(c) crown copyright
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HIS D O C U M E N T IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T
CC(74) 29th
Conclusions
COPY NO
g g
CABINET C O N C L U S I O N S of a M e e t i n g of t h e C a b i n e t h e l d at 10 D o w n i n g S t r e e t on F R I D A Y 26 J U L Y 1974 at 10. 00 a m PRESENT
T h e Rt Hon Harold Wilson M P P r i m e Minister The R t H o n E d w a r d S h o r t M P
Lord P r e s i d e n t of the C o u n c i l ( I t e m s 1 and 2 )
T h e R t H o n R o y Jenkins M P
S e c r e t a r y of State f o r the H o m e
D e p a r t m e n t ( I t e m s 1 and 2)
The R t H o n D e n i s H e a l e y M P
Chancellor of the E x c h e q u e r
T h e R t H o n Anthony C r o s l a n d M P
S e c r e t a r y o f State f o r the E n v i r o n m e n t
( I t e m s 1 and 2 )
The R t H o n M i c h a e l F o o t M P
Secretary of State f o r E m p l o y m e n t
The Rt Hon E r i c V a r l e y M P
S e c r e t a r y of State f o r E n e r g y
The Rt H o n S h i r l e y W i l l i a m s M P
Secretary o f State f o r P r i c e s and
Consumer P r o t e c t i o n
The Rt Hon Barbara Castle M P
S e c r e t a r y of State f o r S o c i a l S e r v i c e s
I!
The R t H o n A n t h o n y W e d g w o o d B e n n M P
Secretary of State f o r I n d u s t r y
T h e Rt Hon P e t e r Shore M P
S e c r e t a r y of State f o r T r a d e
( I t e m s 1 and 2 )
The Rt H o n R o y M a s o n M P
Secretary o f State f o r D e f e n c e
The Rt Hon Reginald Prentice M P
S e c r e t a r y of State f o r E d u c a t i o n and
Science
The R t Hon W i l l i a m R o s s M P
Secretary of State f o r S c o t l a n d
T h e R t H o n John M o r r i s Q C M P
S e c r e t a r y of State f o r W a l e s
1
T h e R t Hon F r e d P e a r t M P
1; The Rt H o n M e r l y n R e e s M P
M i n i s t e r of A g r i c u l t u r e ,
Secretary of S t a t e f o r N o r t h e r n I r e l a n d
Fisheries
and F o o d
T h e R t Hon L o r d S h e p h e r d
The Rt H o n H a r o l d L e v e r M P
Chancellor o f the D u c h y of L a n c a s t e r
Lord Privy Seal
( I t e m s 1 and 2 )
THE FOLLOWING WERE ALSO PRESENT
The R t H o n R o b e r t M e l l i s h M P
Parliamentary S e c r e t a r y , T r e a s u r y
T h e R t Hon D a v i d E n n a l s M P
M i n i s t e r of State f o r F o r e i g n and
Commonwealth Affairs
Mr. J o e l B a r n e t t M P
Chief S e c r e t a r y , T r e a s u r y
(Items 2 - 4 )
M r . Robert Sheldon M P
M i n i s t e r of S t a t e , C i v i l S e r v i c e D e p a r t m e n t
(Item 1)
SECRETARIAT
S i r John Hunt
Mr
Mr
Mr
Mr
Mr
P
J
J
H
R
Benner
A Hamilton
Anson
F Ellis-Rees
G S Johnston
( I t e m 1)
(Items 2
(Item 2)
(Item 4)
(Item 3)
4)
C O N T E N T S
Item
Subject
Page
1.
DISPERSAL OF G O V E R N M E N T WORK FROM LONDON
1
2.
ECONOMIC STRATEGY AND PUBLIC
5
3.
INTERNATIONAL PROPERTY
(INDUSTRIAL) LIMITED
4.
EXPENDITURE
DEVELOPMENT
PROGRAMME ANALYSIS AND REVIEW
12
13
DISPERSAL OF
GOVERNMENT
WORK F R O M
LONDON
1.
T h e C a b i n e t had b e f o r e t h e m a m e m o r a n d u m b y the
L o r d P r e s i d e n t of the C o u n c i l about the D i s p e r s a l of
Government Work f r o m London (C(74) 76).
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 r e c a l l e d that the
L a b o u r P a r t y , when i n o p p o s i t i o n , had c r i t i c i s e d t h e
r e c o m m e n d a t i o n s i n the H a r d m a n R e p o r t a s i n a d e q u a t e .
I t w a s t h e r e f o r e e s s e n t i a l that the t o t a l n u m b e r o f p o s t s
d i s p e r s e d should not b e s i g n i f i c a n t l y l e s s than the 3 1 , 000
r e c o m m e n d e d i n the R e p o r t ; but his o w n p r o p o s a l s e n v i s a g e d
a m u c h m o r e s a t i s f a c t o r y d i s t r i b u t i o n of the d i s p e r s e d p o s t s
s o as t o g i v e the m a x i m u m b e n e f i t t o the a s s i s t e d a r e a s , and
i n p a r t i c u l a r t o S c o t l a n d , the N o r t h E a s t , the N o r t h W e s t and
South W a l e s .
The C i v i l S e r v i c e Department (CSD) w e r e
s a t i s f i e d that the p r o p o s e d p r o g r a m m e , w h i c h w o u l d b e s p r e a d
o v e r a p e r i o d of about t e n y e a r s , w a s p e r f e c t l y f e a s i b l e .
I n t e n s e e x p e c t a t i o n s and i n t e r e s t had b e e n a r o u s e d i n the
r e g i o n s and i t Was e s s e n t i a l that t h e y should not b e d i s a p p o i n t e d .
T h e r e had b e e n c o n s u l t a t i o n s w i t h d e p a r t m e n t a l Staff S i d e s
and w i t h the N a t i o n a l Staff S i d e , and a r e c e n t m e e t i n g w h i c h he
h a d had w i t h the l a t t e r had b e e n c o r d i a l and c o n s t r u c t i v e .
In
g e n e r a l , d i s p e r s a l on the l i n e s p r o p o s e d w a s l i k e l y t o b e
a c c e p t a b l e t o the C i v i l S e r v i c e t r a d e s u n i o n s ; but i t w o u l d b e
i m p o r t a n t t o e n s u r e that the p r o p o s a l s w e r e p r e s e n t e d a s
s y m p a t h e t i c a l l y as p o s s i b l e and that the t r a n s f e r t e r m s a v a i l ­
a b l e t o the a f f e c t e d staff w e r e k e p t under r e v i e w .
The
G o v e r n m e n t w e r e c o m m i t t e d to m a k e a s t a t e m e n t b e f o r e the
r e c e s s ; and he p r o p o s e d to m a k e a n a n n o u n c e m e n t i n the H o u s e
o f C o m m o n s on 30 J u l y on the l i n e s of the d r a f t a n n e x e d t o h i s
memorandum.
I n d i s c u s s i o n , i t w a s a r g u e d that i t w a s e s s e n t i a l that a
s u b s t a n t i a l n u m b e r o f posts should b e d i s p e r s e d t o the a s s i s t e d
a r e a s , and i n p a r t i c u l a r to S c o t l a n d , w h e r e the l o c a l
a u t h o r i t i e s i n the G l a s g o w a r e a had the c a p a c i t y and the
w i l l i n g n e s s to a c c e p t a substantial m e a s u r e of d i s p e r s a l .
T a c t f u l handling of the Staff Side i n t e r e s t s w a s e s s e n t i a l ;
this w a s s t r o n g l y b o r n e out b y the m o v e of the P o s t O f f i c e
S a v i n g s Bank t o G l a s g o w ten y e a r s a g o , w h i c h had i n i t i a l l y
c a u s e d c o n s i d e r a b l e d i f f i c u l t y b e c a u s e o f i n s e n s i t i v e handling
b u t had u l t i m a t e l y p r o v e d h i g h l y p o p u l a r w i t h the staff.
In f a c t ,
c o n s i d e r a b l e good w i l l could p r o b a b l y b e e x p e c t e d f r o m the
N a t i o n a l Staff S i d e , h a v i n g r e g a r d t o the f a c t that m o r e than
h a l f o f the t o t a l n u m b e r of C i v i l S e r v a n t s w e r e a l r e a d y w o r k i n g
outside London.
I t w o u l d , h o w e v e r , b e e s s e n t i a l that the
C S D should g i v e D e p a r t m e n t s a f f e c t e d b y d i s p e r s a l e v e r y
p o s s i b l e h e l p f o r e x a m p l e w i t h the i n s t a l l a t i o n of the m o s t
s a t i s f a c t o r y and u p - t o - d a t e c o m m u n i c a t i o n s s y s t e m s w h e r e
r a p i d t r a n s m i s s i o n of i n f o r m a t i o n w a s e s s e n t i a l .
1
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 p o i n t s w e r e m a d e :
a.
8, 000 staff o f the M i n i s t r y of D e f e n c e had a l r e a d y
been d i s p e r s e d f r o m London.
I t had b e e n a g r e e d that a
f u r t h e r 4, 500 should b e m o v e d t o C a r d i f f and one
thousand to a n u m b e r of l o c a t i o n s o u t s i d e L o n d o n .
It
w a s n e c e s s a r y to s e c u r e the s u p p o r t of the Staff S i d e
to the r a t i o n a l i s a t i o n of r e s e a r c h and d e v e l o p m e n t
e s t a b l i s h m e n t s , w h i c h w a s a l r e a d y i n v o l v i n g the
d i s p e r s a l of one thousand p o s t s f r o m L o n d o n and w o u l d
s h o r t l y a f f e c t a f u r t h e r 1, 600 p o s t s .
M o r e o v e r , the
D e f e n c e R e v i e w w a s l i k e l y "to l e a d to the l o s s of
2, 000 - 3, 000 p o s t s ; i n t h e s e c i r c u m s t a n c e s the
p r o p o s e d d i s p e r s a l o f 6, 000 p o s t s t o G l a s g o w w o u l d b e
unacceptable.
It would involve s e r i o u s operational
difficulties; i t would c a l l for capital expenditure
e s t i m a t e d a t £31 m i l l i o n and a d d i t i o n a l annual c o s t s of
£15 - £ 2 0 m i l l i o n - a g o o d d e a l of the l a t t e r w a s
a c c o u n t e d f o r b y the e x c e s s i v e l y h i g h t r a v e l l i n g c o s t s
which would b e c o m e n e c e s s a r y following a m o v e to
G l a s g o w ; and i t w o u l d b e t o t a l l y o p p o s e d b y the Staff
Side, who would r a i s e much l e s s objection to a m o v e to
s o m e o t h e r l o c a t i o n , such a s T e e s s i d e , M e r s e y s i d e o r
Plymouth.
A s a g a i n s t t h i s , i t w a s a r g u e d that the
p r o p o s a l c o u l d be p r e s e n t e d t o the Staff S i d e i n a m o r e
f a v o u r a b l e l i g h t ; that the staff t o b e m o v e d t o G l a s g o w
should b e c h o s e n s o a s to c a u s e the l e a s t a d m i n i s t r a t i v e
i n c o n v e n i e n c e and c o n f e r the m a x i m u m c o s t b e n e f i t ;
and t h a t the m o v e s c o u l d i f n e c e s s a r y b e s p r e a d o v e r a
considerable period.
b.
I t w o u l d b e h e l p f u l i f the A g r i c u l t u r a l R e s e a r c h
C o u n c i l c o u l d m o v e t o Swindon r a t h e r than M e r s e y s i d e .
T h i s w o u l d l e a d t o the g r o u p i n g t o g e t h e r o f a n u m b e r o f
r e s e a r c h c o u n c i l s and w o u l d t h e r e b y h e l p c a r e e r
prospects.
M o r e o v e r , m o s t of the f a r m s and
e x p e r i m e n t a l i n s t i t u t e s b e i n g s u p e r v i s e d b y the C o u n c i l
w e r e i n the south o f E n g l a n d .
c.
T h e 985 F o r e i g n and C o m m o n w e a l t h O f f i c e ( F C O )
staff p r o p o s e d f o r d i s p e r s a l w e r e i n s m a l l g r o u p s , m o s t
of w h i c h w e r e i n f a c t unsuitable f o r d i s p e r s a l ­
s o m e t i m e s b e c a u s e they w e r e e n g a g e d on d u t i e s
specifically related to London.
T h e r e w e r e substantial
o b j e c t i o n s t o m o v i n g the staff of the L o n d o n P a s s p o r t
O f f i c e t o M e r s e y s i d e , s i n c e this w o u l d r e d u c e the
s e r v i c e a v a i l a b l e i n L o n d o n t o a l o w e r l e v e l than w a s
a v a i l a b l e i n any o t h e r c a p i t a l c i t y .
I t w o u l d i n any
2
e v e n t b e n e c e s s a r y t o continue t o p r o v i d e a c o u n t e r
service.
T h e r e w o u l d b e the g r e a t e s t d i f f i c u l t y i n
finding m o r e than about 300 p o s t s s u i t a b l e f o r r e m o v a l
f r o m London.
d.
T h e r e w e r e w e i g h t y o b j e c t i o n s t o m o v i n g the
I m m i g r a t i o n and N a t i o n a l i t y D e p a r t m e n t o f the H o m e
O f f i c e f r o m C r o y d o n , w h e r e i t had m o v e d o n l y t w o
y e a r s a g o . T h e O f f i c e at p r e s e n t h a n d l e d about
200, 000 p e r s o n a l i n q u i r i e s a y e a r .
M o s t of t h e m c a m e
f r o m people l i v i n g i n or near London, m a n y of w h o m
had an i m p e r f e c t c o m m a n d of E n g l i s h s o that i n q u i r i e s
b y l e t t e r o r t e l e p h o n e w o u l d not b e s a t i s f a c t o r y .
Half
of t h e s e i n q u i r i e s r e q u i r e d r e f e r e n c e t o p e r s o n a l f i l e s
and no c o m m u n i c a t i o n s s y s t e m c o u l d p r o v i d e f o r t h i s .
M o r e o v e r , i t w a s i m p o r t a n t that t h e r e s h o u l d b e c l o s e
c o n t a c t b e t w e e n the I m m i g r a t i o n and N a t i o n a l i t y
D e p a r t m e n t and i m m i g r a t i o n o f f i c e r s , m o s t o f w h o m
w e r e s t a t i o n e d a t H e a t h r o w , G a t w i c k and south c o a s t
p o r t s , and w h o f r e q u e n t l y had t o d e a l w i t h c a s e s of the
greatest urgency.
I t w o u l d not b e p r a c t i c a b l e t o m o v e
the m a i n d i v i s i o n t o M e r s e y s i d e and r e t a i n a c o u n t e r
s e r v i c e i n C r o y d o n j and the p r o p o s e d d i s p e r s a l could
b e a c h i e v e d o n l y a t the c o s t of a v e r y s e r i o u s d e c l i n e
i n the s t a n d a r d of s e r v i c e o f f e r e d t o the p u b l i c i n what
was a particularly sensitive area.
I f p o s t s f r o m the
H o m e Office w e r e to be d i s p e r s e d f r o m London they
should b e found i n s o m e l e s s s e n s i t i v e p a r t o f the
Department,
-
e.
It would be undesirable to c o m e to a d e c i s i o n
about the l o c a t i o n o f the M a n p o w e r S e r v i c e s C o m m i s s i o n
u n t i l the c o m p l e t i o n of the study o f this m a t t e r w h i c h
the C o m m i s s i o n i t s e l f w a s c a r r y i n g out.
It would
h o w e v e r b e a c c e p t a b l e f o r any s t a t e m e n t t o i n d i c a t e
that the C o m m i s s i o n w o u l d b e l o c a t e d o u t s i d e L o n d 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
s e v e r a l of the M i n i s t e r s a f f e c t e d b y the L o r d P r e s i d e n t s
p r o p o s a l s had e x p r e s s e d v e r y s t r o n g o p p o s i t i o n t o t h e m .
The
C a b i n e t a p p r e c i a t e d the f o r c e o f t h e s e o b j e c t i o n s but w e r e
s a t i s f i e d that the t o t a l n u m b e r of p o s t s d i s p e r s e d m u s t b e v e r y
c l o s e t o the 3 1 , 000 r e c o m m e n d e d i n the H a r d m a n R e p o r t and
that t h e y m u s t b e d i s t r i b u t e d s o a s to p r o v i d e the m a x i m u m
h e l p f o r the a s s i s t e d a r e a s .
T h e y t h e r e f o r e a p p r o v e d the
d e t a i l e d p r o p o s a l s i n p a r a g r a p h 4 of the L o r d P r e s i d e n t s
m e m o r a n d u m , subject to three modifications.
F i r s t , they
3
a c c e p t e d that i t w o u l d n o t b e p r a c t i c a b l e f o r the F C O t o find as
m a n y a s 985 p o s t s f o r d i s p e r s a l t o M e r s e y s i d e and a g r e e d that
a f i g u r e of 500 s h o u l d b e s u b s t i t u t e d .
T h e d e t a i l s should b e
w o r k e d out b e t w e e n the F o r e i g n and C o m m o n w e a l t h S e c r e t a r y
and the L o r d P r e s i d e n t .
Secondly, it would b e undesirable to
m o v e the I m m i g r a t i o n and N a t i o n a l i t y D e p a r t m e n t of the H o m e
O f f i c e f r o m C r o y d o n ; i n s t e a d , the H o m e S e c r e t a r y , i n
c o n s u l t a t i o n w i t h the L o r d P r e s i d e n t , should i d e n t i f y one
thousand p o s t s e l s e w h e r e i n the H o m e O f f i c e w h i c h c o u l d b e
d i s p e r s e d f r o m L o n d o n t o M e r s e y s i d e w i t h i n the n e x t t e n
years.
T h i r d l y , w h i l e i t c o u l d b e i n d i c a t e d that the 750 staff
of the M a n p o w e r S e r v i c e s C o m m i s s i o n ( o r f a i l i n g that a n
e q u i v a l e n t n u m b e r f r o m the D e p a r t m e n t of E m p l o y m e n t ) w o u l d
b e d i s p e r s e d , the p r e c i s e l o c a t i o n could not b e d e t e r m i n e d u n t i l
the C o m m i s s i o n s o w n r e v i e w had b e e n c o m p l e t e d .
The
L o r d P r e s i d e n t w a s a u t h o r i s e d t o m a k e a s t a t e m e n t i n the
H o u s e of C o m m o n s on 30 J u l y announcing the C a b i n e t ' s
d e c i s i o n ; the t e x t a p p e n d e d t o M s m e m o r a n d u m should b e
a m e n d e d t o t a k e a c c o u n t o f the a g r e e d m o d i f i c a t i o n s , and
s o m e f u r t h e r v e r b a l a m e n d m e n t s w o u l d b e d e s i r a b l e s o a s to
m a k e i t p r e s e n t a t i o n a l l y m o r e a c c e p t a b l e t o the Staff S i d e ­
i n p a r t i c u l a r , i t should i n d i c a t e the long p e r i o d o v e r w h i c h the
m o v e s f r o m L o n d o n w o u l d b e taking p l a c e .
T h e GSD should
g i v e Departments a l l possible help o v e r consultations with
Staff S i d e s , the p r e s e n t a t i o n of the d e c i s i o n s t o "staff and the
a c t u a l m o v e m e n t of staff w h e n that s t a g e w a s r e a c h e d .
They
s h o u l d a l s o e n s u r e that t h e m o s t e f f i c i e n t c o m m u n i c a t i o n s
s y s t e m s w e r e a v a i l a b l e t o o f f i c e s w h i c h w e r e m o v e d t o the
r e g i o n s and that a n y r e s e a r c h n e e d e d f u r t h e r t o i m p r o v e such
s y s t e m s w a s put i n hand; and the M i n i s t e r of S t a t e , C S D
should l e t h i m h a v e a r e p o r t on t h e s e m a t t e r s .
1
The Cabinet ­
1.
T o o k n o t e , w i t h a p p r o v a l , of the P r i m e
M i n i s t e r s 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,
I n y i t e d the L o r d P r e s i d e n t of the C o u n c i l t o
announce the C a b i n e t ' s d e c i s i o n s a s i n d i c a t e d i n
the s u m m i n g up.
3.
I n v i t e d the M i n i s t e r o f S t a t e , C S D t o s u b m i t j
a r e p o r t to the P r i m e M i n i s t e r on the l i n e s i n d i c a t e d
i n the s u m m i n g up.
4
2.
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
o f the E x c h e q u e r ( C ( 7 4 ) 81) on public e x p e n d i t u r e t o 1 9 7 8 - 7 9 .
T h e y a l s o had b e f o r e t h e m a m e m o r a n d u m b y the C e n t r a l P o l i c y
R e v i e w Staff ( G P R S ) ( C ( 7 4 ) 7 9 ) on the e c o n o m i c f r a m e w o r k f o r
the d i s c u s s i o n of p u b l i c e x p e n d i t u r e ; and a note 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 ( 7 4 ) 80), t o w h i c h w a s a t t a c h e d
t h e 1974 R e p o r t of the P u b l i c E x p e n d i t u r e S u r v e y C o m m i t t e e
(PESC).
T H E P R I M E M I N I S T E R s a i d that i n A p r i l the C a b i n e t had a g r e e d
the p r o c e d u r e f o r the public e x p e n d i t u r e r e v i e w o n the u n d e r ­
standing that this i m p l i e d no c o m m i t m e n t t o a p a r t i c u l a r b a l a n c e
b e t w e e n p u b l i c and p r i v a t e e x p e n d i t u r e , n o r t o d e c i s i o n s on
particular p r o g r a m m e s .
T h e y had a l s o w a n t e d t o d i s c u s s the
G o v e r n m e n t ' s e c o n o m i c s t r a t e g y b e f o r e taking d e c i s i o n s on
expenditure.
D i s c u s s i o n of the m e d i u m - t e r m s t r a t e g y had b e e n
d e l a y e d b y c o n s i d e r a t i o n o f the C h a n c e l l o r ^ s h o r t - t e r m e c o n o m i c
m e a s u r e s : and i t w o u l d c l e a r l y n o t b e p o s s i b l e f o r the C a b i n e t
t o s e t t l e the i n d i v i d u a l public e x p e n d i t u r e p r o g r a m m e s b e f o r e
the R e c e s s .
T h e m a i n p u r p o s e of this d i s c u s s i o n w a s t h e r e f o r e
t o h a v e a b r o a d r e v i e w of the s t r a t e g y f o r p u b l i c e x p e n d i t u r e and
t o s e t t l e the o v e r a l l c e i l i n g o v e r the n e x t f o u r y e a r s as a g a i n s t
t h e r e s o u r c e s f o r p r i v a t e c o n s u m p t i o n : and t o l e a v e o v e r the
d e t a i l s of the i n d i v i d u a l p r o g r a m m e s until the autumn.
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 the b a s i c
a s s u m p t i o n u n d e r l y i n g h i s p a p e r w a s that the e c o n o m y w o u l d g r o w
a t about 3 p e r c e n t a y e a r , e q u i v a l e n t to a b o u t £ 2 , 000 m i l l i o n a
y e a r at p r e s e n t p r i c e s .
P a r t of t h i s , w h i c h he had put at
£ 4 0 0 m i l l i o n w o u l d n e e d t o b e d e v o t e d t o i n c r e a s i n g the r a t e a t
w h i c h the b a l a n c e o f p a y m e n t s d e f i c i t w a s b e i n g r e d u c e d .
This
should e n a b l e the n o n - o i l d e f i c i t to b e e l i m i n a t e d b y about the end
o f 1975, and the o i l d e f i c i t b y 1 9 7 8 - 7 9 .
E v e n on this b a s i s , w e
w o u l d b y then b e p a y i n g £ 1 , 500 m i U i o n a y e a r i n i n t e r e s t c h a r g e s
o n the a c c u m u l a t e d d e f i c i t , and this w o u l d a b s o r b about o n e - h a l f
o f the r e v e n u e f r o m N o r t h S e a o i l .
In o r d e r to m a i n t a i n the
a s s u m e d l e v e l of e c o n o m i c g r o w t h , and e v e n t u a l l y to i m p r o v e on
i t , i t w o u l d b e n e c e s s a r y t o put about £ 5 0 0 m i l l i o n a y e a r i n t o
a d d i t i o n a l i n v e s t m e n t , w h e t h e r i n the p u b l i c o r p r i v a t e s e c t o r .
H e had a l s o a s s u m e d that £ 5 0 0 m i l l i o n a y e a r w o u l d b e a b s o r b e d
by higher earnings.
T h i s w o u l d p e r m i t a n i n c r e a s e of l £ p e r
c e n t a y e a r , w h i c h w o u l d a c c o m m o d a t e s p e c i a l c l a i m s such as
e q u a l p a y , i m p r o v e m e n t s i n l o w p a y , and e f f i c i e n c y p a y m e n t s ,
b u t w o u l d not o t h e r w i s e p r o v i d e f o r a g e n e r a l i n c r e a s e i n the
r e a l l e v e l of e a r n i n g s , o r a l l o w f o r c a s e s w h e r e the T r a d e s
Union
Congress ( T U C ) guidelines w e r e exceeded.
It w o u l d
i m p l y a n i n c r e a s e i n r e a l p r i v a t e c o n s u m p t i o n ( i n c l u d i n g that
f i n a n c e d b y s o c i a l s e c u r i t y p a y m e n t s ) s i m i l a r t o that e x p e r i e n c e d
5
w h e n the G o v e r n m e n t w e r e l a s t i n o f f i c e .
On t h e s e a s s u m p t i o n s ,
£700 m i l l i o n a y e a r w o u l d b e l e f t f o r i n c r e a s e d public e x p e n d i t u r e ,
e q u i v a l e n t t o a n annual i n c r e a s e of 2-f p e r c e n t i n d e m a n d t e r m s .
T h i s w a s i n f a c t e q u a l t o the r a t e of i n c r e a s e w h i c h had e m e r g e d
f r o m the planning e x e r c i s e e m b o d i e d i n the P E S C r e p o r t .
It
should b e s u f f i c i e n t to f i n a n c e about h a l f of the i m p r o v e m e n t s
e m b o d i e d i n the L a b o u r P a r t y ' s e l e c t i o n m a n i f e s t o .
H e a g r e e d w i t h the a n a l y s i s i n the C P R S m e m o r a n d u m , i n c l u d i n g
the c o m m e n t that s o m e of h i s a s s u m p t i o n s w e r e o p t i m i s t i c .
T h e r e was a particular problem regarding defence, w h e r e , despite
the cuts i n p r o s p e c t , i t w o u l d p r o v e d i f f i c u l t to h o l d e x p e n d i t u r e
d o w n t o the p r e s e n t l e v e l , w h i c h i m p l i e d v e r y s u b s t a n t i a l
r e d u c t i o n s i n the l o n g - t e r m c o s t i n g s .
A higher growth in total
public expenditure could only be obtained i f r e a l earnings r o s e m o r e
slowly, than he had a s s u m e d .
H o w e v e r , a s the a s s u m e d l e v e l
of Ij p e r c e n t a y e a r w a s a b s o r b e d b y s p e c i a l c l a i m s , this w o u l d
i m p l y an a c t u a l f a l l i n the g e n e r a l r e a l l e v e l of e a r n i n g s , and he
d i d not b e l i e v e that w o r k e r s on the s h o p f l o o r w o u l d b e p r e p a r e d
t o a c c e p t ouch a s i t u a t i o n o v e r a f o u r y e a r p e r i o d .
I f a g r o w t h r a t e of 2 f p e r c e n t f o r p u b l i c e x p e n d i t u r e w a s a c c e p t e d ,
a n y i n c r e a s e i n one p r o g r a m m e m u s t c o m e e i t h e r f r o m r e d u c t i o n s
i n o t h e r p r o g r a m m e s o r f r o m the c o n t i n g e n c y r e s e r v e .
The
c o n t i n g e n c y r e s e r v e w h i c h Had b e e n i n c l u d e d i n the P E S C r e p o r t
r o s e to £ 1 , 000 m i l l i o n b y the end of the p e r i o d .
T h e c l a i m s on
it, particularly f r o m social security, already greatly exceeded
this f i g u r e ; and i t w o u l d b e u n w i s e t o c o m m i t i t a l l at o n c e .
He
p r o p o s e d t h e r e f o r e that o n l y half of the r e s e r v e should b e c o m m i t ­
t e d a t this s t a g e , and the a l l o c a t i o n of this w o u l d r e q u i r e f u r t h e r
discussion.
H e a s k e d the C a b i n e t t o a g r e e w i t h the r e c o m m e n d a ­
t i o n s i n p a r a g r a p h 9 o f C ( 7 4 ) 8 1 , i n c l u d i n g the p r o p o s a l that the
r a t e of g r o w t h o f p u b l i c e x p e n d i t u r e should b e h e l d t o 2 f p e r c e n t
in demand t e r m s .
H e w o u l d then d i s c u s s w i t h h i s c o l l e a g u e s the
implications for particular p r o g r a m m e s .
The Government
n e c e s s a r i l y had t o a c t under g r e a t e c o n o m i c c o n s t r a i n t ,
but
he b e l i e v e d that both the L a b o u r P a r t y and the c o u n t r y a t l a r g e
r e c o g n i s e d the p r e s e n t l i m i t e d s c o p e f o r i n c r e a s e s i n both p r i v a t e
and p u b l i c e x p e n d i t u r e .
In d i s c u s s i o n , i t w a s a r g u e d that the G o v e r n m e n t s w h o l e
e c o n o m i c p o l i c y w a s c r i t i c a l l y d e p e n d e n t on the s o c i a l c o n t r a c t .
If the T U C w e r e t o p e r s u a d e t h e i r m e m b e r s t o a d h e r e t o t h i s ,
p r o v i s i o n m u s t b e m a d e f o r the s p e c i a l c l a i m s of e q u a l p a y , the
l o w p a i d , and e f f i c i e n c y p a y m e n t s .
S o m e p a r t s of public
e x p e n d i t u r e w e r e , h o w e v e r , a l s o i m p o r t a n t f o r the s o c i a l c o n t r a c t ,
while others w e r e n e c e s s a r y to a c h i e v e g r e a t e r industrial
productivity.
If e x p e n d i t u r e had t o b e l i m i t e d t o the l e v e l s
i n d i c a t 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 , v e r y s e r i o u s
11
q u e s t i o n s of p r i o r i t i e s w o u l d a r i s e b e t w e e n the d i f f e r e n t
programmes.
I t s e e m e d i m p e r a t i v e , t h e r e f o r e , t o find s o m e
w a y out of the c o n s t r a i n t s i m p o s e d b y the c o n v e n t i o n a l a p p r o a c h ,
w h i c h had b e e n u n s u c c e s s f u l l y a d o p t e d d u r i n g the l a s t L a b o u r
Administration.
A m o r e fruitful approach might be to concentrate
on w a y s of g e t t i n g g r e a t e r i n c r e a s e s of p r o d u c t i o n .
Experience
d u r i n g the 3 - d a y w e e k i n d i c a t e d that r e m a r k a b l e i m p r o v e m e n t s
c o u l d b e o b t a i n e d ; and w i t h m o r e i n d u s t r i a l d e m o c r a c y , and a
s o c i a l c o n t r a c t , e v e n g r e a t e r i m p r o v e m e n t s should b e a t t a i n a b l e .
On the o t h e r hand, the a s s u m e d g r o w t h r a t e of 3 p e r c e n t w a s
a l r e a d y h i g h e r than the a v e r a g e a c h i e v e d d u r i n g the p o s t - w a r
p e r i o d , and e x p e r i e n c e d u r i n g that p e r i o d had i l l u s t r a t e d the
i m p r u d e n c e o f t r y i n g t o spend the f r u i t s o f g r o w t h b e f o r e t h e y had
been obtained.
I m p r o v e m e n t s i n p r o d u c t i v i t y w o u l d , i n any c a s e ,
take t i m e to m a t u r e , and i n the m e a n t i m e i t w a s e s s e n t i a l that
planning should p r o c e e d on a r e a l i s t i c b a s i s .
In f u r t h e r d i s c u s s i o n , i t w a s a r g u e d that t h e r e w a s a d a n g e r of
i n c o n s i s t e n c y b e t w e e n the d e c i s i o n s t a k e n on public e x p e n d i t u r e ,
and the m e a s u r e s o f d e m a n d m a n a g e m e n t t a k e n in the s h o r t e r
term.
In o r d e r t o d e a l w i t h the p r o s p e c t of r i s i n g u n e m p l o y m e n t
i t m i g h t b e p r e f e r a b l e to i n c r e a s e e x p e n d i t u r e p r o g r a m m e s r a t h e r
than taking m e a s u r e s l i k e the r e c e n t r e d u c t i o n i n V A T and the
i n c r e a s e i n the r e g i o n a l e m p l o y m e n t p r e m i u m , w h i c h had a l o w e r
p r i o r i t y than o t h e r e x p e n d i t u r e on i n d u s t r i a l a s s i s t a n c e .
It was
a l s o u n d e s i r a b l e t o hold d o w n the l e v e l o f the m a j o r e x p e n d i t u r e
p r o g r a m m e s , and then f i n d i t n e c e s s a r y t o spend m o n e y on
e m e r g e n c y p r o g r a m m e s o f w i n t e r w o r k s of l e s s e r v a l u e tojthe
community.
T h e a c t i o n t a k e n to m a n a g e the e c o n o m y i n the s h o r t ­
t e r m d e s e r v e d a s t h o r o u g h c o l l e c t i v e c o n s i d e r a t i o n a s the m e d i u m ' "
t e r m planning of public expenditure.
On the o t h e r hand, i t w a s
a r g u e d that m o s t public e x p e n d i t u r e did n o t p r o v i d e a s a t i s f a c t o r y
t o o l o f s h o r t - t e r m e c o n o m i c m a n a g e m e n t b e c a u s e i n c r e a s e s , once
m a d e , c o u l d not r e a d i l y b e r e v e r s e d .
Other measures therefore
had t o b e u s e d a s s h o r t - t e r m r e g u l a t o r s .
It might nevertheless
be n e c e s s a r y to t a k e s o m e a c t i o n during the c o m i n g m o n t h s t o h e l p
the c o n s t r u c t i o n i n d u s t r y w h i c h w a s f a c i n g a s e r i o u s d r o p i n a c t i v i t y .
In s u b s e q u e n t d i s c u s s i o n , the f o l l o w i n g p o i n t s w e r e m a d e : ­
a.
M o r e s o p h i s t i c a t e d a n a l y s i s w a s n e e d e d of s o m e of
the e x p e n d i t u r e f i g u r e s , s i n c e d i f f e r e n t t y p e s of e x p e n d i ­
t u r e , e g e x p e n d i t u r e on e x i s t i n g a s s e t s , t r a n s f e r p a y m e n t s ,
e t c . had d i f f e r e n t d e m a n d e f f e c t s .
M o r e information was
a l s o n e e d e d about the e f f e c t o f p u b l i c e x p e n d i t u r e on the
d i s t r i b u t i o n of i n c o m e and w e a l t h , and the i n c i d e n c e o f the
expenditure between different social c a t e g o r i e s .
For
e x a m p l e , s u b s i d i e s to n a t i o n a l i s e d i n d u s t r i e s t o e n a b l e
t h e m to h o l d d o w n t h e i r p r i c e s p r o b a b l y had the e f f e c t of
s u b s i d i s i n g the b e t t e r - o f f , as w e l l a s i n c r e a s i n g the n e e d
for capital investment.
I t should b e p o s s i b l e t o r e d e p l o y
the e x p e n d i t u r e on such s u b s i d i e s t o w a r d s s o c i a l e x p e n d i ­
t u r e , and p o s s i b l y f o o d s u b s i d i e s .
The economic
c a t e g o r i e s of e x p e n d i t u r e c o u l d a l s o b e m i s l e a d i n g .
For
example, Government assistance to private industry
a f f e c t e d t h e 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 , w h i l e the
g e n e r a l c a t e g o r y of i n v e s t m e n t included non-productive
e x p e n d i t u r e such a s the c o n s t r u c t i o n o f b i n g o - h a l l s .
C o n s i d e r a t i o n should b e g i v e n t o m e a s u r e s f o r holding
b a c k such n o n - e s s e n t i a l e x p e n d i t u r e , although i t w o u l d not
b e a p p r o p r i a t e t o i n t r o d u c e such m e a s u r e s a t a t i m e w h e n
the c o n s t r u c t i o n i n d u s t r y w a s - i n d i f f i c u l t i e s .
b.
T h e G o v e r n m e n t w o u l d b e open t o c r i t i c i s m i f public
e x p e n d i t u r e d i d not r i s e as f a s t a s the g r o s s n a t i o n a l p r o d u c t .
I t m i g h t b e w o r t h c o n s i d e r i n g w h e t h e r this c o u l d b e a c h i e v e d
b y asking t h o s e w i t h i n c o m e s a b o v e the a v e r a g e t o a c c e p t a
r e d u c t i o n i n t h e i r r e a l l e v e l of c o n s u m p t i o n .
T h e amount
of e x t r a r e v e n u e w h i c h c o u l d b e obtained f r o m this s o u r c e
was, however, v e r y small.
F o r e x a m p l e , the c o n f i s c a t i o n
of a l l i n c o m e s a b o v e £ 7 , 000 a y e a r w o u l d b r i n g i n o n l y
about £ 110 m i l l i o n .
A l t e r n a t i v e l y , i f the t h r e s h o l d f o r the
h i g h e r r a t e s of tax w e r e l o w e r e d to 1^ t i m e s the a v e r a g e
i n c o m e , this a g a i n w o u l d only b r i n g i n about £ 1 1 0 m i l l i o n .
U n d e r the C h a n c e l l o r ' s p r o p o s a l s , public
e x p e n d i t u r e w o u l d a l r e a d y b e r i s i n g n e a r l y t w i c e as f a s t
as private consumption.
c.
T h e p r o g r a m m e s d e s c r i b e d i n the P E S C r e p o r t w o u l d
i n v o l v e v e r y s u b s t a n t i a l r e d u c t i o n s , g o i n g e v e n f u r t h e r than
the cuts i m p o s e d b y the p r e v i o u s A d m i n i s t r a t i o n ; and the
difficulties would b e further intensified by demographic
changes.
In e d u c a t i o n , no p r o v i s i o n could b e m a d e i n
1975-76 f o r n u r s e r y e d u c a t i o n o r f o r the r e p l a c e m e n t of
o b s o l e t e s c h o o l b u i l d i n g s ; and t h e r e w o u l d n e e d t o b e cuts
i n the p r o g r a m m e s f o r h a n d i c a p p e d c h i l d r e n , n o n - a d v a n c e
f u r t h e r e d u c a t i o n , and h i g h e r e d u c a t i o n , as w e l l a s
i n c r e a s e s in school m e a l c h a r g e s .
In h e a l t h and s o c i a l
s e r v i c e s , many important projects would be d e f e r r e d for
up t o t h r e e y e a r s .
T h e a v e r a g e l i f e o f the s t o c k of
h o s p i t a l b u i l d i n g s , w h i c h w o u l d h a v e b e e n about 50 y e a r s
under the p r o g r a m m e e n v i s a g e d b y the p r e v i o u s
A d m i n i s t r a t i o n , w o u l d b e pushed up t o w a r d s 60 y e a r s .
T h e r e would a l s o b e a backlog in maintenance expenditure
of about £100 m i l l i o n .
T h e housing p r o g r a m m e w a s i n
s e r i o u s t r o u b l e , and the cuts i n t r a n s p o r t e x p e n d i t u r e had
b e e n taken t o the p o i n t w h e r e t h e r e w a s a d a n g e r of
c o l l a p s e i n the t r a n s p o r t s e r v i c e s .
T h e cuts i n w a t e r and
s e w e r a g e w o u l d a l s o b e v e r y d a m a g i n g , and w o u l d i m p e d e
the g r o w t h of h o u s i n g .
d.
On the o t h e r hand, the s t a n d a r d s s e t f o r e q u i p m e n t
and b u i l d i n g s i n t h e e d u c a t i o n and h o s p i t a l p r o g r a m m e s
s e e m e d i n s o m e c a s e s t o b e unduly l a v i s h i n the p r e s e n t
and f o r e s e e a b l e e c o n o m i c c i r c u m s t a n c e s .
Unnecessary
constraints w e r e being imposed by increasingly expensive
technologies.
I t w a s a r g u a b l e that i t w o u l d b e b e t t e r t o
c u t d o w n on s t a n d a r d s i n o r d e r t o e n a b l e m o r e p r o j e c t s to
go forward.
S i m i l a r l y , m a n y young c o u p l e s m i g h t p r e f e r
t o s e e a p r o g r a m m e of c h e a p e r housing r a t h e r than h a v e to
w a i t f o r y e a r s t o obtain a h o u s e .
i(
e.
T h e p r e s s u r e on l o c a l a u t h o r i t y r a t e s w a s b e c o m i n g
v e r y s e r i o u s , and a t t e m p t s to r e s t r a i n t h e i r e x p e n d i t u r e b y
m e a n s o f the r a t e s u p p o r t g r a n t had b e e n u n s u c c e s s f u l .
A
s i m i l a r p r e s s u r e o n the r a t e s could b e e x p e c t e d i n S c o t l a n d
i n 1975, w h e n r e o r g a n i s a t i o n t o o k e f f e c t t h e r e .
The
G o v e r n m e n t ' s a p p r o a c h t o l o c a l a u t h o r i t i e s on e x p e n d i t u r e
q u e s t i o n s should b e c o n s i s t e n t ; i t w a s w r o n g f o r the
G o v e r n m e n t to b e s e n d i n g out c i r c u l a r s e n c o u r a g i n g
i m p r o v e m e n t s i n a w i d e r a n g e of s e r v i c e s at the s a m e t i m e
a s they w e r e exhorting authorities to r e s t r a i n their total
expenditure.
f.
G i v e n the c o n s t r a i n t s on p r i v a t e c o n s u m p t i o n and
p u b l i c e x p e n d i t u r e as a w h o l e , the d i s c u s s i o n of i n d i v i d u a l
p r o g r a m m e s m u s t p r o c e e d on the b a s i s that no e x p e n d i t u r e
should b e r e g a r d e d as s a c r o s a n c t , and any n e w p r o p o s a l s
should b e s u b j e c t t o p a r t i c u l a r l y s e a r c h i n g s c r u t i n y .
It
w a s u n r e a l i s t i c to s u p p o s e that t h e r e c o u l d b e a n y e s c a p e
f r o m these constraints b y going over to a siege economy.
A s o l u t i o n w o u l d h a v e t o b e found w i t h i n the f r a m e w o r k of a
m i x e d e c o n o m y , with a suitable blend of g r e a t e r industrial
e f f i c i e n c y and s o c i a l i d e a l i s m .
g.
If the G o v e r n m e n t w e r e p r e p a r e d to t a k e the p e o p l e i n t o
t h e i r c o n f i d e n c e , t h e r e w e r e r e a s o n a b l e grounds f o r b e l i e v i n g
that they w o u l d r e s p o n d to a c a l l to put f i r s t things f i r s t .
It
w o u l d , h o w e v e r , b e n e c e s s a r y t o g e t a g r e a t e r m e a s u r e of
u n d e r s t a n d i n g that i n c r e a s e d s o c i a l e x p e n d i t u r e f o r m e d a
p a r t of the t o t a l s t a n d a r d of l i v i n g of the c o m m u n i t y .
It
w o u l d a l s o b e n e c e s s a r y t o e x p l a i n f r a n k l y the l i m i t a t i o n s
on the r e a l i m p r o v e m e n t i n the s t a n d a r d of l i v i n g d u r i n g
the c o m i n g y e a r s .
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 had had a m o s t v a l u a b l e f i r s t d i s c u s s i o n of the p r o b l e m
w h i c h faced them in a p a r t i c u l a r l y difficult situation.
A number
o f i m p o r t a n t p o i n t s had b e e n m a d e .
F o r e x a m p l e , a t t e n t i o n had
b e e n d r a w n t o the c r i t i c a l i m p o r t a n c e of the u n d e r l y i n g g r o w t h i n
p r o d u c t i o n , i n w h i c h i t had b e e n s u g g e s t e d that s p e c t a c u l a r
i m p r o v e m e n t s might be obtainable.
P u b l i c e x p e n d i t u r e plans
c o u l d n o t b e b a s e d on such a n a s s u m p t i o n , w h i c h e v e n i f
r e a l i s a b l e w o u l d p r o b a b l y n o t a f f o r d m u c h h e l p i n the e a r l i e r y e a r s .
T h e S e c r e t a r i e s of S t a t e f o r E m p l o y m e n t and I n d u s t r y should
h o w e v e r circulate a joint paper indicating c o n c r e t e steps which
they c o n s i d e r e d would help to p r o m o t e m o r e rapid g r o w t h .
The
C P U S should e x a m i n e the s c o p e b o t h f o r s a v i n g s and f o r w i d e r
p r o v i s i o n t h r o u g h g r e a t e r a u s t e r i t y i n the s t a n d a r d s o f e q u i p m e n t
and b u i l d i n g s f i n a n c e d f r o m public s e c t o r p r o g r a m m e s , i n c l u d i n g
the p o s s i b i l i t y of l o w c o s t h o u s i n g .
T h e C h a n c e l l o r o f the
E x c h e q u e r , i n c o n s u l t a t i o n w i t h the C P R S , should a l s o e x a m i n e
the o t h e r p o i n t s m a d e i n d i s c u s s i o n : i n p a r t i c u l a r , t h e r e should
b e a study of w a y s o f r e s t r i c t i n g l e s s - e s s e n t i a l c o n s t r u c t i o n
e x p e n d i t u r e i n the p r i v a t e s e c t o r ; and p o s s i b l y of a v o i d i n g
e m e r g e n c y w i n t e r - w o r k ' p r o g r a m m e s w h i c h tended t o d i s t o r t
priorities between projects.
In the m e a n t i m e the C a b i n e t
a p p r o v e d , a s a g e n e r a l g u i d e l i n e , the o v e r a l l t a r g e t f o r public
e x p e n d i t u r e p r o p o s e d i n p a r a g r a p h 9a of C ( 7 4 ) 8 1 .
They also
a g r e e d that s e p a r a t e d i s c u s s i o n w o u l d b e n e e d e d of e x p e n d i t u r e on
the m a t t e r s l i s t e d i n p a r a g r a p h 9b and d of that p a p e r , and the
C h a n c e l l o r of the E x c h e q u e r should a r r a n g e t h i s a s n e c e s s a r y .
A s r e g a r d s the o t h e r p r o g r a m m e s , M i n i s t e r s should r e f l e c t on the
p o s i t i o n i n the l i g h t of the C a b i n e f s d i s c u s s i o n and the C h a n c e l l o r ^
p a p e r , and should then h a v e b i l a t e r a l talks w i t h the C h a n c e l l o r
of the E x c h e q u e r .
In the l i g h t of t h e s e t a l k s , the C h a n c e l l o r of
the E x c h e q u e r should c i r c u l a t e a f u r t h e r p a p e r a s e a r l y as p o s s i b l e
in S e p t e m b e r , summarising departmental proposals for additional
e x p e n d i t u r e and s u g g e s t i n g w h e r e any n e c e s s a r y c o u n t e r v a i l i n g
s a v i n g s m i g h t b e found.
A t that s t a g e , M i n i s t e r s m i g h t w i s h t o
c i r c u l a t e p a p e r s o f t h e i r o w n t o C a b i n e t , but t h e y should not d o s o
until a f t e r the b i l a t e r a l t a l k s had b e e n c o m p l e t e d .
1
T h e Cabinet ­
1.
T o o k n o t e , w i t h a p p r o v a l , of 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 b y the P r i m e M i n i s t e r .
2.
A p p r o v e d as a g e n e r a l g u i d e l i n e the r e c o m m e n d a t i o n
i n p a r a g r a p h 9a of C ( 7 4 ) 8 1 .
3.
I n v i t e d the C h a n c e l l o r of the E x c h e q u e r , i n the
l i g h t of h i s f u r t h e r b i l a t e r a l d i s c u s s i o n s w i t h
M i n i s t e r s , to circulate a further m e m o r a n d u m to
the C a b i n e t as p r o p o s e d b y the P r i m e M i n i s t e r i n his
summing up.
10
4.
I n v i t e d the S e c r e t a r i e s of State f o r
E m p l o y m e n t and I n d u s t r y t o c i r c u l a t e a j o i n t
paper containing specific proposals f o r i n c r e a s i n g
the u n d e r l y i n g r a t e of e c o n o m i c g r o w t h .
5.
I n v i t e d the C h a n c e l l o r o f the E x c h e q u e r and
the C e n t r a l P o l i c y R e v i e w Staff to e x a m i n e the
other points m a d e i n discussion, as indicated by
the P r i m e M i n i s t e r i n h i s s u m m i n g u p .
11
3.
T h e C a b i n e t had b e f o r e t h e m a m e m o r a n d u m b y the
L o r d P r e s i d e n t of the C o u n c i l ( C ( 7 4 ) 82) about G o v e r n m e n t
a s s i s t a n c e t o m a i n t a i n e m p l o y m e n t a t the f a c t o r y of the f o r m e r
International P r o p e r t y Development (Industrial) L t d ( I P D
( I n d u s t r i a l ) ) at K i r k b y .
T H E S E C R E T A R Y O F S T A T E F O R I N D U S T R Y s a i d that the
M i n i s t e r i a l C o m m i t t e e on P u b l i c E n t e r p r i s e had a g r e e d on
11 June that I P D I n d u s t r i a l should b e a l l o w e d t o g o i n t o r e c e i v e r ­
s h i p , and that a f e a s i b i l i t y study s h o u l d b e u n d e r t a k e n t o s e e i f a
v i a b l e s c h e m e could b e found f o r the u s e of the f a c t o r y .
H e had
b e e n a u t h o r i s e d to t e l l the R e c e i v e r that the G o v e r n m e n t w o u l d
b e a p o t e n t i a l b u y e r f o r t h e f a c t o r y and should b e g i v e n an
opportunity t o b i d b e f o r e i t w a s s o l d t o a t h i r d p a r t y ; and to t e l l
t h e u n i o n s , w i t h o u t c o m m i t m e n t , that the G o v e r n m e n t w e r e d o i n g
t h e i r u t m o s t t o find a w a y t o e n a b l e e m p l o y m e n t t o b e p r o v i d e d
f o r the w o r k f o r c e .
Consultants had b e e n c o m m i s s i o n e d to
p r e p a r e a f e a s i b i l i t y study f o r the u s e of the f a c t o r y ; i t w a s
e s t i m a t e d that this w o u l d t a k e about s i x m o n t h s t o c o m p l e t e .
T h e R e c e i v e r had s a i d he c o u l d p r o v i d e e m p l o y m e n t f o r 450
w o r k e r s a t the f a c t o r y , t o m a i n t a i n the v i a b l e p a r t s of I P D
( I n d u s t r i a l s f o r m e r a c t i v i t y , but the w o r k f o r c e had r e f u s e d t o
a c c e p t this and had s a t i n , i n s i s t i n g that j o b s m u s t b e found f o r
everyone.
H e had p r o p o s e d to the M i n i s t e r i a l C o m m i t t e e on I n d u s t r i a l
D e v e l o p m e n t ( I D V ) on 23 J u l y that the G o v e r n m e n t should a c q u i r e
the a s s e t s f r o m the R e c e i v e r and e n g a g e the c o n s u l t a n t s t o
m a n a g e the e n t e r p r i s e to g i v e e m p l o y m e n t t o an a d d i t i o n a l 150 m e n
f o r s i x months on a b r e a k e v e n b a s i s , w h i l e r e s e a r c h f o r o t h e r
w a y s of using the p l a n t w e n t on; and that the u n u t i l i s e d 500
w o r k e r s should b e m a i n t a i n e d on f u l l p a y .
T h e m a j o r i t y of the
C o m m i t t e e , w i t h the C h i e f S e c r e t a r y , T r e a s u r y r e s e r v i n g the
C h a n c e l l o r of the E x c h e q u e r s p o s i t i o n , had b e e n p r e p a r e d t o a g r e e
t o the a c q u i s i t i o n of the a s s e t s t o e n s u r e e m p l o y m e n t f o r 600 m e n , '
a l t h o u g h t h e y had n o t a g r e e d t o the f u r t h e r p r o p o s a l that the
u n u t i l i s e d w o r k e r s should b e r e t a i n e d .
H e had now h e a r d h o w e v e r that the w o r k e r s w e r e p r e p a r e d t o s h a r e
out the j o b s a v a i l a b l e s o that no m o r e than 450 w o u l d b e e m p l o y e d
&nd o n the p a y r o l l a t any one t i m e .
On this b a s i s t h e y w o u l d
c o - o p e i e t e w i t h the R e c e i v e r w h o , f o r h i s p a r t , w o u l d r e l e a s e
h o l i d a y pay at p r e s e n t h e l d i n a b l o c k e d a c c o u n t .
He therefore
sought a g r e e m e n t t o the G o v e r n m e n t a c q u i r i n g the a s s e t s t o
p r o v i d e e m p l o y m e n t i n the w a y h e had d e s c r i b e d .
12
CONFIDENTIAL
T H E P R I M E M I N I S T E R , s u m m i n g up a b r i e f d i s c u s s i o n , said that
the S e c r e t a r y of State f o r I n d u s t r y should t e l l the R e c e i v e r that
the G o v e r n m e n t r e m a i n e d a p o t e n t i a l b u y e r f o r the f a c t o r y and
m i g h t put i n a b i d ; but h e should not o f f e r t o a c q u i r e the a s s e t s
a t this s t a g e .
T h e p r o p o s a l f o r s h a r i n g out the j o b s t h e
R e c e i v e r c o u l d o f f e r a p p e a r e d t o g e t o v e r the e a r l i e r d i f f i c u l t y
of paying 500 m e n f o r w h o m t h e r e w o u l d b e n o w o r k , but the
S e c r e t a r y of State should a r r a n g e f o r this t o b e u r g e n t l y
e x a m i n e d b y b i s o f f i c i a l s , i n c o n s u l t a t i o n w i t h the T r e a s u r y and
the D e p a r t m e n t o f E m p l o y m e n t .
I f n e c e s s a r y , he should b r i n g
the m a t t e r b a c k t o the C a b i n e t e a r l y i n t h e f o l l o w i n g w e e k .
The Cabinet T o o k n o t e , with a p p r o v a l , of the P r i m e M i n i s t e r ' s
s u m m i n g up of t h e i r d i s c u s s i o n and i n v i t e d the
S e c r e t a r y of State f o r I n d u s t r y t o b e g u i d e d
accordingly.
4.
T h e C a b i n e t had b e f o r e t h e m 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 ( 7 4 ) 7 8 ) about p r o g r a m m e a n a l y s i s
and r e v i e w ( P A R ) .
T H E C H I E F S E C R E T A R Y , T R E A S U R Y , i n v i t e d the C a b i n e t t o
e n d o r s e the p r o p o s a l that P A R should continue on the b a s i s o f the
p r o c e d u r e outlined i n A n n e x 1 t o C ( 7 4 ) 7 8 .
The memorandum
e x p l a i n e d that P A R w a s a s e l e c t i v e p r o g r a m m e of a n a l y t i c a l
s t u d i e s taking p a r t i c u l a r a s p e c t s of p o l i c y i n t u r n o v e r t i m e .
T h e s y s t e m h a d o r i g i n a l l y b e e n i n t e n d e d t o o p e r a t e on an annual
c y c l e , but this had p r o v e d t o o r i g i d ; none t h e l e s s the c o n c e p t
i t s e l f w a s v a l u a b l e , and the a r r a n g e m e n t f o r c e n t r a l r e v i e w and
c o l l e c t i v e c o n s i d e r a t i o n b y M i n i s t e r s h e l p e d t o c o u n t e r the
i n e r t i a i n e x p e n d i t u r e p r o g r a m m e s and e n s u r e that the options
The procedure
for new p r o g r a m m e s w e r e p r o p e r l y exposed.
n o w r e c o m m e n d e d w o u l d r e t a i n the i n t e r d e p a r t m e n t a l m a c h i n e r y
f o r f o r m u l a t i n g the p r o g r a m m e c o l l e c t i v e l y , t h r o u g h a c o m m i t t e e
o f o f f i c i a l s under the s a m e T r e a s u r y c h a i r m a n s h i p a s the P u b l i c
E x p e n d i t u r e S u r v e y C o m m i t t e e ; and the c e n t r a l D e p a r t m e n t s and
the C e n t r a l P o l i c y R e v i e w Staff w o u l d continue t o b e i n v o l v e d both
i n t h i s p r o c e s s and a t k e y s t a g e s i n e a c h i n d i v i d u a l study; i t
w o u l d h o w e v e r d i s c a r d the r i g i d i t y of a s t r i c t annual c y c l e .
The
m e m o r a n d u m a l s o r e c o m m e n d e d that t h e r e should b e no c h a n g e
i n the p r e v i o u s p r a c t i c e w h e r e b y the l i s t of s u b j e c t s under study
w a s not p u b l i c l y r e v e a l e d .
The Cabinet Approved C(74) 78.
Cabinet Office
28 J u l y 1974
13
CONFIDENTIAL