the G o v e r n m e n t w o u l d i f n e c e s s a r y r e f e r the
to a r b i t r a t i o n i n 1982, but w o u l d a s k the H o u s e o f
C o m m o n s to o v e r r i d e t h e a w a r d i f i t w a s t o o h i g h ;
dispute
or
b.
the G o v e r n m e n t w o u l d i f n e c e s s a r y r e f e r the d i s p u t e
to a r b i t r a t i o n i n 1982, but w o u l d i t s e l f h a v e p o w e r to set
the a w a r d a s i d e on g r o u n d s of o v e r r i d i n g n a t i o n a l p o l i c y .
W h i l e h e w i s h e d to h a v e a u t h o r i t y to e x p l o r e a l l t h e i m p r o v e m e n t s i f
necessary,
h i s a i m w o u l d b e to a v o i d , i f p o s s i b l e , m o v i n g t o w a r d s
settlement
w h i c h i n c l u d e d b o t h t h e a d d i t i o n a l \ p e r c e n t i n 1981 a n d
a
the
offer of a r b i t r a t i o n i n 1982.
In d i s c u s s i o n t h e f o l l o w i n g m a i n p o i n t s w e r e m a d e
­
a.
If a n i n f o r m a l a p p r o a c h w e r e to b e m a d e to t h e u n i o n s o n
10 J u l y i t w o u l d b e b e t t e r n o t t o w i t h d r a w t h e o p e r a t i v e d a t e o f
the s e t t l e m e n t i n a d v a n c e .
Withdrawal would alienate those
c i v i l s e r v a n t s w h o h a d l o y a l l y w o r k e d l o n g h o u r s to d e a l w i t h
the c o n s e q u e n c e s of t h e i r c o l l e a g u e s ' a c t i o n , and w o u l d m a k e
i t m u c h m o r e d i f f i c u l t to n e g o t i a t e a s e t t l e m e n t .
It w o u l d b e
b e t t e r f o r t h e C i v i l S e r v i c e D e p a r t m e n t n e g o t i a t o r to b e
a u t h o r i s e d at h i s d i s c r e t i o n , h a v i n g e x p l o r e d the p o s s i b l e
t e r m s of a s e t t l e m e n t , to r e m i n d the u n i o n r e p r e s e n t a t i v e s that
t h e G o v e r n m e n t w o u l d b e b o u n d to h a v e to a c t o n t h e p o s s i b i l i t y ,
of w h i c h h e h a d a l r e a d y g i v e n p u b l i c w a r n i n g , of w i t h d r a w i n g
the o p e r a t i v e date i f the d i s p u t e w e r e to c o n t i n u e .
b.
T h e r e w e r e d i s a d v a n t a g e s i n i n c r e a s i n g t h e o f f e r f o r 1981
by \ p e r cent.
It w o u l d b e q u e s t i o n e d w h y t h i s o f f e r h a d n o t
b e e n m a d e b e f o r e ; t h i s w o u l d h a v e to b e a n s w e r e d b y r e f e r e n c e
to t h e a d d i t i o n a l staff c u t s e n v i s a g e d .
T h e S e c r e t a r y of State
for D e f e n c e d i d not b e l i e v e that he c o u l d find enough a d d i t i o n a l
staff cuts i n his D e p a r t m e n t , beyond those a l r e a d y planned,
t h o u g h he w o u l d do h i s b e s t i f t h i s p r o v e d n e c e s s a r y .
Other
Departmental M i n i s t e r s might also have difficulty in providing
a d e q u a t e staff s a v i n g s , though t h e y , t o o , w o u l d do t h e i r b e s t .
2
SECRET SECRET On the o t h e r h a n d , i f i t p r o v e d i m p o s s i b l e g e n e r a l l y to f i n d a l l
t h e n e c e s s a r y c u t s , t h e i n c r e a s e i n t h e p a y o f f e r t o 7g p e r c e n t
c o u l d be c r i t i c i s e d as a fudge.
T h e r e was a l s o a r i s k that the
o f f e r of a f u r t h e r \ p e r cent to the n o n - i n d u s t r i a l C i v i l S e r v i c e
w o u l d have r e p e r c u s s i v e effects on other p u b l i c s e c t o r
negotiations.
It w o u l d b e p a r t i c u l a r l y d a m a g i n g i f i t w e r e
a n n o u n c e d b e f o r e the n u r s e s a c c e p t e d - as it n o w s e e m e d l i k e l y
t h e y w o u l d - the o f f e r of 6 p e r cent to t h e m .
c.
T h e offer of a r b i t r a t i o n i n 1982, u n d e r e i t h e r of the m e t h o d s
s u g g e s t e d , c o u l d l e a d to d i f f i c u l t p r o b l e m s n e x t y e a r .
E x p e r i e n c e of the a r b i t r a l a w a r d m a d e to the t e a c h e r s i n 1980
had s h o w n the d i f f i c u l t i e s i n p r a c t i c e of i n v i t i n g both H o u s e s of
P a r l i a m e n t to o v e r r i d e a n a w a r d .
A l t h o u g h it would be
p r a c t i c a b l e , a n d b e t t e r , to c o n f i n e the p r o p o s e d o v e r r i d e p o w e r
to t h e H o u s e of C o m m o n s i n r e s p e c t of the C i v i l S e r v i c e
a r b i t r a t i o n i n 1982, this w o u l d not w h o l l y m e e t the p r o b l e m .
It
w o u l d be m u c h m o r e s a t i s f a c t o r y i f that a r b i t r a t i o n c o u l d be
m a d e s u b j e c t to a r i g h t of t h e G o v e r n m e n t to set t h e a w a r d a s i d e
on g r o u n d s of o v e r r i d i n g n a t i o n a l p o l i c y .
T h e unions w o u l d , of
c o u r s e , r e g a r d s u c h a p r o v i s i o n as m u c h l e s s s a t i s f a c t o r y than
a P a r l i a m e n t a r y p r o c e d u r e , p a r t i c u l a r l y as the s i t u a t i o n n e x t
y e a r c o u l d be one i n w h i c h it m i g h t be v e r y d i f f i c u l t f o r the
G o v e r n m e n t n o t to e x e r c i s e i t s r i g h t of o v e r r i d e .
d.
U n l e s s a f i r m o f f e r w e r e m a d e q u i c k l y to the
industrial
civil servants,
they might join their n o n - i n d u s t r i a l colleagues i n
taking action.
T h i s r e i n f o r c e d the c a s e f o r a g r e e i n g q u i c k l y on
a settlement
for the n o n - i n d u s t r i a l s ,
c o u l d be m a d e to the i n d u s t r i a l s .
so that a c o m p a r a b l e
It w a s a l s o r e l e v a n t t h a t
offer
the
i n d u s t r i a l C i v i l S e r v i c e unions had e x p l i c i t l y stated that the
alteration in their
they w e r e
settlement
d a t e n e x t y e a r to 1 A p r i l ,
seeking in their current negotiations,
would
which
enable
t h e m to take joint a c t i o n then with the n o n - i n d u s t r i a l C i v i l
Service in
future.
T H E P R I M E M I N I S T E R , s u m m i n g up the d i s c u s s i o n , s a i d that the
C a b i n e t a g r e e d that the L o r d P r e s i d e n t of the C o u n c i l s h o u l d now be
a u t h o r i s e d to t r y to s e c u r e a n e a r l y s e t t l e m e n t to t h e d i s p u t e o n t h e
l i n e s h e h a d p r o p o s e d , e x c e p t t h a t he s h o u l d d e f e r m a k i n g a n y m o v e to
w i t h d r a w the o p e r a t i v e d a t e of the pay i n c r e a s e this y e a r b e f o r e the
o u t c o m e of the f u r t h e r i n f o r m a l n e g o t i a t i o n s was k n o w n .
There were
d i s a d v a n t a g e s i n b o t h t h e p r o p o s a l to o f f e r a n a d d i t i o n a l \ p e r c e n t i n
1981 a n d t o o f f e r i m p r o v e d a r b i t r a t i o n a r r a n g e m e n t s i n 1 9 8 2 .
It w a s
3
SECRET SECRE1 c l e a r that the C a b i n e t w o u l d p r e f e r a s e t t l e m e n t w h i c h d i d not i n c l u d e
b o t h e l e m e n t s ; a n d t h a t , i f a r b i t r a t i o n w e r e to b e o f f e r e d f o r t h e 1982
s e t t l e m e n t , t h e y w o u l d p r e f e r i t to b e s u b j e c t to G o v e r n m e n t a l o v e r ­
r i d e , w i t h o u t r e f e r e n c e to P a r l i a m e n t .
The Cabinet had also noted
that, w h i l e a l l M i n i s t e r s w o u l d do t h e i r b e s t to s e c u r e a d d i t i o n a l off­
s e t t i n g s t a f f e c o n o m i e s s h o u l d a n e n h a n c e d o f f e r o f p a y i n 1981 p r o v e
necessary, some Departments would face particular difficulty i n this
regard.
F i n a l l y the C a b i n e t had a u t h o r i s e d h e r , the C h a n c e l l o r of the
E x c h e q u e r , the L o r d P r e s i d e n t of the C o u n c i l and the S e c r e t a r y of S t a t e
for E m p l o y m e n t to s u p e r v i s e n e g o t i a t i o n s w i t h the C i v i l S e r v i c e u n i o n s
w i t h i n the f r a m e w o r k of the L o r d P r e s i d e n t of the C o u n c i l ' s p r o p o s a l s
and i n the l i g h t of t h e i r d i s c u s s i o n .
The
Cabinet -
A g r e e d that the P r i m e M i n i s t e r , the C h a n c e l l o r of the
E x c h e q u e r , the L o r d P r e s i d e n t of the C o u n c i l and the
S e c r e t a r y of S t a t e f o r E m p l o y m e n t s h o u l d h a v e
d i s c r e t i o n to a u t h o r i s e n e g o t i a t i o n s w i t h l e a d e r s of t h e
C i v i l S e r v i c e u n i o n s on the l i n e s p r o p o s e d by the L o r d
P r e s i d e n t of the C o u n c i l , t a k i n g a c c o u n t of the p o i n t s
made in their discussion.
Cabinet
Office
10 J u l y 1981
4
SECRET SUBJECT
SECRE r One Copy
MOST CONFIDENTIAL
TO
CC(81) 29th
Only
RECORD CONCLUSIONS
T h u r s d a y 2 3 J u l y 1981
1981
PUBLIC
EXPENDITURE
SURVEY
Previous
References:
C ^ l )
23rd
Conclusions and
CC(81) 22nd
Conclusions,
Minute 5
T h e C a b i n e t c o n s i d e r e d a m e m o r a n d u m b y the C h a n c e l l o r of the
E x c h e q u e r (C(81) 37) o n t a x a n d p u b l i c e x p e n d i t u r e ; m e m o r a n d a b y the
C h i e f S e c r e t a r y , T r e a s u r y (C(81) 38) a n d the S e c r e t a r y of State for the
E n v i r o n m e n t (C(81) 4 0 ) o n l o c a l a u t h o r i t i e s ' c u r r e n t e x p e n d i t u r e i n
1 9 8 2 - 8 3 ; a n d a n o t e b y t h e S e c r e t a r y of the C a b i n e t (C(81) 39) c o v e r i n g a
note b y the C e n t r a l P o l i c y R e v i e w Staff ( C P R S ) on p u b l i c e x p e n d i t u r e .
T H E C H A N C E L L O R O F T H E E X C H E Q U E R s a i d that, c o n t r a r y to the
G o v e r n m e n t ' s e x p e c t a t i o n s and p r o m i s e s , the b u r d e n s of tax and of
p u b l i c e x p e n d i t u r e h a d b o t h i n c r e a s e d s i n c e 1979.
The present burden
of t a x w a s one of the m a i n f a c t o r s h i n d e r i n g the g r o w t h of n e w
employment opportunities.
T o w i d e n the gap b e t w e e n the i n c o m e s of
t h o s e i n a n d out of w o r k , to i m p r o v e i n c e n t i v e s f o r the l o w e r - p a i d a n d
to e a s e the p o v e r t y t r a p , a p r i o r i t y s h o u l d be to r a i s e s u b s t a n t i a l l y t h e
s t a r t i n g point for i n c o m e tax; i n p a r t i c u l a r , it w o u l d be e s s e n t i a l i n the
n e x t B u d g e t to a v o i d a g a i n w i t h h o l d i n g R o o k e r - W i s e " i n c r e a s e s i n
p e r s o n a l t a x t h r e s h o l d s , but he w a s n o t p r o p o s i n g at t h i s s t a g e a n y
further reductions i n i n c o m e tax.
It w a s a l s o n e c e s s a r y t o r e d u c e t h e
tax b u r d e n on b u s i n e s s , p r o b a b l y b y a r e d u c t i o n i n the N a t i o n a l
Insurance Surcharge.
T a x reductions of this k i n d w e r e a better w a y of
s t i m u l a t i n g r e a l employment, and with better l o n g - t e r m consequences,
than additional public expenditure.
T o bring inflation down w e l l into
s i n g l e f i g u r e s a n d to p e r m i t a f a l l i n i n t e r e s t r a t e s o v e r the m e d i u m
t e r m , i t w a s n e c e s s a r y to k e e p to t h e m e d i u m - t e r m f i n a n c i a l s t r a t e g y ,
a n d p r o g r e s s i v e l y to r e d u c e the P u b l i c S e c t o r B o r r o w i n g R e q u i r e m e n t
( P S B R ) as a p r o p o r t i o n of G r o s s D o m e s t i c P r o d u c t ( G D P ) .
If,
h o w e v e r , t h e f i n a n c i a l m a r k e t s w e r e to t a k e t h e v i e w t h a t t h e
G o v e r n m e n t ' s d e t e r m i n a t i o n was w e a k e n i n g , the e c o n o m i c strategy, and
t h e r e d u c t i o n of i n f l a t i o n , w o u l d be i n c r e a s i n g l y v u l n e r a b l e to t h e e f f e c t s
of h i g h i n t e r e s t r a t e s i n the U n i t e d S t a t e s of A m e r i c a .
T h e k e y to t a x
r e d u c t i o n s l a y i n r e d u c i n g the p r o s p e c t i v e t o t a l s of p u b l i c e x p e n d i t u r e .
T h e r e w e r e , h o w e v e r , s e r i o u s p r o b l e m s i n r e d u c i n g the t o t a l s e v e n to
t h o s e i n t h e 1981 P u b l i c E x p e n d i t u r e W h i t e P a p e r ( C m n d 8 1 7 5 ) .
The
p r e s e n t r e t u r n s s h o w e d a d d i t i o n a l b i d s i n 1982-83 of £ 6 - | b i l l i o n i n c a s h ,
of w h i c h a b o u t £ 2 - | b i l l i o n w a s f o r a d d i t i o n s to t h e n a t i o n a l i s e d
i n d u s t r i e s ' E x t e r n a l F i n a n c i n g L i m i t s ( E F L s ) and n e a r l y £l|- b i l l i o n for
m e a s u r e s to r e d u c e u n e m p l o y m e n t .
A g a i n s t this b a c k g r o u n d , he
n
SECRET SECRET i n v i t e d t h e C a b i n e t t o e n d o r s e t h e g e n e r a l a p p r o a c h t o t h e 1981 P u b l i c
E x p e n d i t u r e S u r v e y i n d i c a t e d i n C(81) 37, a n d i n p a r t i c u l a r t h e o v e r ­
r i d i n g a i m of getting the o v e r a l l e x p e n d i t u r e totals b e l o w t h o s e d e r i v e d
f r o m C m n d 8175 s o a s t o m a k e p o s s i b l e , w i t h i n t h e o v e r a l l e c o n o m i c
s t r a t e g y , the tax r e d u c t i o n s n e c e s s a r y for f u l f i l l i n g the G o v e r n m e n t ' s
economic and employment objectives.
In d i s c u s s i o n t h e f o l l o w i n g w e r e t h e
m a i n points made
­
a.
T h e C h a n c e l l o r of the E x c h e q u e r ' s p a p e r w a s i n a d e q u a t e ,
b e c a u s e i t d i d not p r o v i d e the C a b i n e t w i t h the f i g u r e s w h i c h
w o u l d be the o n l y s e n s i b l e b a s i s for d i s c u s s i o n : s u c h f i g u r e s as
(for e x a m p l e ) t h e e x p e c t e d o u t t u r n f o r 1 9 8 1 - 8 2 , a n d t h e
C h a n c e l l o r of the E x c h e q u e r ' s f o r e c a s t s and a s s u m p t i o n s on the
p r o p o r t i o n o f p u b l i c e x p e n d i t u r e to G D P .
b.
T h e a p p r o a c h r e c o m m e n d e d b y the C h a n c e l l o r of the
E x c h e q u e r d i d not offer a s u f f i c i e n t l y i m a g i n a t i v e and
p r a c t i c a b l e r e s p o n s e to the a c u t e s o c i a l a n d p o l i t i c a l p r o b l e m s
now confronting the G o v e r n m e n t .
A strategy centred on
r e d u c t i o n s of t a x a t i o n and p u b l i c e x p e n d i t u r e w o u l d be
i r r e l e v a n t to t h e p r o b l e m s o f N o r t h e r n I r e l a n d , o r to t h o s e o f
M e r s e y s i d e and other a r e a s of u r b a n d e r e l i c t i o n and d e p r i v a t i o n .
M e r s e y s i d e in particular was a community which was v i s i b l y
f a l l i n g a p a r t , its h o p e l e s s n e s s and d e s p a i r c o m p o u n d e d b y the
l a c k of c o m m i t m e n t to the a r e a of a n y of the w e a l t h - c r e a t i n g
institutions i n the c o u n t r y .
W i t h u n e m p l o y m e n t totals r i s i n g to
3 m i l l i o n l a t e r i n the y e a r , a n d f o l l o w i n g the r e c e n t r i o t i n g i n a
n u m b e r of c i t i e s , the t o l e r a n c e of s o c i e t y w a s n o w s t r e t c h e d
. n e a r t o i t s l i m i t .
T o give people r e n e w e d hope and confidence
for the f u t u r e , i t w a s e s s e n t i a l to t a k e n e w a n d c o n s t r u c t i v e
action urgently.
c.
S u c h a c t i o n c o u l d b u i l d on the m a n y s u b s t a n t i a l i m p r o v e ­
m e n t s w h i c h the G o v e r n m e n t h a d a c h i e v e d i n the l a s t two y e a r s
a n d w h i c h p r o v i d e d a s o u n d b a s e f r o m w h i c h to r e s p o n d to a
r e v i v a l i n g r o w t h , as the p r e s e n t w o r l d - w i d e r e c e s s i o n c a m e to
an end: for e x a m p l e , i m p r o v e m e n t s i n m a n a g e m e n t m e t h o d s , i n
p r o d u c t i v i t y , i n c o m p e t i t i v e n e s s , a n d i n the s t r u c t u r e of
business taxes, p a r t i c u l a r l y those affecting s m a l l f i r m s .
To
c o n s o l i d a t e t h e s e a c h i e v e m e n t s and r e a p the benefits of t h e m
r e q u i r e d the c o n t i n u a n c e i n office of the G o v e r n m e n t t h r o u g h the
next P a r l i a m e n t ; without that the a c h i e v e m e n t s w o u l d be t h r o w n
away.
If a c t i o n w e r e d e l a y e d f o r too l o n g , i t w o u l d t h e n b e s e e n
a s a p a n i c r e a c t i o n to m o u n t i n g p r o b l e m s ; i f i t c a m e t o o l a t e , i t
would r i s k w a s t i n g the i m p r o v e m e n t s w h i c h the G o v e r n m e n t had
made.
2
SECREI d.
M a n y people w e r e n o w f a r m o r e w o r r i e d b y the p r o b l e m s
of u n e m p l o y m e n t t h a n b y l e v e l s of t a x .
P r i o r i t y should now be
g i v e n to m e a s u r e s to r e d u c e u n e m p l o y m e n t , o n t h e l i n e s o f t h o s e
p r o p o s e d b y the S e c r e t a r y of State f o r E m p l o y m e n t a n d o t h e r s ;
further jobs should be generated, and useful assets created, by
i n c r e a s i n g c a p i t a l i n v e s t m e n t i n the p u b l i c s e c t o r and b y
e x p e n d i t u r e to s t i m u l a t e i n v e s t m e n t i n the p r i v a t e s e c t o r .
If
p e o p l e w e r e c o n v i n c e d that the G o v e r n m e n t w a s t a k i n g a m a j o r
a n d c o n s t r u c t i v e i n i t i a t i v e to t a c k l e t h e s e p r o b l e m s , t h e y m i g h t
w e l l be p r e p a r e d to a c c e p t s o m e s a c r i f i c e s to e n s u r e that the
objectives were achieved.
e.
It w a s s u g g e s t e d t h a t p e o p l e m i g h t b e p r e p a r e d t o a c c e p t a
s e v e r e l i m i t a t i o n , or even a f r e e z e , on pay i n c r e a s e s , i f i t c o u l d
be s h o w n to p r o v i d e r e s o u r c e s f o r i n c r e a s e d i n v e s t m e n t a n d
special employment measures.
If t h e r e w e r e a n y q u e s t i o n o f
l i m i t i n g t h e u p r a t i n g of s o c i a l b e n e f i t s , t h a t w o u l d s u r e l y n e e d to
be a c c o m p a n i e d by some such l i m i t a t i o n s on i n c o m e s .
O n the
o t h e r h a n d , w h i l e i t w a s c l e a r l y d e s i r a b l e to a i m f o r a n d
e n c o u r a g e l o w p a y i n c r e a s e s , i t w a s u n r e a l i s t i c to t h i n k i n t e r m s
of a w a g e f r e e z e o r of i n c r e a s e s l i m i t e d to 1 o r 2 p e r c e n t a g e
points.
Indeed, s u c h l i m i t a t i o n s could be p o s i t i v e l y d a m a g i n g
i f t h e y w e r e to d e p r e s s d e m a n d f o r goods and s e r v i c e s o r to l e a d
to any s h a r p e s c a l a t i o n of b i d s for p a y i n c r e a s e s e i t h e r
i m m e d i a t e l y b e f o r e o r after the p e r i o d of pay l i m i t a t i o n .
It w a s
v e r y doubtful w h e t h e r the a p p r o a c h , d i s c u s s e d i n the A n n e x to
C(81) 37, w h e r e b y s o m e p a r t i c u l a r g r o u p s m i g h t a c c e p t a t r a d e ­
off b e t w e e n p a y a n d c a p i t a l i n v e s t m e n t i n t h e i r s e c t o r , w a s
realistic.
T h e r e was no r e a s o n , for e x a m p l e , w h y d o c t o r s o r
n u r s e s s h o u l d a c c e p t r e l a t i v e l y l o w p a y a w a r d s i n o r d e r to
f i n a n c e the c o n s t r u c t i o n of h o s p i t a l s .
f.
In a d d i t i o n to i m p l e m e n t i n g i n f u l l i n the n e x t B u d g e t
R o o k e r - W i s e i n c r e a s e s i n p e r s o n a l tax thresholds, t h e r e was a l s o
a c a s e f o r r e s t o r i n g the benefits l o s t f r o m the a b a t e m e n t of s u c h
increases in previous Budgets.
On the other h a n d , i t w a s f o r
q u e s t i o n w h e t h e r p r i o r i t y s h o u l d b e g i v e n to t a x r e d u c t i o n s to t h e
extent p r o p o s e d by the C h a n c e l l o r of the E x c h e q u e r .
The
a s s e r t i o n that tax reductions w e r e a better w a y of s t i m u l a t i n g
e m p l o y m e n t t h a n a d d i t i o n a l p u b l i c e x p e n d i t u r e w a s o p e n to
question.
A s the C P R S h a d s u g g e s t e d , the C a b i n e t n e e d e d m o r e
i n f o r m a t i o n on the e m p l o y m e n t i m p l i c a t i o n s of p a r t i c u l a r t a x a n d
e x p e n d i t u r e o p t i o n s , i f t h e y w e r e to s e l e c t the a p p r o a c h w h i c h
o f f e r e d the b e s t p r o s p e c t s of d e a l i n g w i t h u n e m p l o y m e n t .
g.
G i v e n the p r e s e n t e s t i m a t e
in 1982-83,
of a d d i t i o n a l b i d s of £ 6 - | b i l l i o n
i t w o u l d b e a h e r c u l e a n t a s k to c o n t a i n p u b l i c
e x p e n d i t u r e t o t a l s to the l e v e l s i n C m n d 8175, l e t a l o n e to
3
d»
MM
r'», •«• *m
reduce
them further.
It w a s u n r e a l i s t i c t o l o o k f o r y e t f u r t h e r c u t s o n
t h o s e p r o g r a m m e s w h i c h h a d a l r e a d y b o r n e the b r u n t of the
s u c c e s s i o n o f p r e v i o u s e x e r c i s e s to c u t e x p e n d i t u r e ; t h e d e f e n c e
budget had a l r e a d y been d e c i d e d i n v o l u m e t e r m s ; t h e r e w o u l d be
m a j o r p o l i t i c a l d i f f i c u l t i e s i n a n y a t t e m p t to l i m i t u p r a t i n g s i n
social security and unemployment benefits; and there were strong
p r e s s u r e s for f u r t h e r e x p e n d i t u r e on the l a w and o r d e r
p r o g r a m m e s , p a r t i c u l a r l y the p r i s o n s e r v i c e , a n d to d e a l v/ith
the a f t e r m a t h of the r e c e n t r i o t s .
It w o u l d b e i m p o r t a n t t o
r e d u c e t h e m a j o r o v e r r u n o f S.2jr b i l l i o n o n t h e n a t i o n a l i s e d
i n d u s t r i e s ' E F L s , but at a t i m e of r e c e s s i o n s o m e o v e r r u n w a s to
be e x p e c t e d .
It h a d g e n e r a l l y t o b e r e c o g n i s e d t h a t f u r t h e r c u t s
i n p u b l i c e x p e n d i t u r e w o u l d be d a m a g i n g to e m p l o y m e n t p r o s p e c t s
a n d to p r i v a t e s e c t o r i n d u s t r y .
It s e e m e d u n r e a l i s t i c t o l o o k f o r
a d e c l i n i n g P S B R , as a p r o p o r t i o n of G D P , at a t i m e of e c o n o m i c
r e c es s i o n .
T H E P R I M E M I N I S T E R , s u m m i n g up the d i s c u s s i o n , s a i d that, b e f o r e
r e a c h i n g a v i e w on the b a l a n c e between t a x a t i o n and public e x p e n d i t u r e
o b j e c t i v e s , t h e C a b i n e t w i s h e d t h e C h a n c e l l o r of t h e E x c h e q u e r t o
p r e s e n t t h e m w i t h a f u l l e r e v a l u a t i o n of the o p t i o n s t h a n i n C(81) 37.
In
p a r t i c u l a r , they wanted m o r e i n f o r m a t i o n on the e m p l o y m e n t i m p l i c a ­
t i o n s of p a r t i c u l a r t a x and e x p e n d i t u r e o p t i o n s ; a fuller a s s e s s m e n t of
t h e r e a l i s m o f l o o k i n g f o r r e d u c t i o n s i n p u b l i c e x p e n d i t u r e to the l e v e l s
a s s u m e d i n C m n d 8175, o r b e l o w ; m o r e i n f o r m a t i o n on the m a k e - u p of
the p r e s e n t a d d i t i o n a l b i d s i n 1982-83 of £ 6 - | b i l l i o n ; and an i n d i c a t i o n of
the C h a n c e l l o r of the E x c h e q u e r ' s p r e s e n t a s s u m p t i o n s on the l e v e l of
t h e P S B R i n r e l a t i o n to G D P t h i s y e a r a n d n e x t .
In f u r t h e r d i s c u s s i o n ,
i t w o u l d be n e c e s s a r y to w e i g h the p o s s i b l e b e n e f i t s of f u r t h e r
e x p e n d i t u r e on c a p i t a l i n v e s t m e n t , and the c o n s e q u e n c e s of not r e d u c i n g
p u b l i c e x p e n d i t u r e t o t a l s t o a t l e a s t C m n d 8175 l e v e l s , a g a i n s t t h e r i s k s
a n d c o n s e q u e n c e s , not o n l y to the G o v e r n m e n t ' s b r o a d o b j e c t i v e s but a l s o
to c o n f i d e n c e i n t h e c u r r e n c y , o f a n y d e p a r t u r e f r o m t h e m e d i u m - t e r m
f i n a n c i a l s t r a t e g y ; i n p a r t i c u l a r , i t w a s e s s e n t i a l to r e c o g n i s e t h e
i m p a c t of a n y f u r t h e r i n c r e a s e i n i n f l a t i o n o n t h o s e w h o s e s a v i n g s a n d
i n c o m e w e r e not p r o t e c t e d b y i n d e x - l i n k i n g .
The Cabinet ­
1.
I n v i t e d t h e C h a n c e l l o r o f t h e E x c h e q u e r to c i r c u l a t e a f u r t h e r m e m o r a n d u m on the
factors r e l e v a n t to d e c i s i o n s a b o u t p u b l i c e x p e n d i t u r e i n 1982-83 and l a t e r
2.
years. A g r e e d t o r e s u m e t h e i r d i s c u s s i o n o f t h e 1981
P u b l i c E x p e n d i t u r e S u r v e y when that m e m o r a n d u m
was a v a i l a b l e .
4
SECRET 3.
A g r e e d to r e s u m e c o n s i d e r a t i o n o f t h e
m e m o r a n d a by the C h i e f S e c r e t a r y , T r e a s u r y , and
the S e c r e t a r y of S t a t e f o r the E n v i r o n m e n t at a l a t e r
meeting.
Cabinet
Office
2 7 J u l y 1981
5
SECRET NloST CONfrteunfa(lt=zx>K.b
Ind£,
S U BJ E C T
SECRET
AND PERSONAL
ONE
MOST
CONFIDENTIAL
COPY
ONLY
RECORD
TO
CC(81) 34th
CONCLUSIONS
T h u r s d a y 29 O c t o b e r
CONFIDENTIALITY
OF CABINET
PROCEEDINGS
Previous
Reference;
CC(81) 24th
Conclusions
1981
B e f o r e the C a b i n e t p r o c e e d e d to the o r d e r of the d a y , T H E P R I M E
M I N I S T E R d r e w a t t e n t i o n to the r e p o r t s i n the p r e v i o u s w e e k ' s
P r e s s a n d b r o a d c a s t i n g m e d i a a b o u t the p r o c e e d i n g s at the m e e t i n g
of the C a b i n e t h e l d o n T u e s d a y 20 O c t o b e r .
She r e c a l l e d that at
the c o n c l u s i o n of the p r e v i o u s w e e k ' s d i s c u s s i o n of the e c o n o m i c
s i t u a t i o n and p u b l i c e x p e n d i t u r e it had been a g r e e d that nothing
s h o u l d be s a i d to the P r e s s o t h e r t h a n t h a t d i s c u s s i o n s w o u l d c o n ­
tinue (including b i l a t e r a l d i s c u s s i o n s between D e p a r t m e n t a l
M i n i s t e r s a n d the T r e a s u r y ) on l e v e l s of p u b l i c e x p e n d i t u r e f o r
1982-83 and subsequent y e a r s .
It h a d b e e n p o i n t e d o u t t h a t a n y
u n a u t h o r i s e d d i s c l o s u r e of the p r o c e e d i n g s i n m o r e d e t a i l c o u l d
a f f e c t f i n a n c i a l m a r k e t s - as i n the e v e n t i t h a d - a n d the o u t c o m e
of the b y - e l e c t i o n i n C r o y d o n .
D e s p i t e that a g r e e m e n t , f u l l r e p o r t s
h a d a p p e a r e d , i n the f i r s t i n s t a n c e i n I n d e p e n d e n t T e l e v i s i o n N e w s
o n the e v e n i n g of the d a y o n w h i c h the m e e t i n g h a d b e e n h e l d , t h e n
i n T h e T i m e s the f o l l o w i n g m o r n i n g , a n d s u b s e q u e n t l y i n o t h e r
newspapers.
C e r t a i n a s p e c t s of what had been p u b l i s h e d c o u l d
h a v e c o m e o n l y f r o m s o m e o n e w h o w a s p r e s e n t at the m e e t i n g .
T h i s w a s not the f i r s t o c c a s i o n on w h i c h t h e r e h a d b e e n d a m a g i n g
b r e a c h e s of the c o n f i d e n t i a l i t y of C a b i n e t p r o c e e d i n g s .
The Cabinet
s h o u l d u n d e r s t a n d the i m p l i c a t i o n s .
If what w a s s a i d i n s i d e the
C a b i n e t R o o m w a s to be s y s t e m a t i c a l l y d i s c l o s e d o u t s i d e i t , the
t i m e w o u l d c o m e w h e n m e m b e r s of C a b i n e t w o u l d not f e e l a b l e to
s p e a k t h e i r m i n d s f r e e l y ; the C a b i n e t w o u l d c e a s e to be a g a t h e r i n g
i n w h i c h m a j o r i s s u e s o f p o l i c y c o u l d be d i s c u s s e d , a n d m o r e r e s o r t
w o u l d h a v e to be h a d to d i s c u s s i o n i n s m a l l e r g r o u p s .
If a n y
m e m b e r of the C a b i n e t w a s k n o w i n g l y e n g a g e d i n a c t i v i t i e s w h i c h
c o u l d r e s u l t i n s u c h d i s c l o s u r e s t o the P r e s s , t h e o n l y h o n o u r a b l e
c o u r s e w a s f o r h i m to r e s i g n .
T H E F O R E I G N A N D C O M M O N W E A L T H S E C R E T A R Y , supporting
the P r i m e M i n i s t e r , s a i d t h a t M i n i s t e r s m u s t be a b l e to d i s a g r e e
in Cabinet and r e a c h c o m p r o m i s e s among themselves without having
to be c o n c e r n e d a b o u t the r i s k t h a t the p r o c e e d i n g s w o u l d be w i d e l y
reported in public.
If t h a t c o u l d n o t be the c a s e , i t put a l l m e m b e r s
of the C a b i n e t i n a n i m p o s s i b l e p o s i t i o n , a n d u n d e r m i n e d the c o n ­
fidence which should subsist among Cabinet colleagues.
He r e c a l l e
t h a t at the p r e v i o u s m e e t i n g he h a d s p e c i f i c a l l y s u g g e s t e d t h a t
M i n i s t e r s should not even t e l l people i n their own D e p a r t m e n t s or
P r i v a t e Offices what had passed.
1
SECRET
AND PERSONAL
SECRET AND PERSONAL
In d i s c u s s i o n t h e r e w a s g e n e r a l s u p p o r t f o r w h a t h a d b e e n s a i d b y
the r e p o r t s that h a d a p p e a r e d .
It w a s i m p o s s i b l e t o e x a g g e r a t e t h e
d a m a g e d o n e i n m a r k e t s , i n the C r o y d o n b y - e l e c t i o n a n d to the
m o r a l e of the G o v e r n m e n t ' s s u p p o r t e r s i n the H o u s e of C o m m o n s .
T h e r e w a s n o d o u b t that t h e r e p o r t s of d i s s e n s i o n a n d d i v i s i o n i n t h e
C a b i n e t h a d h a d a d a m a g i n g effect on the m o r a l e of P a r t y w o r k e r s i n
t h e C r o y d o n b y - e l e c t i o n a n d of the G o v e r n m e n t ' s s u p p o r t e r s up a n d
d o w n the c o u n t r y .
T h e C a b i n e t f a c e d the p r o s p e c t of d i f f i c u l t
d i s c u s s i o n s a n d d e c i s i o n s i n the c o m i n g m o n t h s , p a r t i c u l a r l y i n the
e c o n o m i c f i e l d ; t h e y m u s t b e f r e e to d i s c u s s t h e s e m a t t e r s a n d to
r e a c h c o n c l u s i o n s , w i t h o u t the r i s k of u n a u t h o r i s e d d i s c l o s u r e s w h i c h
w o u l d d i m i n i s h the e f f e c t s w h i c h the d e c i s i o n s w e r e i n t e n d e d to h a v e .
T h e d a n g e r w a s n o t j u s t o f d i r e c t d i s c l o s u r e s to the P r e s s .
It w a s
c l e a r that m e m b e r s of the P r e s s t a l k e d a r o u n d w i d e l y , w i t h a v i e w to
g l e a n i n g i n f o r m a t i o n n o t o n l y f r o m m e m b e r s of the C a b i n e t t h e m s e l v e s
but a l s o f r o m o t h e r s to w h o m m e m b e r s of the C a b i n e t h a d t a l k e d a b o u t
the p r o c e e d i n g s , as they thought i n confidence.
A s a r e s u l t of t h i s
p r o c e s s , m u c h of what w a s r e p o r t e d w a s at t h i r d o r f o u r t h h a n d , a n d
the s t o r i e s w h i c h a p p e a r e d i n the P r e s s w e r e not o n l y d a m a g i n g but
also distorted.
THE PRIME MINISTER,
s u m m i n g up the d i s c u s s i o n ,
said that it m u s t
be the g e n e r a l h o p e a n d w i s h of the C a b i n e t that the k i n d of t h i n g w h i c h
had happened after
it r e c u r r e d ,
the p r e v i o u s m e e t i n g s h o u l d not h a p p e n a g a i n .
the c o n s e q u e n c e s
w o u l d be both c o n s i d e r a b l e a n d
f o r the future
regrettable.
The Cabinet Took
Cabinet
note.
Office
4 November
1981
-2-
SECRET AND PERSONAL
conduct of business
If