(c) crown copyright
Catalogue Reference:CAB/128/57/19
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S DOCUMENT IS T H E P R O P E R T Y
:C
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
( 7 5 ) 49th
o r*
6 3 COPY NO
Conclusions CABINET C O N C L U S I O N S of a M e e t i n g of the 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 T U E S D A Y 18 N O V E M B E R
1975 at 2 30 p m 0
P R E S E N T
T h e R t Hon H a r o l d W i l s o n
P r i m e Minister MP The Rt Hon E d w a r d S h o r t M P
T h e R t Hon J a m e s C a l l a g h a n
Lord P r e s i d e n t o f the C o u n c i l
S e c r e t a r y of S t a t e f o r F o r e i g n
Commonwealth Affairs The Rt Hon L o r d
Lord C h a n c e l l o r
T h e R t Hon R o y Jenkins
Elwyn-Jones
MP and MP
S e c r e t a r y o f S t a t e f o r the H o m e
Department
The Rt Hon D e n i s H e a l e y
MP
T h e R t Hon A n t h o n y C r o s l a n d
Chancellor of t h e E x c h e q u e r
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
The Rt Hon A n t h o n y W e d g w o o d B e n n
Secretary o f S t a t e f o r E n e r g y
(Items 1-4)
Jhe Rt Hon B a r b a r a C a s t l e
Secretary o f S t a t e f o r
Consumer
Protection
T h e R t Hon E r i c V a r l e y
Services
S e c r e t a r y of State f o r
T h e R t Hon R o y M a s o n
(Items
MP
S e c r e t a r y of S t a t e f o r P r i c e s and
MP
Secretary o f S t a t e f o r T r a d e
The Rt Hon W i l l i a m R o s s
T h e R t Hon S h i r l e y W i l l i a m s
MP
MP
Secretary o f S t a t e f o r S o c i a l
fhe Rt Hon P e t e r S h o r e
MP
1-3)
S e c r e t a r y of State f o r
MP
MP
Industry
MP
Defence
T h e R t Hon John M o r r i s Q C
Scotland
S e c r e t a r y of State f o r
Ihe Rt Hon F r e d P e a r t M P
^inister o f A g r i c u l t u r e , F i s h e r i e s
fnd Food
MP
Wales
T h e R t Hon H a r o l d L e v e r M P
C h a n c e l l o r o f the D u c h y of L a n c a s t e r
i
The Rt Hon L o r d S h e p h e r d
The Rt Hon Reginald Prentice
fiord P r i v y S e a l
M i n i s t e r for
The Rt Hon R o b e r t M e l l i s h
Parliamentary Secretary,
ALSO
Overseas
MP
Development
MP
Treasury
PRESENT
The Rt Hon 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 ( I t e m 5 )
The L o r d Crowther-Hunt
M i n i s t e r of S t a t e , D e p a r t m e n t of
E d u c a t i o n and S c i e n c e ( I t e m 5)
SECRETARIAT
Sir John Hunt
M r G R D e n m a n ( I t e m s 2 and 3)
M r P B e n n e r ( I t e m s 1, 3 and 4 )
M r D L P e a r s o n ( I t e m 3)
M r T F 3 r e n c h l e y ( I t e m 2)
M r J A M a r s h a l l ( I t e m s 5 and 6)
Mr A D Gordon-Brown (Item 4)
M r A M M a c p h e r s o n ( I t e m s 5 and 6)
M r W R T o m k y s ( I t e m 2)
C ONTE
Item
Subject
1.
PARLIAMENTARY AFFAIRS
2.
FOREIGN
3.
14.
NTS
Page
1
AFFAIRS
Iceland
1
E c o n o m i c Summit
3
DIRECT ELECTIONS TO THE EUROPEAN COMMUNITY
5
SPEAKER'S CONFERENCE
8
ON E L E C T O R A L
LAW
5.
RATE SUPPORT GRANT
10
­
JUNIOR HOSPITAL DOCTORS
14
6
ii
K L I A ME N T A R Y
1
IF A IRS
H o u s e of C o m m o n s d u r i n g the f o l l o w i n g
OREIGN
2.
FFAIRS
t h a t the M i n i s t e r of State f o r F o r e i g n and C o m m o n w e a l t h
0
T h e C a b i n e t w e r e i n f o r m e d o f t h e b u s i n e s s t o b e t a k e n in the
week.
THE FOREIGN A N D C O M M O N W E A L T H S E C R E T A R Y
said
Affairs,
M e H a t t e r siey, had returned f r o m R e y k j a v i k without r e a c h i n g
a g r e e m e n t with t h e I c e l a n d i c G o v e r n m e n t on f i s h e r i e s .
leland
any
W h e r e a s the
D e f e n c e and O v e r s e a P o l i c y C o m m i t t e e had g i v e n h i m a m a n d a t e t o
revious
leference:
1(75)
45th
lonclusions,
linute 3
s e t t l e f o r 100^000 t o n s , t h e B r i t i s h f i s h i n g i n d u s t r y , j u s t b e f o r e
departure for Reykjavik,
his
h a d s a i d t h a t t h e y w o u l d s u p p o r t the
G o v e r n m e n t on a n a g r e e m e n t a s l o w a s 8 0 , 0 0 0 t o n s i f
necessary,
t h o u g h he w a s n o t s u r e h o w f i r m t h e y w e r e o n that p o i n t .
However,
M r H a t t e r s l e y h a d found t h e I c e l a n d i c G o v e r n m e n t u n w i l l i n g t o m a k e
a n y a d v a n c e o n t h e i r o f f e r of 6 5 , 000 t o n s e x c e p t to the v e r y
minor
e x t e n t t h a t t h e y w e r e w i l l i n g t o i n t e r p r e t t h i s as 6 5 , 000 t o n s o f c o d
o n l y , w h i c h m i g h t m e a n a t o t a l c a t c h o f 7 0 , 000 tonSj, a l l o w i n g f o r
s p e c i e s o f f i s h caught by a c c i d e n t ,
other
M r H a t t e r s l e y had r e d u c e d o u r b i d
f r o m 130, 000 t o n s t o 110, 000 t o n s a n d had h i n t e d at h i s w i l l i n g n e s s t o
c o m e d o w n f u r t h e r if the I c e l a n d i c s i d e c o u l d m a k e a f u r t h e r
advance.
T h e y had h o w e v e r b e e n u n w i l l i n g to m a k e a n y m o v e to b r i d g e the g a p ,
a n d he h a d j u d g e d i t t a c t i c a l l y i n a d v i s a b l e t o o f f e r a n y
concession at this stage,
further
M r H a t t e r s l e y ' s a s s e s s m e n t w a s that t h e r e
w a s n o p o i n t in m a k i n g a n e w a p p r o a c h t o t h e I c e l a n d e r s f o r a f e w
weeks.
In t h e s h o r t t e r m the I c e l a n d i c f i s h i n g i n d u s t r y w a s l o s i n g
t h r o u g h t h e l a c k o f an a g r e e m e n t ,
since our industry would be able to
g o o n c a t c h i n g u p t o 130, 000 t o n s a y e a r .
Moreover,
the I c e l a n d i c
G o v e r n m e n t might well be able to r e a c h a b i l a t e r a l a g r e e m e n t
the F e d e r a l G e r m a n G o v e r n m e n t in the v e r y n e a r f u t u r e ;
with
at t h a t
p o i n t i t w o u l d b e t h e i r l a c k of a g r e e m e n t w i t h u s w h i c h w o u l d p r e v e n t
t a r i f f " f r e e a c c e s s t o the C o m m u n i t y m a r k e t f o r I c e l a n d i c f i s h ,
t h e p r o v i s i o n s o f P r o t o c o l 6.
I c e l a n d e r s t o r e t u r n to the c o n f e r e n c e t a b l e .
further ahead,
under
T h e s e f a c t o r s might persuade the
However,
looking
i t w a s l i k e l y t h a t t h e c o n c e p t of a Z O C ^ m i l e
E c o n o m i c Z o n e would r e c e i v e further
Exclusive
s u p p o r t a t t h e s e s s i o n of the
U n i t e d N a t i o n s L a w of the Sea C o n f e r e n c e
( U N L O S C ) next
spring.
T h i s m i g h t l e a d t o action b y a d d i t i o n a l c o u n t r i e s , p a r t i c u l a r l y the
United States of A m e r i c a ,
200-mile limit,
to c l a i m e x c l u s i v e f i s h i n g r i g h t s w i t h i n a
w h i c h in t u r n w o u l d s t r e n g t h e n the I c e l a n d i c
position.
H e had a s k e d M r H a t t e r s l e y t o p r e p a r e a p a p e r f o r the D e f e n c e
O v e r s e a P o l i c y C o m m i t t e e and in i t to d e a l with both o a r
and
negotiating
p o s i t i o n f o r the n e x t r o u n d of t a l k s a n d t h e s i t u a t i o n w e w e r e l i k e l y t o
f a c e a f t e r t h e n e x t s e s s i o n of U N L O S C ,
M e a n w h i l e , t h e r e w a s the
p r o b l e m of p r o t e c t i o n f o r o u r f i s h i n g v e s s e l s .
Even
before
M r H a t t e r s l e y a r r i v e d in I c e l a n d o n 15 N o v e m b e r t h e I c e l a n d i c
coast­
guard had cut the w a r p s o f t w o of our t r a w l e r s ;
had
made a v i g o r o u s p r o t e s t t o the Icelandic F o r e i g n
M r Hattersley
Minister,
M r Agustsson.,
H e u n d e r s t o o d that t h e t h r e e c i v i l i a n f i s h e r y ­
p r o t e c t i o n v e s s e l s we had c h a r t e r e d w e r e a l r e a d y on t h e i r way t o the
fishing grounds.
It m i g h t a l s o b e n e c e s s a r y to r e c o n s i d e r the p e r i o d
of n o t i c e at w h i c h R o y a l N a v y ships w e r e b e i n g h e l d .
The Defence
and O v e r s e a P o l i c y C o m m i t t e e had i d e n t i f i e d f o u r l e v e l s of
p r o t e c t i o n f o r our t r a w l e r s .
"VVe s e e m e d t o b e p r o c e e d i n g r a p i d l y
t h r o u g h t h e f i r s t t h r e e of t h e s e and icnight s o o n b e i n t o the f o u r t h l e v e l
at w h i c h R o y a l N a v y s h i p s w o u l d be r e q u i r e d to t a k e . a c t i o n .
I n d i s c u s s i o n i t w a s a r g u e d t h a t the r e o p e n i n g of n e g o t i a t i o n s s h o u l d
b e r e g a r d e d as an u r g e n t m a t t e r since o t h e r w i s e t h e r e w e r e bound t o
b e u n p l e a s a n t i n c i d e n t s w h i c h w o u l d i n f l a m e o p i n i o n and m a k e
negotiations m o r e difficult.
On the o t h e r h a n d i t s e e m e d t h a t t h e
p r e s e n t m o o d of t h e I c e l a n d e r s w a s t o p o c k e t w h a t e v e r c o n c e s s i o n s
w e o f f e r e d and a s k f o r m o r e , i n w h i c h c a s e a n e a r l y r e s u m p t i o n of
talks with t h e m would be u n d e s i r a b l e .
T h e M i n i s t e r of A g r i c u l t u r e ,
F i s h e r i e s and F o o d w o u l d be having a m e e t i n g with the B r i t i s h f i s h i n g
i n d u s t r y r e p r e s e n t a t i v e s on 19 N o v e m b e r , at w h i c h t h e i r a t t i t u d e t o a
s e t t l e m e n t o n a c a t c h a s l o w a s 80^ 000 t o n s c o u l d b e c l a r i f i e d .
As
f o r p r o t e c t i o n o f t h e f i s h i n g f l e e t the G o v e r n m e n t h a d m o v e d m o r e
d e c i s i v e l y than the last A d m i n i s t r a t i o n ,
The three civilian fishery
protection v e s s e l s a l r e a d y c h a r t e r e d w e r e m o v i n g into position now
and w o u l d b e r e a d y to s t a r t p r o v i d i n g p r o t e c t i o n off I c e l a n d w i t h i n
24 h o u r s .
T h e y w e r e g o o d s e a g o i n g v e s s e l s and s u f f i c i e n t l y s t r o n g l y
c o n s t r u c t e d to d e t e r an I c e l a n d i c gunboat by i n t e r p o s i n g t h e m s e l v e s
b e t w e e n t h e g u n b o a t and B r i t i s h t r a w l e r s .
But t h e y w e r e s l o w e r than
t h e g u n b o a t s and f o r t h i s r e a s o n a f a s t tug w a s a l s o b e i n g c h a r t e r e d
which would have sufficient speed to be able to shadow a gunboat.
D u r i n g t h e l a s t c o d w a r f i v e c i v i l i a n p r o t e c t i o n v e s s e l s had p r o v e d
s u f f i c i e n t l y e f f e c t i v e f o r f i s h i n g t o c o n t i n u e f o r 12 m o n t h s b e f o r e R o y a l
Navy ships b e c a m e involved.
On t h i s o c c a s i o n i t w a s p o s s i b l e that
the B r i t i s h industry m i g h t a s k f o r m u c h e a r l i e r R o y a l N a v y i n t e r ­
vention.
T h e p r e s e n t a v a i l a b i l i t y of f r i g a t e s w a s that H M S L e o p a r d
w a s off N o r t h N o r w a y and c o u l d be in p o s i t i o n off I c e l a n d within t h r e e
days.
H M S Lowestoft was in transit f r o m H a m b u r g to Portsmouth
and c o u l d , i f the s i t u a t i o n r e q u i r e d , g o on t o R o s y t h , s o a s t o b e
c l o s e r to I c e l a n d i c w a t e r s .
A m o r e immediate m e a s u r e , which
m i g h t b e u s e f u l t o o u r t r a w l e r s and w o u l d a l s o d e m o n s t r a t e the
G o v e r n m e n t s d e t e r m i n a t i o n to p r o v i d e p r o t e c t i o n , would be f o r a
N i m r o d r e c o n n a i s s a n c e a i r c r a f t to f l y t o a p o s i t i o n o f f I c e l a n d a t d a w n
t h e f o l l o w i n g d a y ; the h o u r s o f d a y l i g h t w o u l d s u f f i c e f o r i t t o s u r v e y
t h e f i s h i n g a r e a s b e t w e e n 12 a n d 50 m i l e s o f f the I c e l a n d i c c o a s t i n a
s i n g l e r e c o n n a i s s a n c e , a l t h o u g h it w o u l d not be a b l e to c o v e r t h e w h o l e
200-mile zone.
No i n f r i n g e m e n t of Icelandic a i r space would be
i n v o l v e d , and t h e a i r c r a f t w o u l d b e a b l e t o w a r n t r a w l e r s if I c e l a n d i c
gunboats w e r e in the v i c i n i t y .
In f u r t h e r d i s c u s s i o n d i s e p p o i n t m e n t w a s e x p r e s s e d t h a t the F e d e r a l
G e r m a n G o v e r n m e n t s e e m e d t o b e on the p o i n t of c o n c l u d i n g an
a g r e e m e n t with Iceland without r e g a r d t o our position: on the other
h a n d i t w a s p o i n t e d out t h a t such an a g r e e m e n t w o u l d n o t i n a n y w a y
w e a k e n our b a r g a i n i n g s t r e n g t h d e r i v e d f r o m P r o t o c o l 6, s i n c e the
I c e l a n d e r s c o u l d n o t g e t t a r i f f - f r e e a c c e s s t o the C o m m u n i t y m a r k e t
f o r t h e i r f i s h u n t i l t h e y had r e a c h e d a g r e e m e n t w i t h a l l m e m b e r s of
the C o m m u n i t y c o n c e r n e d .
It w a s s u g g e s t e d t h a t a. t h r e a t of e x t e n s i o n
o f t h e U n i t e d K i n g d o m f i s h i n g l i m i t t o 200 m i l e s w o u l d b r i n g p r e s s u r e
o n t h e I c e l a n d e r s s i n c e s o m e of t h e i r t r a w l e r s f i s h e d f o r h e r r i n g off
the B r i t i s h c o a s t s .
On the o t h e r hand i t w a s p o i n t e d out t h a t , q u i t e
a p a r t f r o m t h e i n t e r n a t i o n a l d i f f i c u l t i e s t h a t such a t h r e a t w o u l d
i n v o l v e ^ , t h e I c e l a n d e r s s e e m e d r e a d y f o r r e a s o n s of c o n s e r v a t i o n t o
a g r e e t o a t o t a l b a n o n h e r r i n g c a t c h e s i n the N o r t h S e a , in w h i c h c a s e
t h e i r fishing off B r i t i s h c o a s t s w o u l d in any c a s e c o m e t o an e n d .
It
w a s s u g g e s t e d that a m e s s a g e t o the P r i m e M i n i s t e r w h i c h w a s
r e p o r t e d t o b e on i t s w a y f r o m t h e I c e l a n d i c P r i m e M i n i s t e r m i g h t
p r o v i d e an o p p o r t u n i t y f o r a r e o p e n i n g o f n e g o t i a t i o n s : h o w e v e r it
s e e m e d that t h i s m e s s a g e would c o n t a i n l i t t l e m o r e than a p l e a f o r
s p e c i a l c o n s i d e r a t i o n f o r I c e l a n d ^ d i f f i c u l t i e s and w o u l d n o t a d v a n c e
the negotiations in any w a y ,
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 , said that
M r H a t t e r s l e y ' s p a p e r should be c i r c u l a t e d as soon a s p o s s i b l e f o r
c o n s i d e r a t i o n b y t h e D e f e n c e and O v e r s e a P o l i c y C o m m i t t e e ,
The
speed with which p r o t e c t i o n b y c i v i l i a n v e s s e l s was b e i n g p r o v i d e d w a s
satisfactory.
F o r the t i m e b e i n g t h e r e w a s no n e e d to d o m o r e than
t a k e n o t e of t h e c u r r e n t s t a t e o f r e a d i n e s s of R o y a l N a v y f r i g a t e s .
H o w e v e r t h e C a b i n e t a u t h o r i s e d t h e u s e of N i m r o d s f o r o n e o r m o r e
r e c o n n a i s s a n c e f l i g h t s o f f I c e l a n d , s u b j e c t t o c o n s u l t a t i o n b e t w e e n the
S e c r e t a r y of S t a t e f o r D e f e n c e a n d t h e 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 o n t h e t i m i n g of such f l i g h t s .
The Cabinet
1.
­
T o o k n o t e , with a p p r o v a l , of the
Ministers
s u m m i n g up o f t h e i r
Prime discussion. T H E P R I M E M I N I S T E R s a i d t h a t a l l w h o had p a r t i c i p a t e d i n t h e S u m m i t
at R a m b o u i l l e t w e r e a g r e e d t h a t i t h a d b e e n m o r e s u c c e s s f u l than had
been expected.
P r e s i d e n t F o r d had b e e n v e r y o p t i m i s t i c a b o u t t h e
s t r e n g t h of the United States e c o n o m i c r e c o v e r y , but o t h e r s had b e e n
m o r e c a u t i o u s and h e h a d h i m s e l f e x p r e s s e d h i s c o n c e r n l e s t t h e
upturn b e c h o k e d off b y r e n e w e d i n f l a t i o n o r a t t e m p t s t o c o r r e c t
budgetary deficits too quickly.
T h e D e c l a r a t i o n ^ w h i c h w o u l d be
p u b l i s h e d a s a W h i t e P a p e r , had r e f l e c t e d B r i t i s h i n s i s t e n c e o n t h e
n e e d f o r r e s p o n s i v e n e s s and f l e x i b i l i t y b y the s t r o n g e r e c o n o m i e s in
p r o m o t i n g t h e w o r l d r e c o v e r y - and p a r t i c u l a r a t t e n t i o n had b e e n p a i d
t o t h e p r o b l e m of u n e m p l o y m e n t .
T h e p r o g r e s s that had b e e n m a d e
i n r e c o n c i l i n g the F r e n c h and U n i t e d S t a t e s v i e w s o n p a r i t y r e l a t i o n ­
ships was to be w e l c o m e d .
A l l the p a r t i c i p a n t s had b e e n i n f a v o u r of
t r a d e e x p a n s i o n and o p p o s e d t o g e n e r a l i m p o r t c o n t r o l s .
H e had
h o w e v e r r e p e a t e d o u r p o s i t i o n o n the s e l e c t i v e and t e m p o r a r y u s e of
c o n t r o l s i n w o r d s w h i c h h e had u s e d i n t h e H o u s e o f C o m m o n s .
P r e s i d e n t F o r d had b e e n h e l p f u l o n t h i s p o i n t w i t h h i s r e f e r e n c e t o
" a c u t e and e x c e p t i o n a l " c i r c u m s t a n c e s w h i c h m i g h t j u s t i f y a c t i o n i n
t h e s h o r t t e r m t o p r o t e c t a n i n d u s t r y w h i c h w a s v i a b l e in n o r m a l
conditions but which m i g h t succumb t o a b n o r m a l outside p r e s s u r e .
T h e m e e t i n g had r e s i s t e d s u g g e s t i o n s f o r c o n t i n u i n g a r r a n g e m e n t s t o
f o l l o w up i t s w o r k : t h i s w o u l d i n s t e a d b e d o n e t h r o u g h e x i s t i n g
i n s t i t u t i o n s a n d the a p p r o p r i a t e i n t e r n a t i o n a l o r g a n i s a t i o n s .
In d i s c u s s i o n t h e r e w a s a g e n e r a l w e l c o m e f o r the f a c t that t h e
c o n f e r e n c e h a d b e e n a b l e t o t a k e a f o r t h c o m i n g s t a n c e on w o r l d t r a d e
w h i l e e n a b l i n g us t o p r e s e r v e o u r o w n n e c e s s a r y o p t i o n s .
The
g e n e r a l a t t i t u d e s e e m e d t o b e t h a t the p a r t i c i p a n t s w e r e n o t l o o k i n g f o r
t h e e x c u s e t o a d o p t p r o t e c t i o n i s t m e a s u r e s b u t r e s e r v e d t h e r i g h t to
t a k e s e l e c t i v e a c t i o n in e x t r e m e c a s e s .
T h e p r i n c i p l e s of t h e
O r g a n i s a t i o n f o r E c o n o m i c C o - o p e r a t i o n and D e v e l o p m e n t T r a d e
p l e d g e had b e e n c o n f i r m e d but n o n e w c o m m i t m e n t h a d b e e n u n d e r ­
taken.
T h e a g r e e m e n t on m o n e t a r y m a t t e r s w a s p e r h a p s l e s s s t r i k i n g
t h a n h a d b e e n p o r t r a y e d i n the P r e s s .
T h e o n l y r e a l c h a n g e w a s that
t h e F e d e r a l R e s e r v e B a n k w o u l d s m o o t h out e r r a t i c f l u c t u a t i o n s i n
e x c h a n g e r a t e s , a task w h i c h w a s r e g a r d e d a s a n o r m a l duty b y other
central banks.
N e v e r t h e l e s s the a b a n d o n m e n t of the F r e n c h e x t r e m e
v i e w on fixed parities was a w e l c o m e development.
The French were
c l e a r l y d e t e r m i n e d t o e x t r a c t the m a x i m u m kudos and l e v e r a g e f r o m
t h e C o n f e r e n c e on I n t e r n a t i o n a l E c o n o m i c C o - o p e r a t i o n b u t w e had
s u c c e s s f u l l y r e s i s t e d t h e i r a t t e m p t t o p l a c e a l l the p r o b l e m s of t h e
d e v e l o p i n g c o u n t r i e s , i n c l u d i n g s t a b i l i s a t i o n of t h e i r e x p o r t e a r n i n g s
a n d c o m m o d i t y a g r e e m e n t s , i n t o t h e c o n t e x t o f the d i a l o g u e b e t w e e n
p r o d u c e r s and c o n s u m e r s .
The Cabinet
­
2,
T o o k n o t e , with a p p r o v a l , of the
b y the P r i m e M i n i s t e r .
statement
DIRECT E L E C T I O N S
3.
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 S e c r e t a r y
TO THE E U R O P E A N
of S t a t e f o r F o r e i g n and C o m m o n w e a l t h A f f a i r s
COMMUNITY
t h e l i n e t o b e t a k e n a t t h e m e e t i n g o f the E u r o p e a n C o u n c i l or.
( C ( 7 5 ) 122) about
1 a n d 2 D e c e m b e r i n d i s c u s s i o n of p r o p o s a l s f o r d i r e c t e l e c t i o n s
t o the E u r o p e a n A s s e m b l y .
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 " r e c a l l e d that
m e m b e r s of the E u r o p e a n A"osembly
w e r e at present nominated
f r o m a m o n g m e m b e r s of n a t i o n a l P a r l i a m e n t s , b u t t h a t the
T r e a t y o f R o m e p r o v i d e d f o r the A s s e m b l y to m a k e p r o p o s a l s f o r
e l e c t i o n s by d i r e c t u n i v e r s a l suffrage in a c c o r d a n c e w i t h a u n i f o r m
procedure in all M e m b e r States.
The subject had b e e n under
c o n s i d e r a t i o n b y the o r i g i n a l m e m b e r s of the C o m m u n i t y f o r
s o m e t h i n g a p p r o a c h i n g t w e n t y y e a r s , and b y D e c e m b e r 1974 a l l b u t
B r i t a i n and D e n m a r k h a d s u b s c r i b e d t o the a i m of r e a c h i n g
d e c i s i o n s i n 1976 w h i c h w o u l d p e r m i t e l e c t i o n s b y d i r e c t u n i v e r s a l
s u f f r a g e in o r a f t e r 1978.
T h e European Council would have b e f o r e
i t the r e p o r t of a n a d h o c w o r k i n g p a r t y ( A n n e x C of h i s p a p e r )
about the p r o b l e m s w h i c h w o u l d be i n v o l v e d .
The Council would
n o t r e a c h f i n a l d e c i s i o n s o n t h e s e m a t t e r s i n D e c e m b e r , and t h e r e
w a s m u c h t o be s a i d f o r an u n h u r r i e d a p p r o a c h .
Indeed there
m i g h t b e a d v a n t a g e i n i n v i t i n g the P r e s i d e n c y o r M . T i n d e m a n s
t o c o n s i d e r the m a t t e r f u r t h e r a n d m a k e p r o p o s a l s i n 1976.
N e v e r t h e l e s s i t w o u l d b e h e l p f u l t o h a v e a n i n d i c a t i o n of the
C a b i n e f s attitude.
T h e g e n e r a l v i e w in the C o m m u n i t y s e e m e d
t o b e that d i r e c t e l e c t i o n s s h o u l d a s f a r as p o s s i b l e b e c o n d u c t e d
i n a c c o r d a n c e w i t h national p r o c e d u r e s and not on a u n i f o r m b a s i s .
This was to be w e l c o m e d .
W e o u g h t n o w e v e r t o c o n s i d e r our
a t t i t u d e on t h e s i z e of t h e A s s e m b l y and t h e d i s t r i b u t i o n o f s e a t s a n d
on w h e t h e r t h e r e should be s i m u l t a n e o u s o r n e a r - s i m u l t a n e o u s
elections in all m e m b e r countries.
H i s own p r e f e r e n c e w a s f o r
a n A s s e m b l y o f 350 and a c o m m o n e l e c t i o n d a y .
H e had a l r e a d y
m a d e i t c l e a r t h a t t h e s e i s s u e s , and o t h e r m a t t e r s s u c h a s t h e
e l i g i b i l i t y o f P e e r s and M e m b e r s o f P a r l i a m e n t t o s t a n d f o r t h e
E u r o p e a n A s s e m b l y , w o u l d n e e d i n due c o u r s e to be p u b l i c l y
d e b a t e d in t h e U n i t e d K i n g d o m , p o s s i b l y o n t h e b a s i s of a G r e e n
P a p e r : and he h a d a l s o s a i d t h a t h e r e g a r d e d 1978 a s an u n d u l y
o p t i m i s t i c d a t e on p r a c t i c a l g r o u n d s f o r t h e i n t r o d u c t i o n of d i r e c t
elections.
The r e p o r t was concerned with procedures for d i r e c t elections
and t h e p o w e r s of the A s s e m b l y w e r e n o t u n d e r s e r i o u s
at present.
discussion
H i s own v i e w w a s n e v e r t h e l e s s that a d i r e c t l y
e l e c t e d A s s e m b l y m i g h t w e l l s e e k e n l a r g e d p o w e r s i n due c o u r s e .
T h e r e s u l t m i g h t b e t o i n c r e a s e the i n f l u e n c e o f the A s s e m b l y
o f the C o u n c i l o f M i n i s t e r s a t the e x p e n s e of t h e
and
Commission;
but a n y d e c i s i o n to i n c r e a s e A s s e m b l y p o w e r s w o u l d be s u b j e c t t o
c o n t r o l by t h e C o u n c i l a n d u l t i m a t e l y b y n a t i o n a l P a r l i a m e n t s .
5
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 e x p r e s s e d his
g e n e r a l s u p p o r t f o r the m e m o r a n d u m b y the F o r e i g n and
Commonwealth Secretary.
Careful consideration would need
t o b e g i v e n to the r e l a t i o n s h i p b e t w e e n the W e s t m i n s t e r
P a r l i a m e n t and the E u r o p e a n A s s e m b l y ;
and i n
the c o u r s e of d i s c u s s i o n s on d i r e c t e l e c t i o n s c a r e f u l a c c o u n t
w o u l d a l s o h a v e t o b e t a k e n of d e v e l o p m e n t s i n t h e f i e l d of
d e v o l u t i o n i n the United K i n g d o m and the p r o p o s e d S p e a k e r s
C o n f e r e n c e on E l e c t o r a l R e f o r m .
O n the s i z e o f the E u r o p e a n
A s s e m b l y he f a v o u r e d a f i g u r e of a b o u t 400 m e m b e r s r a t h e r
t h a n 350 s i n c e t h i s w o u l d g i v e us b e t t e r r a p r e s e n t a t i o n .
T H E H O M E S E C R E T A R Y a l s o e x p r e s s e d g e n e r a l support for
these p r o p o s a l s .
H i s p r e f e r e n c e w a s f o r a n A s s e m b l y of 350
a n d f o r e l e c t i o n s t a k i n g p l a c e n o t n e c e s s a r i l y o n a c o m m o n d a y but
within a c o m m o n w e e k .
I n this w a y i t m i g h t be p o s s i b l e t o
a r r a n g e f o r t h e e l e c t i o n s t o c o i n c i d e w i t h l o c a l e l e c t i o n s i n the
U n i t e d K i n g d o m , s o that o n e s e t o f e l e c t i o n s c o u l d b u t t r e s s the
t u r n - c u t f o r the e t h e r .
I n d i s c u s s i o n i t w a s a r g u e d t h a t a l t h o u g h the T r e a t y of R o m e
i m p l i e d a c o m m i t m e n t to d i r e c t e l e c t i o n s the i s s u e had not
e m e r g e d i n t h e c o u r s e of t h e r e f e r e n d u m c a m p a i g n .
Bringing it
f o r w a r d n o w w o u l d b e l i k e l y t o r e o p e n o l d c o n t r o v e r s i e s and t h e r e
w a s in a n y c a s e no p r e s s u r e h e r e i n f a v o u r o f d i r e c t e l e c t i o n s .
O u r e x p e r i e n c e of t h e E u r o p e a n A s s e m b l y w a s s u b s t a n t i a l l y l e s s than
t h a t of t h e
original members.
T h e y had p a r t i c i p a t e d f o r s o m e
17 y e a r s ; t h e e x p e r i e n c e o f L a b o u r P a r t y r e p r e s e n t a t i v e s w a s
l i m i t e d t o the l a s t f e w m o n t h s .
This was a cogent argument in
f a v o u r o f a s l o w a n d c a r e f u l l y c o n s i d e r e d a p p r o a c h on o u r p a r t .
F u r t h e r m o r e it w a s questionable w h e t h e r w e should contemplate
introducing d i r e c t e l e c t i o n s without c o n s i d e r i n g m o r e c l o s e l y the
q u e s t i o n of p o w e r s f o r the E u r o p e a n A s s e m b l y .
A directly elected
A s s e m b l y would compete with national P a r l i a m e n t s for p o w e r s ,
a n d m i g h t s e r v e t o b o l s t e r t h e i n f l u e n c e of t h e C o m m i s s i o n a g a i n s t
the C o u n c i l and national P a r l i a m e n t s .
The implications would need
t o b e f u l l y d i s c u s s e d i n P a r l i a m e n t i n the l i g h t o f t h e m a j o r
c o n s t i t u t i o n a l i s s u e s i n v o l v e d , i n c l u d i n g the i m p e t u s w h i c h d i r e c t
elections might give towards a federated Europe.
O n the o t h e r h a n d i t w a s a r g u e d t h a t w e w e r e c o m m i t t e d t o d i r e c t
e l e c t i o n s b y t h e T r e a t y of R o m e a n d o u r o w n r e f e r e n d u m .
Their
m a i n e f f e c t w o u l d m e r e l y b e to l e g i t i m i s e and m a k e m o r e
d e m o c r a t i c the p o w e r s a l r e a d y e n j o y e d b y the A s s e m b l y .
But
they w o u l d a l s o h e l p to g i v e g r e a t e r r e a l i t y t o the i m p r o v e d m e t h o d s
f o r f i n a n c i a l a n d d e m o c r a t i c c o n t r o l i n the C o m m u n i t y w h i c h w e
and others wanted t o s e e .
A n y f u r t h e r e x t e n s i o n of the p o w e r s of
the A s s e m b l y w a s a quite s e p a r a t e i s s u e and w o u l d be f o r l a t e r
d e c i s i o n w h e n w e w o u l d of c o u r s e h a v e a v e t o .
T h e r e was in any
c a s e no r e a s o n w h y d i r e c t e l e c t i o n s should of t h e m s e l v e s lead to a n
i n c r e a s e in the i n f l u e n c e o f the A s s e m b l y : the r e v e r s e m i g h t w e l l
be the c a s e .
The present situation was m o s t
unsatisfactory
and w e h a d nothing t o f e a r f r o m t a k i n g a s t e p w h i c h m o s t p e o p l e
i n the C o m m u n i t y w a n t e d .
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 i s s u e of d i r e c t e l e c t i o n s r a i s e d c o m p l e x a n d d i f f i c u l t i s s u e s on
w h i c h w e should n e e d t o p r o c e e d s l o w l y and with c a u t i o n .
The
C a b i n e t a c c e p t e d h o w e v e r that we w e r e c o m m i t t e d to d i r e c t
e l e c t i o n s a n d i n a n y c a s e the p r e s e n t p o s i t i o n o v e r n o m i n a t e d
m e m b e r s was inherently unsatisfactory.
T h e p r o p o s a l s of t h e
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 w o u l d p r o v i d e a b a s i s f o r
the l i n e h e w o u l d t a k e a t t h e n e x t m e e t i n g of t h e E u r o p e a n C o u n c i l ,
but h e w o u l d n o t e n t e r i n t o a n y c o m m i t m e n t a t that s t a g e .
In any
c a s e t h e r e w a s r-o q u e s t i o n of l e g i s l a t i o n o n d i r e c t e l e c t i o n s i n
the n e w S e s s i o n .
F o l l o w i n g t h e E u r o p e a n C o u n c i l m e e t i n g 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 should c o n s i d e r f u r t h e r
the p r e p a r a t i o n of a G r e e n P a p e r , i t s c o n t e n t s and t i m i n g ; a n d
s h o u l d b r i n g the m a t t e r b e f o r e the C a b i n e t a g a i n a t the
appropriate stage.
The Cabinet T o o k note, with a p p r o v a l ,
of the P r i m e
s u m m i n g u p of t h e i r d i s c u s s i o n .
7
Ministers
fcEAKER'S
JONFERENCE
INELECTORAL
JAW
Previous
Reference:
fC(74) 8 th
Conclusions,
Jlinute 6
4,
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 H o m e
S e c r e t a r y ( C ( 7 5 ) 121) p u t t i n g f o r w a r d p r o p o s a l s f o r r e c o n v e n i n g a
S p e a k e r ' s C o n f e r e n c e t o c o n s i d e r e l e c t o r a l r e f o r m and a n u m b e r o f
other matters.
T H E H O M E S E C R E T A R Y s a i d t h a t a n u m b e r of i t e m s had b e e n l e f t
u n f i n i s h e d f r o m t h e S p e a k e r ' s C o n f e r e n c e w h i c h had b e e n i n t e r r u p t e d
b y t h e G e n e r a l E l e c t i o n i n F e b r u a r y 1974, f o r i n s t a n c e E l e c t i o n
e x p e n s e s ; and s e v e r a l a d d i t i o n a l i t e m s f o r r e f e r e n c e t o a C o n f e r e n c e
had b e e n s u g g e s t e d s u b s e q u e n t l y .
In h i s v i e w t h e r e w a s no q u e s t i o n
b u t that t h e C o n f e r e n c e s h o u l d b e r e c o n v e n e d i n t h e c o m i n g S e s s i o n t o
consider these i t e m s
It w o u l d t h e n b e v e r y d i f f i c u l t n o t t o r e f e r t o i t
t h e q u e s t i o n of e l e c t o r a l r e f o r m , a l t h o u g h t h o s e m o s t i n f a v o u r of
e l e c t o r a l r e f o r m w e r e u n e n t h u s i a s t i c about thia c o u r s e .
Speaker's
C o n f e r e n c e s had e x a m i n e d this s u b j e c t in the p a s t - m o s t r e c e n t l y i n
1 9 6 6 - 6 7 - w h e n i n t e r e s t i n i t w a s l e s s , and i t w o u l d b e u n t e n a b l e n o t t o
r e f e r the subject to the C o n f e r e n c e now.
A f t e r d i s c u s s i o n w i t h the
P r i m e M i n i s t e r and the L o r d P r e s i d e n t of the C o u n c i l he had a l r e a d y
i n f o r m e d the o t h e r P a r t i e s that t h e p o s s i b i H t y o f s u c h a r e f e r e n c e
would be considered.
T h e p r e s e n t n a r r o w b a l a n c e b e t w e e n the
P a r t i e s i n t h e H o u s e of C o m m o n s , and the e x i s t e n c e o f t h e m i n o r i t y
P a r t i e s , c o u l d c a u s e p r o b l e m s o v e r ' the c o m p o s i t i o n o f t h e C o n f e r e n c e .
H i s p r o p o s a l , w h i c h he t h o u g h t m i g h t j u s t g a i n a c c e p t a n c e , w a s f o r
15 L a b o u r M P s , 12 C o n s e r v a t i v e s , one L i b e r a l and o n e S c o t t i s h
N a t i o n a l P a r t y M e m b e r , t o g e t h e r w i t h the S p e a k e r .
T h e S e c r e t a r y of
S t a t e f o r N o r t h e r n I r e l a n d , w h o w a s u n a b l e t o b e p r e s e n t , had s a i d
that it w o u l d b e d i f f i c u l t t o e x c l u d e U l s t e r U n i o n i s t s ; but it would
e q u a l l y b e i m p o s s i b l e t o r e d u c e t h e C o n s e r v a t i v e r e p r e s e n t a t i o n t o 11,
and a p o s s i b l e a l t e r n a t i v e to h i s p r o p o s a l w o u l d be s i m p l y to add a n
U l s t e r U n i o n i s t M P , g i v i n g e q u a l n u m b e r s o f L a b o u r M P s and
M e m b e r s f r o m the o t h e r P a r t i e s ,
B e c a u s e those who wanted e l e c t o r a l
r e f o r m r e g a r d e d the S p e a k e r s C o n f e r e n c e as an u n s a t i s f a c t o r y body to
c o n s i d e r t h i s s u b j e c t , he p r o p o s e d a s a s w e e t e n e r t h e e s t a b l i s h m e n t o f
an a d d i t i o n a l independent b o d y to p r e p a r e the g r o u n d f o r c o n s i d e r a t i o n
b y the C o n f e r e n c e b y m a k i n g a s u r v e y of t h e v a r i o u s s y s t e m s o f
proportional representation.
c
!
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 a g r e e m e n t that the S p e a k e r ' s
C o n f e r e n c e should be r e c o n v e n e d to c o n s i d e r the m a t t e r s o t h e r than
e l e c t o r a l r e f o r m , but d i f f e r i n g v i e w s w e r e e x p r e s s e d on t h e
d e s i r a b i l i t y of r e f e r r i n g e l e c t o r a l r e f o r m t o t h e C o n f e r e n c e ,
In
f a v o u r o f t h i s c o u r s e it w a s a r g u e d that e l e c t o r a l r e f o r m w a s a m a j o r
and s e r i o u s i s s u e which ought to b e looked at.
A Labour Government
s h o u l d n o t b e a f r a i d t o i n i t i a t e i n f o r m e d d e b a t e , a n d d i s c u s s i o n of t h i s
subject in the c o u n t r y would r e c e i v e added stimulus f r o m the
D e v o l u t i o n B i l l and t h e p r o p o s a l s f o r d i r e c t e l e c t i o n t o t h e E u r o p e a n
Parliament.
The subject would be v e r y difficult to handle if i t w e r e
not r e f e r r e d to the S p e a k e r ' s C o n f e r e n c e , w h e r e a s a r e f e r e n c e to the
8
C o n f e r e n c e w o u l d b e t a c t i c a l l y a d v a n t a g e o u s so a s t o r e d u c e the
pressure.
A n d t h e l i k e l y o u t c o m e w a s t h a t n o c h a n g e i n the p r e s e n t
e l e c t o r a l a r r a n g e m e n t s would be r e c o m m e n d e d .
On t h e o t h e r hand
it w a s a r g u e d that p r o p o r t i o n a l r e p r e s e n t a t i o n w a s t o t a l l y
u n a c c e p t a b l e , and w o u l d h a v e d a m a g i n g c o n s e q u e n c e s b o t h t o t h e
L a b o u r P a r t y and t o t h e G o v e r n m e n t of the c o u n t r y .
The
C o n s e r v a t i v e P a r t y v / c r e a g a i n s t p r o p o r t i o n a l r e p r e s e n t a t i o n ; and i f
no c o n c e s s i o n of a n y k i n d w e r e o f f e r e d , t h e p r e s s u r e f o r e l e c t o r a l
r e f o r m , which was n a r r o w l y b a s e d , would blow itself out.
In t h e s e
c i r c u m s t a n c e s i t w o u l d b e a s e r i o u s m i s t a k e to r e f e r t h e s u b j e c t t o
the S p e a k e r ' s C o n f e r e n c e ,
T h e p o i n t w a s a l s o m a d e that if e l e c t o r a l
r e f o r m w a s r e f e r r e d t o the C o n f e r e n c e , f u r t h e r t h o u g h t s h o u l d b e
g i v e n to the p r o p o s a l f o r a s e p a r a t e b o d y to p r e p a r e a r e p o r t f o r the
C o n f e r e n c e on p r o p o r t i o n a l r e p r e s e n t a t i o n .
This report might w e l l
be highly misleading by presenting some f o r m of proportional
r e p r e s e n t a t i o n a s t h e o n l y s e r i o u s p r o p o s i t i o n f o r c o n s i d e r a t i o n ; and
if t h e C o n f e r e n c e f e l t t h e n e e d f o r e x p e r t a d v i c e , it c o u l d p e r f e c t l y
w e l l m a k e its own a r r a n g e m e n t s f o r obtaining i t .
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 , said the C a b i n e t
a g r e e d t h a t the S p e a k e r ' s C o n f e r e n c e s h o u l d b e r e c o n v e n e d t o
c o n s i d e r the m a t t e r s o t h e r than e l e c t o r a l r e f o r m .
A m a j o r i t y of t h e
C a b i n e t saw s u b s t a n t i a l o b j e c t i o n s t o t h e r e f e r e n c e of e l e c t o r a l r e f o r m
t o t h e C o n f e r e n c e , a n d the G o v e r n m e n t s h o u l d t h e r e f o r e not t a k e a n y
initiative in proposing this.
T h e q u e s t i o n o f t h e s i z e and c o m p o s i t i o n
of t h e C o n f e r e n c e c o u l d g i v e r i s e t o d i f f i c u l t y , and t h e 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 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 and
the Chief W h i p , should g i v e f u r t h e r thought to this p r o b l e m .
P r o p o s a l s f o r r e c o n v e n i n g the C o n f e r e n c e to c o n s i d e r the m a t t e r s
o t h e r t h a n e l e c t o r a l r e f o r m s h o u l d t h e n b e put t o t h e o t h e r P a r t i e s .
A n e w situation would b e c r e a t e d if a significant demand then a r o s e for
e l e c t o r a l r e f o r m a l s o t o b e r e f e r r e d t o t h e C o n f e r e n c e ; and t h e
q u e s t i o n w o u l d h a v e t o b e b r o u g h t b a c k t o the C a b i n e t f o r f u r t h e r
consideration.
T h e Cabinet T o o k note, with approval,
of the P r i m e
Minister's
s u m m i n g u p o f t h e i r d i s c u s s i o n and i n v i t e d t h e
Ministers concerned to proceed
9
CONFIDENT!.- ­
accordingly.
j^TE S U P P O R T
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 S e c r e t a r y of
GRANT
S t a t e f o r t h e E n v i r o n m e n t ( C ( 7 5 ) 1 2 3 ) , a n o t e b y the C h a n c e l l o r of
the E x c h e q u e r ,
Treasury,
to w h i c h w a s a t t a c h e d a note b y the
Chief
( C ( 7 5 ) 1 2 4 ) a n d a m e m o r a n d u m b y the C e n t r a l
Secretary,
Policy
R e v i e w S t a f f ( C ( 7 5 ) 1 2 5 ) a b o u t the l e v e l o f r a t e s u p p o r t g r a n t i n
1976-77.
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 s a i d that
the a m o u n t of l o c a l a u t h o r i t y e x p e n d i t u r e w h i c h w a s t o b e a c c e p t e d
a s r e l e v a n t e x p e n d i t u r e f o r g r a n t p u r p o s e s had a l r e a d y b e e n
settled in negotiation.
T h e d i s t r i b u t i o n o f the g r a n t b e t w e e n
d i f f e r e n t kinds of l o c a l a u t h o r i t y h a d a l s o b e e n s e t t l e d .
What was
n o w i n q u e s t i o n w a s t h e l e v e l of g r a n t .
A m e e t i n g of M i n i s t e r s
on 10 N o v e m b e r h a d b e e n u n a b l e t o r e a c h a g r e e m e n t o n w h a t the
r a t e should b e .
In 1975-76 it was 66f p e r cent.
The Chief
S e c r e t a r y , T r e a s u r y , h a d m a i n t a i n e d t h a t i t s h o u l d b e r e d u c e d to
64;5 p e r c e n t n e x t y e a r ; b u t the r e s t o f t h e G r o u p had t a k e n t h e v i e w
that i t should r e m a i n a t 6 6 f p e r c e n t .
The T r e a s u r y contended
that the g r a n t should a s s u m e that l o c a l a u t h o r i t y e x p e n d i t u r e i n
1 9 7 6 - 7 7 w o u l d b e n o h i g h e r i n r e a l t e r m s t h a n i n the c u r r e n t y e a r ;
a n d t h a t the a u t h o r i t i e s w o u l d a c c e p t t h a t , i n l i n e w i t h G o v e r n m e n t
c o u n t e r - i n f l a t i o n p o l i c y , i n f l a t i o n b e t w e e n N o v e m b e r 1975 a n d m i d ­
1976-77 w o u l d r u n at 7 par c e n t ( e q u i v a l e n t t o a n annual r a t e of
10-11 p e r cent).
Both these contentions w e r e unrealistic.
Local
a u t h o r i t i e s would not b e a b l e to r e a c h an a b s o l u t e s t a n d s t i l l i n
t h e i r e x p e n d i t u r e d u r i n g 1976-77, and w e r e m o r e l i k e l y to o v e r s p e n d
by about 1 per cent.
This would still be a considerable achievement
a n d w o u l d m e a n t h a t l o c a l a u t h o r i t i e s h a d r e d u c e d the r a t e of i n c r e a s e
i n t h e i r e x p e n d i t u r e o v e r a 3 y e a r p e r i o d f r o m 10 p e r c e n t t o
5 p e r c e n t and t h e n t o 1 p e r c e n t .
N o r c o u l d l o c a l a u t h o r i t i e s be
e x p e c t e d t o a g r e e the 7 p e r c e n t f i g u r e f o r i n f l a t i o n - 1 0 - 1 2 p e r c e n t
w a s a m o r e p r o b a b l e a s s u m p t i o n on their p a r t .
O n t h a t b a s i s , if
t h e r a t e s u p p o r t g r a n t p e r c e n t a g e w e r e r e d u c e d t o 64 p e r c e n t o r
65 p e r c e n t , the d o m e s t i c r a t e p o u n d a g e s w e r e l i k e l y t o i n c r e a s e b y
15-31 p e r cent or 18-35 p e r cent r e s p e c t i v e l y .
A r e d u c t i o n i n the
r a t e of g r a n t w o u l d h a v e u n w e l c o m e p o l i t i c a l c o n s e q u e n c e s .
It
w o u l d b e a n a f f r o n t t o the C o n s u l t a t i v e C o u n c i l on L o c a l G o v e r n m e n t
F i n a n c e w h o h a d up t o n o w c o - o p e r a t e d m o s t l o y a l l y w i t h t h e
G o v e r n m e n t i n s e e k i n g w a y s of c u t t i n g b a c k l o c a l g o v e r n m e n t
expenditure.
T h e l o c a l authorities would undoubtedly r e g a r d a cut
a s a b e t r a y a l b y the G o v e r n m e n t o f t h e t r u s t t h a t had b e e n b u i l t up
since
the C o u n c i l w a s e s t a b l i s h e d .
If this c o - o p e r a t i o n w e r e l o s t ,
it w o u l d r e a c t a d v e r s e l y on e x p e n d i t u r e c o n t r o l .
Furthermore,
the r a t e i n c r e a s e s i m p l i e d b y a 64^ p e r c e n t g r a n t would bite just
w h e n the G o v e r n m e n t s c o u n t e r - i n f l a t i o n p o l i c y w a s l i k e l y t o be
under strain.
T h i s could p l a c e the i n c o m e s p o l i c y at r i s k .
Finally,
r a t e i n c r e a s e s w o u l d b e w i d e l y u n p o p u l a r , and t h i s u n p o p u l a r i t y
w o u l d b e r e f l e c t e d i n the l o c a l a u t h o r i t y e l e c t i o n s in M a y .
The
p e r c e n t a g e of t h e r a t e s u p p o r t g r a n t t o b e b o r n e b y t h e C e n t r a l
Government was essentially a political issue.
The question was
w h e t h e r , f o r n o g a i n i n p u b l i c e x p e n d i t u r e t e r m s , the G o v e r n m e n t
should r i s k b r e a k i n g e x c e l l e n t r e l a t i o n s w i t h the l o c a l a u t h o r i t i e s ,
p r o v o k i n g d a n g e r o u s l y h i g h r a t e i n c r e a s e s i n s p r i n g 1976 a n d
p u t t i n g t h e m s e l v e s i n a s c a p e g o a t p o s i t i o n i n the l o c a l e l e c t i o n s
i n M a y 1976.
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 , s a i d t h a t a l t h o u g h the
q u e s t i o n d i d n o t a f f e c t 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
( P E S C ) t o t a l , the e s s e n t i a l i s s u e w a s h o w t o c u t b a c k the e x p e n d i ­
t u r e of t h e l o c a l a u t h o r i t i e s .
T h e y had c o n s i s t e n t l y been spending
a g r ^ a t d e a l m o r e than had been b u d g e t e d f o r .
The Government
w a s tackling this p r o b l e m in v a r i o u s w a y s , eg through cash l i m i t s .
B u t the m a i n m e t h o d o f c o n t r o l w a s s t i l l t h r o u g h the r a t e s u p p o r t
grant.
A t 6 4 ^ p e r c e n t t h e r a t e of c e n t r a l G o v e r n m e n t s u p p o r t
f o r l o c a l a u t h o r i t y e x p e n d i t u r e i n 19 7 6 - 7 7 s h o u l d g i v e l o c a l
a u t h o r i t i e s s u f f i c i e n t c a s h t o f i n a n c e the v o l u m e of c u r r e n t
e x p e n d i t u r e a l r e a d y a p p r o v e d by the G o v e r n m e n t f o r that y e a r a n d
a l s o t o m e e t a n y p a y a n d p r i c e i n c r e a s e s a t a n a n n u a l r a t e of
a r o u n d 11 p e r c e n t , w i t h o u t a n y i n c r e a s e i n a v e r a g e r a t e p o u n d a g e s .
I f a h i g h e r p e r c e n t a g e w e r e p a i d , t h i s w o u l d g i v e the l o c a l
a u t h o r i t i e s s p a r e m o n e y t o spend; a r a t e of 66^ p e r c e n t w o u l d
p r o v i d e a t l e a s t £ 2 0 0 m i l l i o n of s p a r e s p e n d i n g m o n e y .
This
w o u l d b e r e g a r d e d a s u n w a r r a n t e d e x t r a v a g a n c e , and t a k e n a s a n
i n d i c a t i o n t h a t the G o v e r n m e n t w a s n o t r e a l l y s e r i o u s w h e n i t
talked about r e d u c i n g l o c a l g o v e r n m e n t e x p e n d i t u r e .
He a g r e e d
t h a t t h e i s s u e s h o u l d b e v i e w e d i n p o l i t i c a l t e r m s , b u t in h i s v i e w
the G o v e r n m e n t w o u l d g a i n m u c h m o r e p o l i t i c a l l y f r o m a d e m o n s t r a ­
t i o n t h a t t h e y w e r e d e t e r m i n e d t o p l a c e a n e f f e c t i v e c u r b on l o c a l
authority expenditure.
T h i s was w h a t m a n y of their s u p p o r t e r s
e x p e c t e d o f t h e m a n d t h e y w o u l d n o t be s e e n t o b e d o i n g i t i f t h e y
a g r e e d that the p e r c e n t a g e r a t e of g r a n t should r e m a i n a t
66^- p e r
cent.
H e q u e s t i o n e d w h e t h e r the l o c a l a u t h o r i t i e s w o u l d i n f a c t m a k e
different
a s s u m p t i o n s a b o u t the a n n u a l p e r c e n t a g e r a t e of
i n f l a t i o n t o w a r d s the e n d of 1976.
But e v e n if l o c a l a u t h o r i t y f e a r s
a b o u t t h e s u c c e s s of t h e c o u n t e r - i n f l a t i o n p o l i c y p r o v e d t o b e
j u s t i f i e d , h e h a d g i v e n t h e m an a s s u r a n c e t h a t t h e G o v e r n m e n t w a s
p r e p a r e d t o r e v i e w t h e c a s h l i m i t s on t h e i r g r a n t s i f the p a c e of
i n f l a t i o n g e n e r a l l y , o r t h e r a t e of p r i c e i n c r e a s e s a f f e c t i n g l o c a l
a u t h o r i t y e x p e n d i t u r e , w e r e to b e s u b s t a n t i a l l y h i g h e r than t h o s e
i m p l i e d i n the c a s h H m i t s .
E v e n i f l o c a l authorities did spend an
e x t r a 1 p e r cent, a s 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
s u g g e s t e d t h e y w o u l d , i t w a s n o t f o r t h e G o v e r n m e n t to o f f e r t o
finance it.
H e v a l u e d the c o - o p e r a t i o n o f t h e C o n s u l t a t i v e C o u n c i l
o n L o c a l G o v e r n m e n t F i n a n c e and c o u l d t e s t i f y f r o m h i s o w n
e x p e r i e n c e i n d i s c u s s i o n w i t h the C o u n c i l , that they w o u l d not
r e g a r d a r e d u c t i o n i n t h e p e r c e n t a g e r a t e of g r a n t s u p p o r t a s a
betrayal.
D u r i n g a l l the m e e t i n g s of t h e C o u n c i l w h i c h h e h a d
a t t e n d e d r e c e n t l y , t h e r e h a d b e e n n o d i s p u t e t h a t th& a n n u a l r a t e
of i n f l a t i o n a t the e n d of 1976 w a s l i k e l y t o b e b e t w e e n 10 and
11
11 p e r c e n t .
H e w a s s u r e that the C o n s u l t a t i v e C o u n c i l e x p e c t e d
the G o v e r n m e n t t o b e h a v e i n a t o u g h a n d c o n s i s t e n t m a n n e r .
It
w a s f o r this r e a s o n t h a t h e r e c o m m e n d e d t h e r a t e o f g r a n t s h o u l d
be 64^ P
cent.
c r
In d i s c u s s i o n i t w a s a r g u e d that o n e o f the m o s t i m p o r t a n t c o n s i d e r a ­
t i o n s o f a l l w a s t h a t t o c u t the r a t e of g r a n t t o 6 4 ^ p e r c e n t w o u l d b e
s e e n b y t h e l o c a l a u t h o r i t i e s a s a b r e a c h of f a i t h , p a r t i c u l a r l y i n the
y e a r w h e n c a s h l i m i t s w e r e being i n t r o d u c e d and had b e e n a c c e p t e d
by the l o c a l a u t h o r i t y r e p r e s e n t a t i v e s .
The Consultative Council
h a d s o f a r p r o v e d t o b e a g r e a t s u c c e s s , a n d i t s m e e t i n g s had
e n g e n d e r e d a g r e a t fund o f g o o d w i l l o n the p a r t o f l o c a l a u t h o r i t i e s
f o r t h e G o v e r n m e n t s o b j e c t i v e s , and a l l of t h i s w o u l d b e put i n
j e o p a r d y i f the l o c a l a u t h o r i t y s i d e f e l t t h a t t h e y had b e e n b e t r a y e d .
T h e l o c a l authorities had b e e n p r e s s e d to a g r e e to a standstill on
e x p e n d i t u r e i a 1 9 7 6 - 7 7 , and t h e y w o u l d n a t u r a l l y e x p e c t t h i s t o b e
a c c o m p a n i e d by a s t a n d s t i l l i n the r a t e of g r a n t .
Whatever
d e c i s i o n was taken, t h e r e would b e an a p p r e c i a b l e i n c r e a s e in r a t e
d e m a n d s n e x t y e a r , a n d i f the g r a n t r a t e w e r e cut t o 6 4 ^ p e r c e n t
the G o v e r n m e n t would undoubtedly be b l a m e d w h e t h e r justifiably
or not.
A l o w e r r a t e of g r a n t c o u l d b e v e r y d a m a g i n g p o l i t i c a l l y
f o r the G o v e r n m e n t , and r e m e m b e r i n g that the d e c i s i o n w o u l d h a v e
t o b e a p p r o v e d b y t h e H o u s e o f C o m m o n s , i t m i g h t put m a n y of t h e
G o v e r n m e n t s own supporteis in an e x t r e m e l y difficult position.
A g a i n s t t h i s i t w a s a r g u e d that t h e m o s t i m p o r t a n t f a c t o r i n the
situation w a s the need to b r i n g l o c a l a u t h o r i t y e x p e n d i t u r e under
control.
L o c a l a u t h o r i t i e s had c o n s i s t e n t l y s p e n t m o r e t h a n h a d
b e e n p l a n n e d , a n d i f the r a t e o f g r a n t w e r e f i x e d a t 64-2 p e r c e n t
t h i s w o u l d b e a s t r o n g i n c e n t i v e upon t h e m t o s q u e e z e t h e i r e x p e n d i ­
ture.
It should be r e m e m b e r e d that, b y the t i m e r a t e poundages
c a m e t o b e f i x e d , m o s v o f the l o c a l a u t h o r i t y p a y i n c r e a s e s w o u l d
h a v e b e e n s e t t l e d , s o that a l a r g e p a r t of the u n c e r t a i n t y w h i c h
l o c a l T r e a s u r e r s might face would be gone.
T o f i x the r a t e a t
6 6 ^ p e r c e n t m e a n t g i v i n g the l o c a l a u t h o r i t i e s £ 2 2 0 m i l l i o n m o r e
t h a n w a s n e e d e d t o k e e p t h e i r e x p e n d i t u r e n e x t y e a r a t tho s a m e
l e v e l as in 1975-76, and w a s t h e r e f o r e d i r e c t l y i n i m i c a l to b e t t e r
expenditure control.
O n the p o l i t i c a l p l a n e , i t w a s a r g u e d t h a t if,
a s w a s i n d i c a t e d b y the f i g u r e s i n C ( 7 5 ) 1 2 3 , the a v e r a g e i n c r e a s e
i n r a t e d e m a n d s n e x t y e a r w o u l d b e 16 p e r c e n t ( i f t h e g r a n t w e r e
f i x e d a t 6 6 ^ p e r c e n t a n d i n f l a t i o n a s s u m e d t o r u n a t 12 p e r c e n t )
this w o u l d l o s e just as m a n y v o t e s as a h i g h e r i n c r e a s e .
What was
a t i s s u e w a s t h e c r e d i b i l i t y of t h e G o v e r n m e n t s c o u n t e r - i n f l a t i o n
p o l i c y , and the g r a n t s h o u l d b e f i x e d a t a l e v e l w h i c h r e f l e c t e d n o
h i g h e r a n n u a l r a t e o f i n f l a t i o n t h a n t h e 11 p e r c e n t i m p l i e d i n t h a t
policy.
T h e l o c a l a u t h o r i t i e s w e r e a l r e a d y unpopular b e c a u s e of
t h e i r high spending, and fixing the g r a n t at 6 4 j p e r cent would b e
s e e n a s a w e l c o m e a c t o f f i r m n e s s o n the p a r t of t h e G o v e r n m e n t .
A n y t h i n g m o r e w o u l d s u g g e s t t h a t the G o v e r n m e n t w a s n o t s e r i o u s
12
is! SFI15 F SSI "I" I ik. 1
about its cash l i m i t s p o l i c y .
T h e T r e a s u r y had u n d e r t a k e n t o
t h o s e l i m i t s if t h e r a t e of i n f l a t i o n t u r n e d ozvfc t o b e s e r i o u s l y
f r o m the r a t e a s s u m e d ,
should be
and on t h i s b a s i s t h e 64j
review
different
per cent p r o p o s a l
accepted.
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 t h a t , g i v e n the d i v i s i o n of v i e w
i n C a b i n e t on t h e i s s u e b e f o r e t h e m , t h e r e m i g h t b e m e r i t i n a d o p t i n g
a compromise proposal.
T h e i s s u e w a s o n e of p s y c h o l o g y r a t h e r
t h a n o n e o f a r i t h m e t i c , a n d a f i g u r e s u c h a s 65-g- p e r c e n t m i g h t e n s u r e
t h a t t h e G o v e r n m e n t w a s s e e n to b e s u i t a b l y f i r m o v e r t h e e x p e n d i t u r e
i s s u e w i t h o u t r i s k i n g an u n d u l y h i g h i n c r e a s e i n the a v e r a g e f i g u r e f o r
rate demands,
T H E P R I M E M I N I S T E R , s u m m i n g u p the d i s c u s s i o n , said that the
i s s u e b e f o r e C a b i n e t w a s an i m p o r t a n t a n d d i f f i c u l t o n e , o n w h i c h t h e
arguments were finely balanced,
I t w a s i m p o r t a n t to b e s e e n t o b e
k e e p i n g a f i r m c o n t r o l on public e x p e n d i t u r e .
On t h e o t h e r hand the
v a l u e o f t h e w o r k w h i c h h a d b e e n d o n e i n s e t t i n g up the C o n s u l t a t i v e
C o u n c i l and t h r o u g h i t s m e e t i n g s o b t a i n i n g s u c h a h i g h l e v e l of
c o - o p e r a t i o n w a s r e c o g n i s e d b y e v e r y b o d y , and i t w o u l d b e i m p o r t a n t
not to t h r o w this a d v a n t a g e a w a y .
T h e C a b i n e t w e r e a g r e e d that a
c o m p r o m i s e f i g u r e o f 65j p e r c e n t w o u l d b e t h e r i g h t l e v e l f o r t h e
rate support g r a n t f o r 1976-77,
The Cabinet
­
1.
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 , 2.
I n v i t e d 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 t o i n f o r m the l o c a l a u t h o r i t y r e p r e s e n t a t i v e s
a t the s t a t u t o r y m e e t i n g o n 21 N o v e m b e r that t h e r a t e
s u p p o r t g r a n t f o r 1976-77 w o u l d b e f i x e d at 65 jr p3r
cent.
13
6.
THE SECRETARY
OF STATE FOR SOCIAL SERVICES
said
t h a t the G o v e r n m e n t f a c e d a d i f f i c u l t s i t u a t i o n o n j u n i o r h o s p i t a l
d o c t o r s w h o had e f f e c t i v e l y l a u n c h e d a f r o n t a l a t t a c k o n t h e
G o v e r n m e n t s pay policy,,
She a s k e d a l l h e r c o l l e a g u e s , p a r t i c u l a r l y
i n s p e e c h e s b e f o r e t h e m e e t i n g o f the B r i t i s h M e d i c a l A s s o c i a t i o n on
t h e f o l l o w i n g S u n d a y , t o s u p p o r t t h e G o v e r n m e n t s stand o n h o s p i t a l
d o c t o r s p a y , and f o r t h i s p u r p o s e she w o u l d a r r a n g e f o r a p p r o p r i a t e
b r i e f i n g to be sent to a l l M i n i s t e r s .
1
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 , s a i d t h a t h e
w a s s u r e that a l l M i n i s t e r s w o u l d w i s h t o d o w h a t had b e e n a s k e d .
T h e 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 should c a l l upon the s e r v i c e s
of the P a r l i a m e n t a r y S e c r e t a r y , P r i v y C o u n c i l O f f i c e , w h o had
a l r e a d y s u c c e s s f u l l y c o - o r d i n a t e d a g r e a t d e a l of s p e e c h m a k i n g on t h e
G o v e r n m e n t s pay p o l i c y .
The Cabinet 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
s u m m i n g up o f t h e i r d i s c u s s i o n .
Cabinet
Office
19 N o v e m b e r 1975
Ministers