(c) crown copyright
Catalogue Reference:CAB/128/58/10
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T I
^ S 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
C ( 7 6 ) 10th
Conclusions
C
COPY NO
0 K
U t)
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 a t 10 D o w n i n g S t r e e t o n
T U E S D A Y 16 M A R C H 1976
a t 11. 00 a m
PRESENT
T h e R t Hon H a r o l d W i l s o n M P
Prime Minister
*h* R t Hon E d w a r d S h o r t M P
***d P r e s i d e n t of t h e C o u n c i l
** the C h a i r f o r I t e m 2 a n d p a r t
T h e Rt Hon J a m e s Callaghan M P
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 a n d
Commonwealth Affairs
(In t h e C h a i r f o r p a r t of I t e m 3 a n d
I t e m s 4 and 5)
^ * R t Hon L o r d E l w y n - J o n e s
*4 C h a n c e l l o r
T h e R t Hon R o y J e n k i n s M P
S e c r e t a r y of S t a t e f o r t h e H o m e
Department
^ Rt Hon D e n i s Healey M P
J ^ c e l l o r of t h e E x c h e q u e r
***is 1 and 3-5)
T h e R t Hon Anthony C r o eland M P
S e c r e t a r y of S t a t e f o r t h e E n v i r o n m e n t
**** R t Hon M i c h a e l F o o t M P
" N o t a r y of S t a t e f o r E m p l o y m e n t
Rt Hon Shirley Williams M P
^ e t a r y of S t a t e f o r P r i c e s a n d C o n s u m e r
ction (Items 1 and 3-5)
T h e R t Hon Anthony Wedgwood Benn M P
S e c r e t a r y of S t a t e f o r E n e r g y
T h e R t Hon B a r b a r a C a s t l e M P
S e c r e t a r y of S t a t e f o r S o c i a l S e r v i c e s
(Items 1 and 3-5)
R t Hon E r i c V a r l e y M P
*Qtary of S t a t e f o r I n d u s t r y
T h e R t Hon P e t e r S h o r e M P
S e c r e t a r y of S t a t e f o r T r a d e
Rt Hon R o y M a s o n M P
" B t a r y of S t a t e f o r D e f e n c e
The Rt Hon William R o s s M P
S e c r e t a r y of S t a t e f o r S c o t l a n d
Rt Hon J o h n M o r r i s Q C M P
* t a r y of S t a t e f o r W a l e s
T h e R t Hon M e r l y n R e e s M P
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
The R t H o n F r e d P e a r t M P
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 a n d
The Rt Hon Harold L e v e r M P
C h a n c e l l o r of t h e D u c h y of L a n c a s t e r
Rt Hon L o r d S h e p h e r d
$0*0 P r i v y S e a l
The Rt Hon F r e d Mulley M P
S e c r e t a r y of S t a t e f o r E d u c a t i o n a n d S c i e n c e
The R t H o n R o b e r t M e l l i s h M P
^filamentary Secretary, Treasury
(k*ma l , 3 a n d 5 )
The R t Hon John Silkin M P
Minister for Planning and Local Government
Food
ALSO PRESENT
The Rt Hon Joel Barnett, M ?
Chief S e c r e t a r y , T r e a s u r y
(Items 3-5)
SECRETARIAT
Sir
Mr
Mr
Mr
Mr
John Hunt
J A Hamilton
W I Mclndoe
A D Gordon-Brown
C J Farrow
(Items 3-5)
( I t e m 2)
( I t e m 2)
(Items 3-5)
C O N T E N T S
Item
1.
2.
3.
4.
5.
Subject
PRIME M I N I S T E R S INTENTION TO RESIGN
Page
1
T H E L A W ON C O N S P I R A C Y
8
THE N E W S P A P E R INDUSTRY
9
S T A T E M E N T BY T H E C A B I N E T A B O U T T H E
PRIME M I N I S T E R S RESIGNATION
12
THE SHIPBUILDING INDUSTRY
13
li
fj^ME M I N I S T E R S
WTENTION T O
^SlGN
1.
THE PRIME MINISTER informed the Cabinet i n the
following t e r m s of h i e i n t e n t i o n t o r e s i g n a e P r i m e M i n i s t e r a s
soon a s the P a r l i a m e n t a r y Labour P a r t y could choose a new
Leader.
"I have just returned from the Palace where I had an
A u d i e n c e of T h e Q u e e n .
I formally confirmed to her a
a d e c i s i o n of w h i c h I h a d a p p r i s e d h e r e a r l y i n D e c e m b e r ,
t h a t i n M a r c h of t h i s y e a r I w o u l d i n t e n d t o m a k e w a y f o r a
s u c c e s s o r , and that I would r e s i g n a s P r i m e Minister a s
soon a s the P a r l i a m e n t a r y P a r t y had completed the
n e c e s s a r y constitutional p r o c e d u r e s for electing a new
Leader.
" I n M a r c h 1974 I d e c i d e d t h a t I w o u l d r e m a i n i n office f o r n o
m o r e than two y e a r s .
I have not w a v e r e d i n this decision
and it is irrevocable.
Indeed I had originally intended t h a t
it should take effect l a s t S e p t e m b e r , b u t d e c i d e d t o d e f e r i t
b e c a u s e of t h e p a r a m o u n t I m p o r t a n c e of e n s u r i n g t h e
n a t i o n a l a c c e p t a n c e a n d Buccess of t h e c o u n t e r - i n f l a t i o n
policy the Government announced last July.
" I m u s t , of c o u r s e , i n f o r m m y c o l l e a g u e s of m y r e a s o n s :
" F i r s t . I h a v e b e e n L e a d e r of t h i s P a r t y f o r o v e r 13
e x c i t i n g a n d t u r b u l e n t y e a r s - n e a r l y e i g h t of t h e m i n
Government.
My period a s P r i m e M i n i s t e r has been
l o n g e r t h a n t h a t of a n y of m y p e a c e t i m e p r e d e c e s s o r s i n
thiB c e n t u r y .
T h e s e y e a r s of office s p a n n e d a p e r i o d w h e n
Britain, nationally and internationally, h a d to face s t o r m s
and challenges without p a r a l l e l in o u r p e a c e t i m e history.
" B u t i t i s n o t o n l y t h o s e l a s t 13 y e a r s ; I n 3 1 y e a r s i n
P a r l i a m e n t I have been on one or other F r o n t B e n c h for
n e a r l y 30 y e a r s - for a l m o s t l l £ y e a r s i n Cabinet.
No one
should a s k for m o r e .
" T o have led four A d m i n i s t r a t i o n s , d e d i c a t e d not only to
solving the n a t i o n s e c o n o m i c p r o b l e m s b u t a l s o to
a c h i e v i n g a h i g h e r l e v e l of s o c i a l j u s t i c e a n d e q u a l i t y t h a n
our people have e v e r known, is a privilege conferred on
v e r y few m e n .
,
"Second. I have a clear duty to the country and to the P a r t y
n o t t o r e m a i n h e r e s o l o n g t h a t o t h e r s a r e d e n i e d the c h a n c e
This i s the m o s t experienced
to seek election to this post.
and talented t e a m in this century, in m y view transcending
t h a t of C a m p b e l l - B a n n e r m a n 7 0 yearB a g o . I a m p r o u d of
that.
A l e a d e r s h i p e l e c t i o n will d o good in showing the
c o u n t r y t h e w e a l t h of t a l e n t i n o u r r a n k s .
1
"The fact that I a m leaving s h o r t l y after m y sixtieth
b i r t h d a y h a s no b e a r i n g on the choice t o b e m a d e .
I have
r e a c h e d s i x t y a f t e r 13 y e a r s ' P a r t y l e a d e r s h i p , n e a r l y
e i g h t of t h e s e i n D o w n i n g S t r e e t .
S o m e of m y m o s t
distinguished p r e d e c e s s o r s w e r e either just below or just
o v e r t h a t a g e on b e c o m i n g P r i m e M i n i s t e r , i n c l u d i n g
C l e m Attlee, Winston Churchill, H a r o l d M a c m i l l a n and
A l e c D o u g l a s - H o m e i n our own t i m e .
The fact that I began
e a r l y a n d h a v e b o r n e t h e r e s p o n s i b i l i t y of t h i s office f o r s o
long m e a n s t h a t sixty i s the r i g h t a g e for m e to p r o m u l g a t e
a change.
"Third, it is m y view that m y s u c c e s s o r should be in post
now, t o i m p o s e h i s or h e r style and to w o r k out the s t r a t e g y
f o r t h e r e m a i n i n g y e a r s of t h i s P a r l i a m e n t .
But 1 a m
c e r t a i n that the new A d m i n i s t r a t i o n w i l l a s s e r t the s a m e
H a termination a n d d e d i c a t i o n i n o u r c o u n t e r - i n f l a t i o n
policies in this country, a s we have unitedly shown to the
world.
Equally I a m totally convinced that no conceivable
r e c o n s t r u c t i o n of t h e C a b i n e t c o u l d i n a n y w a y l e a d t o a
w e a k e n i n g i n o u r r e s o l v e t o fulfil i n f u l l m e a s u r e o u r
c o m m i t m e n t to our allies and p a r t n e r s o v e r s e a s .
" F o u r t h , t h e r e is, a d a n g e r , to which I have b e e n a l e r t e d a l l
m y working life.
I t i s t h a t , i n t i m e s of r a p i d c h a n g e , y o u
m a y be faced with a d e c i s i o n which, p e r h a p s in different
conditions, you have faced b e f o r e .
If, o n t h e e a r l i e r
o c c a s i o n y o u c o n s i d e r e d a n d r e j e c t e d a p a r t i c u l a r c o u r s e of
action, t h e r e i s a tendency to s a y you have been into that,
s o t h a t you d o not give the f r e s h c o n s i d e r a t i o n the
circumstances may require.
I a m d e t e r m i n e d not to
succumb to this danger.
" I w a n t t o m a k e i t q u i t e c l e a r , w i t h t h e a g r e e m e n t of a l l m y
C a b i n e t c o l l e a g u e s , that t h e s e r e a s o n s r e p r e s e n t the total
e x p l a n a t i o n of m y d e c i s i o n .
There a r e no impending
p r o b l e m s or difficulties - e c o n o m i c or political - known t o
the Cabinet, which a r e not known to the c o u n t r y and which
a r e n o t a l r e a d y t h e s u b j e c t of t h e p o l i t i c a l d i s c u s s i o n of o u r
times.
"Now I want to e x p r e s s m y w a r m thanks to m y colleagues,
n o t o n l y for t h e i r w o r k and. a c h i e v e m e n t s , b u t £or t h e f a c t
that in a l l m y four A d m i n i s t r a t i o n s t h e s e have b e e n happy
Cabinets.
We h a v e f a c e d p r o b l e m s f a r m o r e d a u n t i n g t h a n
any Cabinet in our p o s t - w a r h i s t o r y , and those p r o b l e m s
have b e e n m e t with m o r e c o u r a g e , m o r e determination,
m o r e i m a g i n a t i o n and m o r e c o m r a d e s h i p and unity than by
a n y C a b i n e t of w h i c h I h a v e k n o w l e d g e .
I have in fact
p r e s i d e d o v e r 4 7 2 C a b i n e t s a n d t h o u s a n d s of C a b i n e t
Committees,
I h a v e a n s w e r e d m o r e t h a n 12, 0 0 0
Parliamentary Questions.
2
" I a m p r o u d of t h e a c h i e v e m e n t s of t h e s e p a s t t w o y e a r s .
"We r e m e m b e r what we faced when w e w e r e r e c a l l e d to
office a l i t t l e o v e r t w o y e a r s a g d .
It w a s not only the
economic paralysis.
There was a widespread anxiety in
t h e c o u n t r y t h a t e v e n t h e " g o v e r l i a b i l i t y of B r i t a i n w a s i n
doubt.
It i s n o t i n d o u b t t o d a y , b e c a u s e t h e e c o n o m i c a n d
s o c i a l g o v e r n a n c e of B r i t a i n h a s b e e n e s t a b l i s h e d o n t h e
b a s i s of t h e c o n s e n t of t h e p e o p l e .
11
"We h a v e c r e a t e d a new r e l a t i o n s h i p b e t w e e n G o v e r n m e n t
and people to r e p l a c e the c l a s h and confrontation w h i c h two
y e a r s ago a l m o s t brought this country to d i s a s t e r .
"This is a far m o r e united and d e t e r m i n e d people now than
for m a n y y e a r s .
"Our counter-inflation policies have b e e n a c c e p t e d by the
g r e a t m a j o r i t y of t h e n a t i o n .
Our counter-inflation
t a r g e t f o r t h e e n d of t h i s y e a r i s now i n s i g h t of a c h i e v e ­
ment.
" I n 1 9 7 5 t h e c u r r e n t a c c o u n t d e f i c i t o n o u r b a l a n c e of
p a y m e n t s w a s l e s s t h a n half the deficit in 1974, e v e n though
w e h a v e h a d t o m e e t - a n d h a d t o m e e t i n a p e r i o d of
unprecedented world e c o n o m i c p r o b l e m s - the five-fold
i n c r e a s e i n t h e p r i c e of t h e o i l w e i m p o r t .
" T h e v a l u e of o u r e x p o r t s i s r i s i n g s t r o n g l y - b y 4 p e r c e n t
in the l a s t t h r e e m o n t h s c o m p a r e d with the p r e v i o u s t h r e e
months - and a t a much faster r a t e than i m p o r t s .
" F o r t w o y e a r s w e h a v e h a d t o f a c e t h e c o n s e q u e n c e s of
world inflation and world unemployment.
But now the
e c o n o m y i s beginning to r e v i v e .
Business confidence is
h i g h e r t h a n a t a n y t i m e s i n c e t h e a u t u m n of 1 9 7 3 .
There
a r e g r o w i n g s i g n s t h a t t h e r a t e of i n c r e a s e i n u n e m p l o y m e n t
Is running a t a v e r y m u c h s m a l l e r level than l a s t y e a r ,
p a r t i c u l a r l y t h e l a s t t h r e e m o n t h s of l a s t y e a r .
"We i n h e r i t e d a d a n g e r o u s l y d i s t o r t e d a n d u n b a l a n c e d
economy.
We a r e b e g i n n i n g t o g e t i t r i g h t .
" F o r the f i r s t t i m e , i n d u s t r i a l p r o b l e m s a r e being tackled
b y r e l e v a n t m i c r o - e c o n o m i c a c t i o n i n p l a c e of a n o v e r ­
r e l i a n c e on c l u m s y a n d often ineffective m a c r o - e c o n o m i c
l u r c h e s ; through NEDC and d i r e c t action to r e s t r u c t u r e
and modernise particular industries through NEB and
specific s e c t o r a l actions to strengthen our economic b a s e ,
which is manufacturing industry.
3
" W e h a v e e m b a r k e d o n t h e b i g g e s t p r o g r a m m e of i n d u s t r i a l
training and r e - t r a i n i n g in our h i s t o r y .
j
j
I
"We h a v e c a r r i e d through the g r e a t e s t - e v e r i m p r o v e m e n t s
i n t h e s t a n d a r d s of p e n s i o n e r s a n d o t h e r s d e p e n d e n t o n t h e
social services, particularly the disabled, previously so
neglected.
" W e i n h e r i t e d m e l o w e s t h o u s e b u i l d i n g f i g u r e s Bince t h e
1950s; we have r e s t o r e d the housing p r o g r a m m e to over
3 0 0 , 0P0 h o u s e s a y e a r .
" I n w o r l d a f f a i r s o u r r e l a t i o n s w i t h the U n i t e d S t a t e s , w i t h
European countries, E a s t and West, and with the
Commonwealth, a r e b e t t e r t h a n for m a n y y e a r s .
Our
m e m b e r s h i p of the E u r o p e a n C o m m u n i t y h a s b e e n
confirmed.
Our r e l a t i o n s with the United States w e r e
r e c e n t l y d e s c r i b e d by P r e s i d e n t F o r d a s being " a s good
a s they have e v e r been".
" N o w , f o r the f u t u r e .
" L a t e r t h i s m o r n i n g I w i l l m e e t t h e C h a i r m a n of t h e
P a r l i a m e n t a r y Labour P a r t y , and propose that he calls a
s p e c i a l m e e t i n g of t h e P a r t y t h i s e v e n i n g , t o p u t f o r w a r d
the Liaison C o m m i t t e e ' s suggestions for the l e a d e r s h i p
election, s o m a t nominations m a y be invited forthwith.
I would hope that they m a y b e a b l e to d e v i s e p r o c e d u r e s
w h i c h e n a b l e full c o n s i d e r a t i o n t o b e c o m b i n e d with a l l
reasonable speed ­ certainly m o r e expeditious than the
s o m e w h a t l e i s u r e l y w e e k l y p r o c e d u r e s of t h e p a s t .
j
"I shall play n o p a r t in that election a p a r t from casting m y
own vote b y s e c r e t ballot.
Nor will I s e e k t o influence a
s i n g l e M e m b e r of t h e P a r t y i n h i s v o t e .
"I s h a l l r e m a i n in P a r l i a m e n t a s long a s m y constituency
w i l l p u t u p w i t h m e . I h a w n o t b e e n i n a c t i v e o n b e h a l f of
my constituents.
I h o p e t o s e e m o r e of t h e m a n d p u t i n
m o r e t i m e on t h e i r b e h a l f .
I a m above a l l a Parliamentarian;
I love P a r l i a m e n t and want to g o on s e r v i n g i t a n d s e r v i n g
in it.
"I s h a l l not go into industry or take paid e m p l o y m e n t .
" I s h a l l n o t a c c e p t t h e h e a d s h i p o r o t h e r office i n a n y p l a c e
of l e a r n i n g , a p a r t f r o m m y p r e s e n t r e l a t i o n s h i p with t h e
U n i v e r s i t y of B r a d f o r d .
I m a y give occasional l e c t u r e s h e r e
or a b r o a d , a s I have for m a n y y e a r s , but not to the d e t r i m e n t
of m y P a r l i a m e n t a r y w o r k .
4
"I want to say this to my s u c c e s s o r , whoever he o r she m a y
be.
" T h i s i s a n office t o c h e r i s h ; s t i m u l a t i n g a n d s a t i s f y i n g .
You will n e v e r h a v e a dull m o m e n t ; you will n e v e r get
b o r e d . But i t is a full-time calling.
T h e s e a r e not the
e a s y , s p a c i o u s , s o c i a l l y - o r i e n t a t e d d a y s of s o m e of m y
predecessors.
A p a r t from quite generous holidays ­
w h e n , thaakfl t o m o d e r n c o m m u n i c a t i o n s , I h a v e n e v e r b e e n
m o r e than m o m e n t s away f r o m Downing S t r e e t - Z have had
t o w o r k s e v e n d a y s a w e e k a t l e a s t 12 t o 14 h o u r s a d a y .
But the v a r i e t y and i n t e r e s t - with, usually, a t l e a s t 500
different documents or s u b m i s s i o n s to r e a d in a n a v e r a g e
weekend after a busy week - m e a n s that you do not get
b o r e d ; consequently, y o u do not get t i r e d .
" £ v e r y P r i m e M i n i s t e r h a s h i s own s t y l e .
But he m u s t know
a l l t h a t i s g o i n g o n . E v e n if h e w e r e t e m p t e d t o b e r e m i s s
i n t h i s , t h e w i d e - o p e n n a t u r e of P r i m e M i n i s t e r ' s
Q u e s t i o n s - e n t i r e l y d i f f e r e n t f r o m t h a t of a n y d e p a r t m e n t a l
M i n i s t e r - r e q u i r e s f a m i l i a r i t y w i t h , a n d u n d e r s t a n d i n g of,
t h e p r o b l e m s of e v e r y D e p a r t m e n t a n d e v e r y p a r t of t h e
country.
" M o r e t h a n t h a t , t h e p r i c e of a n A d m i n i s t r a t i o n ^
continuance and s u c c e s s is e t e r n a l v i g i l a n c e - on duty o r on
c a l l e v e r y m i n u t e of t h e d a y .
Y e t y o u m u s t find t i m e e n o u g h
t o s t a n d b a c k a n d t h i n k a b o u t t h e p r o b l e m s of t h e
Administration, its purpose, its co-ordination and Its
longer-term strategy.
E q u a l l y y o u h a v e t o w a t c h for t h a t
cloud no bigger than a m a n s hand which m a y t h r e a t e n not
t o m o r r o w ^ c r i s i s , but p e r h a p s next m o n t h ' s o r next y e a r ' s .
In a l l this you have got t o think and feel politically a s well
a s in constitutional and administrative t e r m s .
f
"It i s not only the job h e r e in W e s t m i n s t e r , Whitehall and
Parliament.
I t i s the j o b i n t h e c o u n t r y .
T h e l e a d e r of t h e
P a r t y , a n d no l e s s the P r i m e M i n i s t e r , h a s a duty to m e e t
the people, to a d d r e s s political and other m e e t i n g s .
For
13 y e a r s I h a v e a v e r a g e d w e l l o v e r 100 a y e a r , c o v e r i n g
n e a r l y e v e r y c o n s t i t u e n c y , s o m e of t h e m m a n y t i m e s .
"You w i l l b e a b l e to count on m y full s u p p o r t , e s p e c i a l l y w h e n
the going i s r o u g h .
"My advice and experience is available when you seek it:
d o n o t i n t e n d t o offer g r a t u i t o u s a d v i c e .
I
" I w i l l give a n y h e l p I c a n In a n y f o r m y o u a s k , inBide t h a House, in the P a r l i a m e n t a r y P a r t y , and in the country,
apart from accepting a Ministerial appointment.
5
" I n p a r t i c u l a r , I s h a l l b e g u i d e d b y t h e l e t t e r a n d s p i r i t of
the undertaking which a p r e - w a r p r e d e c e s s o r gave when he
stood down for a s u c c e s s o r , who w a s i n fact c h o s e n - not
elected as is our rule - "Once I leave, I leave.
I a m not
going to s p e a k to t h e m a n on t h e b r i d g e , a n d I a m not going
t o s p i t on t h e d e c k " .
"I a m c o n f i d e n t t h a t t h i s b r i e f e l e c t i o n p e r i o d w i l l b e
c o m r a d e l y and not d i v i s i v e .
"In this period e v e r y M i n i s t e r will be expected to put his
full e f f o r t i n t o h i s D e p a r t m e n t a l a n d C a b i n e t d u t i e s .
I will,
of c o u r s e , r e m a i n i n f u l l c h a r g e of t h e A d m i n i s t r a t i o n u n t i l
the e l e c t o r a l p r o c e s s i s c o m p l e t e d , e x e r c i s i n g a l l the r i g h t s
a n d d u t i e s of a P r i m e M i n i s t e r t o t a k e a n y a c t i o n t h a t i s
needed.
"I a m confident t h a t a new P r i m e M i n i s t e r i n taking o v e r w i l l
enjoy f r o m h i s Cabinet the s a m e loyalty, support, u n d e r ­
standing and even, when r e q u i r e d , forgiveness, that it h a s
b e e n m y privilege to enjoy.
"My only advice to him and the Cabinet he f o r m s - and I a m
s u n this advice is not n e c e s s a r y - is t o get out into the
c o u n t r y , m e e t the people, t e l l t h e m , e x p l a i n to t h e m , l i s t e n
t o t h e m ; and above a l l r e m e m b e r the P a r t y i s the P a r t y i n
t h e c o u n t r y - n o t t h e P a l a c e of W e s t m i n s t e r , n o t S m i t h
Square.
"In r e t u r n I would a s k the P a r t y e v e r y w h e r e - and I hope
t h a t o u r P r e s s £ c i e n d t , a l l of w h o m I f o r g i v e , w i l l a l l o w m e
to s a y this t o t h e m a s well - that in a l l c i r c u m s t a n c e s a l l
c o n c e r n e d w i l l c o m p l y w i t h t h e s p i r i t of t h e S p e a k e r * s
P e t i t i o n t o T h e Q u e e n o n b e h a l f of t h e C o m m o n s w h e n a n e w
P a r l i a m e n t m e e t s : "That the m o s t favourable construction
m a y b e p l a c e d on a l l y o u r p r o c e e d i n g s " .
1 1
T h e P r i m s M i n i s t e r * * i d t h t t fa* w i s h e d t o e m p h a s i s e t h a t the
t i m i n g of t h i s m a t t e r w a s n o t r e l a t e d t o a n y r e c e n t e v e n t s .
He
had considered resigning before the l a s t P a r t y Conference and
t h e n a g a i n a t C h r i s t m a s : but h e had felt it n e c e s s a r y t o r e m a i n
i n o r d e r t o l e a d t h e c a m p a i g n f o r a c c e p t a n c e of t h e p a y p o l i c y
s e t f o r t h e y e a r f r o m t h e e n d of J u l y 1 9 7 5 .
If h e h a d d e l a y e d
a n y l o n g e r h o w e v e r t h i s would have p o s e d p r o b l e m s i n r e l a t i o n
t o t h e n e g o t i a t i o n s for t h e s e c o n d r o u n d of c o u n t e r - i n f l a t i o n
policy.
He had t h e r e f o r e decided a s long a g o a s l a s t D e c e m b e r
t h a t m i d d l e o r l a t e M a r c h would be the r i g h t m o m e n t .
This
m a r k e d i n e f f e c t t h e t u r n of t h e h i n g e w h e n t h e 1 9 7 5 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 fully e s t a b l i s h e d a n d t h e 1 9 7 6 p o l i c y w a s a b o u t
to be worked out.
H e h a d not announced h i s intention on h i s
6
sixtieth birthday because this coincided with two by-elections,
a n d h e h a d a l s o b a d t o t a k e i n t o a c c o u n t t h e s i t u a t i o n on t h e
foreign exchange m a r k e t .
The s t e r l i n g r a t e had now s t e a d i e d ,
b u t i t w o u l d c l e a r l y b e of t h e g r e a t e s t i m p o r t a n c e t o p r e s e n t v e r y
fully the r e a s o n s for b i s d e c i s i o n and thus a v o i d a n y s p e c u l a t i o n
that it a r o s e f r o m anything other than the original decision which
h e h a d t a k e n i n M a r c h 1974 t h a t h e w o u l d n o t r e m a i n a s P r i m e
Minister for m o r e than two y e a r s .
He proposed therefore to
r e l e a s e t o t h e P r e s s t h e t e x t of t h e s t a t e m e n t w h i c h h e h a d j u s t
m a d e to the Cabinet.
Suitable m e s s a g e s w e r e being sent to s o m e
f o r e i g n H e a d s of G o v e r n m e n t a n d t o c e r t a i n o t h e r p e r s o n s ,
i n c l u d i n g t h e G o v e r n o r of the B a n k of E n g l a n d , w h o n e e d e d t o b e
Informed without delay.
He proposed to a b s e n t himself f r o m the
r e s t of t h e m e e t i n g i n o r d e r t o i n f o r m t h e C h a i r m a n of t h e
P a r l i a m e n t a r y Labour Party and a s k h i m to set in hand the
n e c e s s a r y constitutional p r o c e d u r e s for electing a new L e a d e r .
THE LORD PRESIDENT O F THE COUNCIL said that the Cabinet
had listened to the P r i m e Minister 's s t a t e m e n t , which to their
r e g r e t he had said was irrevocable, with v e r y g r e a t s a d n e s s .
T h e y w e r e indeed stunned: and a t this s t a g e he could only convey
to the P r i m e M i n i s t e r t h e i r v e r y h e a r t f e l t thanks for e v e r y t h i n g
which he h a d done for t h e m .
THE F O R E I G N AND COMMONWEALTH S E C R E T A R Y a g r e e d
that this w a s not the t i m e for t r i b u t e s to the P r i m e M i n i s t e r
who would continue to d i r e c t t h e i r c o u n s e l s until a new L e a d e r
had been chosen.
He wanted h o w e v e r to a d d that h i s t o r y would
d e a l e v e n m o r e kindly with the P r i m e M i n i s t e r t h a n h i s
contemporaries.
It w a s s o m e t i m e s s a i d t h a t t h e P r i m e M i n i s t e r
had displayed a unique facility in keeping the L a b o u r P a r t y
t o g e t h e r : but i t b a d a l s o to be r e m e m b e r e d t h a t in m a i n t a i n i n g a
u n i t e d P a r t y , a s w i t h h i s SUCCOSB on o t h e r m a t t e r s , t h e P r i m e
M i n i s t e r had s e r v e d the nation well.
The Cabinet ­
1.
T o o k n o t e , w i t h r e g r e t , of t h e s t a t e m e n t
by the P r i m e Minister.
2.
T o o k n o t e , w i t h w a r m a p p r o v a l , of t h e
s t a t e m e n t s by the Lord P r e s i d e n t and the
F o r e i g n and Commonwealth S e c r e t a r y .
THE LAW ON
CONSPIRACY
Previous
^ference;
C ( 7 6 ) 8th
Conclusions,
Minute 5
C
Z.
T h e C a b i n e t r e s u m e d t h e i r d i s c u s s i o n of t h e t i m i n g of t h e
G o v e r n m e n t l e g i s l a t i o n which would follow the Law C o m m i s s i o n s
r e p o r t on t h e l a w of c o n s p i r a c y i n E n g l a n d a n d W a l e s , w h i c h w a s
t o b e p u b l i s h e d the following d a y .
THE HOME S E C R E T A R Y said that on 4 M a r c h the Cabinet had
invited the L o r d P r e s i d e n t and himself, with the other M i n i s t e r s
concerned, to consider urgently by what m e a n s i t might be possible
t o e n a c t P a r t I of t h e L a w C o m m i s s i o n s d r a f t B i l l t h i s S e s s i o n .
B e f o r e t h i s d i s c u s s i o n h e h a d m e t r e p r e s e n t a t i v e s of t h e T r a d e s
Union C o n g r e s s (TUC). This had been a v e r y s m a l l , low-level
d e p u t a t i o n , w h e r e a s e a r l i e r T U C d e p u t a t i o n s on r e l a t e d m a t t e r s
had been large and high-level.
He had explained the position to
the deputation and a s k e d them w h e t h e r , given a choice, they would
p r e f e r legislation this Session or next.
They had recognised that
the Law C o m m i s s i o n s proposals w e r e complicated, and a p p e a r e d
to be disposed to a c c e p t the need for further study with a view to
legislation next Session.
The L o r d C h a n c e l l o r and the A t t o r n e y G e n e r a l now took the view that it would b e i m p r a c t i c a b l e to l i m i t
t h e l e g i s l a t i o n t o P a r t I of t h e L a w C o m m i s s i o n s p r o p o s a l s ,
dealing with conspiracy generally.
In the c i r c u m s t a n c e s he thought
i t w o u l d b e b e t t e r not t o p r o c e e d w i t h i m m e d i a t e l e g i s l a t i o n , w h i c h
w o u l d i n v o l v e t h e r i s k of a b o t c h e d B i l l g e t t i n g b o g g e d d o w n i n
P a r l i a m e n t , a l t h o u g h if t h e T U C w e r e s u b s e q u e n t l y t o u r g e
l e g i s l a t i o n this S e s s i o n it would be n e c e s s a r y t o h a v e a n o t h e r look
at t h e position.
He p r o p o s e d t h a t , a f t e r p u b l i c a t i o n of t h e r e p o r t ,
t h e G o v e r n m e n t s h o u l d i n d i c a t e t h e i r i n t e n t i o n of l e g i s l a t i n g e a r l y
n e x t S e s s i o n , a t l e a s t on P a r t I .
THE LORD CHANCELLOR said that he a g r e e d with this c o u r s e .
I n h i s v i e w , i t w o u l d b e i m p r a c t i c a b l e , a l m o s t t o t h e p o i n t of
I m p o s s i b i l i t y , t o r e f o r m t h e p r e s e n t l a w on c o n s p i r a c y g e n e r a l l y ,
a s i n P a r t I, while m a i n t a i n i n g t h e c o r r e s p o n d i n g l a w i n r e l a t i o n t o
s q u a t t i n g a n d o b s c e n i t y b y d e f e r r i n g a c t i o n o n P a r t s II a n d H I of t h e
Law Commissions proposals.
M i n i s t e r s h a d n o t y e t fully d i s c u s s e d
t h e m a j o r p o i n t s of p o l i c y w h i c h a r o s e o n P a r t s II a n d III, a n d p u b l i c
r e a c t i o n t o t h e s e p r o p o s a l s would be i m p o r t a n t .
THE LORD PRESIDENT OF THE COUNCIL, 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 the Cabinet a g r e e d that, about a w e e k after the
p u b l i c a t i o n of the L a w C o m m i s s i o n s r e p o r t , t h e H o m e S e c r e t a r y
should announce the G o v e r n m e n t s intention, following c o n s u l t a t i o n s
w i t h i n t e r e s t e d b o d i e s , t o l e g i s l a t e a t t h e s t a r t of n e x t S e B B i o n ,
c e r t a i n l y on P a r t I of t h e L a w C o m m i s s i o n s p r o p o s a l s a n d , s u b j e c t
t o p u b l i c r e a c t i o n s , o n P a r t s II a n d H I .
The H o m e S e c r e t a r y would
a l s o a r r a n g e for any guidance t o the P r e s s w h i c h m i g h t be n e c e s s a r y
b e t w e e n p u b l i c a t i o n of t h e r e p o r t a n d t h e G o v e r n m e n t a n n o u n c e m e n t .
The Cabinet T o o k n o t e , w i t h a p p r o v a l , of t h 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 b y t h e L o r d P r e s i d e n t of t h e C o u n c i l , a n d
invited the Home S e c r e t a r y to proceed accordingly.
8
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 t h e S e c r e t a r y of
S t a t e f o r T r a d e (C(76) 30) on t h e i n t e r i m r e p o r t b y t h e R o y a l
C o m m i s s i o n on the P r e s s .
THE SECRETARY OF STATE F O R TRADE said that the Royal
C o m m i s s i o n o n t h e P r e s s h a d b e e n a s k e d i n S e p t e m b e r 1975 t o
p r o d u c e an u r g e n t i n t e r i m r e p o r t on the financial s i t u a t i o n and
p r o s p e c t s f o r t h e n a t i o n a l n e w s p a p e r I n d u s t r y b e c a u s e of w i d e s p r e a d
f e a r s t h a t one o r m o r e n a t i o n a l n e w s p a p e r s m i g h t c l o s e w h i l e t h e
C o m m i s s i o n was pursuing its general r e m i t .
The i n t e r i m r e p o r t
w a s t o b e p u b l i s h e d the following d a y .
T h e e s s e n c e of i t s
r e c o m m e n d a t i o n s w a s t h a t r e d u c t i o n of c o s t s b y i n t r o d u c t i o n of n e w
e q u i p m e n t a n d a g r e e d r e d u c t i o n of m a n p o w e r w a s t h e o n l y w a y t o
s e c u r e an e a r l y improvement in the i n d u s t r y ^ financial position.
The Royal C o m m i s s i o n saw joint d i s c u s s i o n s which w e r e being held
b e t w e e n m a n a g e m e n t and unions a s a m a j o r opportunity for p r o m o t i n g
these changes.
They r e j e c t e d a n y g e n e r a l subsidy for the P r e s s and
c o n s i d e r e d that m o s t national n e w s p a p e r s could b o r r o w from the
p r i v a t e s e c t o r t o finance the c a p i t a l i n v e s t m e n t and the r e d u n d a n c y
p a y m e n t s which would be involved.
They had however recommended
that n e w s p a p e r s unable to b o r r o w f r o m the p r i v a t e s e c t o r should be
p e r m i t t e d t o b o r r o w f r o m the G o v e r n m e n t and that, i n addition, the
G o v e r n m e n t s h o u l d p r o v i d e a m e a s u r e of i n t e r e s t r e l i e f on a l l
b o r r o w i n g for t h i s p u r p o s e f r o m w h a t e v e r s o u r c e .
The i n t e r i m
r e p o r t had b e e n c o n s i d e r e d by a m e e t i n g under the P r i m e M i n i s t e r ' s
c h a i r m a n s h i p which had a g r e e d that the r e p o r t should be b r o a d l y
welcomed.
The i m p e t u s provided by the r e p o r t and by the a g r e e m e n t
i n p r i n c i p l e a l r e a d y r e a c h e d between the m a n a g e m e n t and the t r a d e s
unions provided a unique opportunity for bringing about r a d i c a l change
b y a g r e e m e n t i n a n i n d u s t r y w h i c h h a d a h i s t o r y of f a i l u r e t o a g r e e o n
such matters.
However the draft s t a t e m e n t which he proposed to
m a k e , and which w a s attached to C(76) 30, avoided a n y c o m m i t m e n t s
on the G o v e r n m e n t t o provide a s s i s t a n c e .
These could not be given
until m o r e d e t a i l s w e r e available and a m o r e detailed a g r e e m e n t had
been reached between management and unions.
In d i s c u s s i o n i t w a s questioned w h e t h e r it w a s n e c e s s a r y for any
s u b s t a n t i a l s t a t e m e n t t o b e m a d e a t t h e t i m e of p u b l i c a t i o n of t h e
report.
A g r e e m e n t e v e n i n p r i n c i p l e t o p r o v i d e p u b l i c funds t o t h e
newspaper i n d u s t r y r a i s e d important i s s u e s , for example a s to
c o n d i t i o n s w h i c h s h o u l d b e i m p o s e d , w h i c h n e e d e d t o b e fully
considered.
On the o t h e r hand it w a s a r g u e d s t r o n g l y that the
G o v e r n m e n t h a d r e q u e s t e d a r e p o r t t o b e m a d e a s a m a t t e r of
u r g e n c y and that i t w a s incumbent on t h e m t o give s o m e indication
of t h e i r v i e w s a s s o o n a s i t w a s p u b l i s h e d .
9
In further d i s c u s s i o n it w a s pointed out t h a t the C o m m i s s i o n had
e n v i s a g e d t w o d i s t i n c t f o r m s of a s s i s t a n c e t o t h e i n d u s t r y .
Firstly
they h a d r e c o m m e n d e d that n e w s p a p e r s w h i c h w e r e unable to r a i s e
loans from c o m m e r c i a l s o u r c e s should be provided with loans from
public funds.
Secondly they had r e c o m m e n d e d m a t a l l l o a n s , f r o m
whatever s o u r c e , should r e c e i v e a n i n t e r e s t subsidy f r o m the
Government for 2 y e a r s .
T h e f i r s t of t h e s e r a i s e d p r o b l e m s i n
r e l a t i o n to the G o v e r n m e n t ' s i n d u s t r i a l s t r a t e g y , for i t r e q u i r e d
the G o v e r n m e n t t o provide a s s i s t a n c e to c o m p a n i e s which w e r e not
sufficiently c r e d i t - w o r t h y to b o r r o w on the c o m m e r c i a l m a r k e t .
T h e u s e of S e c t i o n 8 of t h e I n d u s t r y A c t 1972 w o u l d c a u s e p a r t i c u l a r
p r o b l e m s , and no c o m m i t m e n t should be given on t h i s .
There
w e r e s t i l l m o r e s e r i o u s objections to the s e c o n d r e c o m m e n d a t i o n
and t h e r e w a s a s t r o n g c a s e for m a k i n g c l e a r f r o m the outset t h a t
t h e r e w a s n o q u e s t i o n of t h e G o v e r n m e n t p r o v i d i n g s u c h a s u b s i d y .
O n t h e o t h e r h a n d i t w a s s t r o n g l y a r g u e d t h a t t h e p r o v i s i o n of a l o a n
f r o m p u b l i c funds t o t h o s e n e w s p a p e r s u n a b l e t o b o r r o w f r o m
c o m m e r c i a l s o u r c e s w a s a n e s s e n t i a l e l e m e n t In the R o y a l
Commission^ recommendations.
Their objective had been to
e n s u r e t h a t a l l n e w s p a p e r h o u s e s m o v e d t o g e t h e r : if s o m e p u r s u e d
a n independent c o u r s e the failures to m o d e r n i s e w h i c h had b e e n
c h a r a c t e r i s t i c of t h e p a s t w e r e l i k e l y t o b e r e p e a t e d .
Given the
s e r i o u s n e s s of t h e c o n d i t i o n of t h e i n d u s t r y i t w a s n e c e s s a r y t o
p r e s e r v e t h e m o m e n t u m w h i c h h a d b e e n b r o u g h t a b o u t b y t h e w o r k of
t h e R o y a l C o m m i s s i o n a n d t o t h i s e n d s o m e c a l l o n p u b l i c funds
might be n e c e s s a r y .
The C o m m i s s i o n justified the recommendation
f o r a n i n t e r e s t s u b s i d y on s i m i l a r g r o u n d s b u t on t h i s i s s u e t h e i r
c a s e w a s m u c h l e s s strong, and it would be r i g h t for the G o v e r n m e n t
to be wholly non-committal.
T h e p o s s i b i l i t y of s u c h a l i m i t e d s u b s i d y
should not, however, be ruled out.
THE FOREIGN AND COMMONWEALTH S E C R E T A R Y , s u m m i n g up
the discussion, said that the Cabinet w e r e a g r e e d that it would be
r i g h t f o r t h e G o v e r n m e n t t o m a k e a s t a t e m e n t of t h e i r a t t i t u d e t o t h e
R o y a l C o m m i s s i o n ^ r e p o r t a t t h e t i m e of p u b l i c a t i o n o n t h e l i n e s of
the d r a f t a t t a c h e d t o C(76) 30.
There was however a wide m e a s u r e
of a g r e e m e n t t h a t n o c o m m i t m e n t s h o u l d b e g i v e n t o t h e p r o v i s i o n of
p u b l i c f u n d s , p a r t i c u l a r l y for a n i n t e r e s t s u b s i d y .
The general view
w a s t h a t a n a p p r o p r i a t e a m e n d m e n t to the d r a f t s t a t e m e n t would be
to delete the w o r d s "but, above a l l , in p r e s e n t financial c i r c u m s t a n c e s ,
w h e n t h e a v a i l a b i l i t y of p u b l i c f u n d s m u s t n e c e s s a r i l y b e v e r y l i m i t e d ,
i t i s i m p e r a t i v e f o r a l l c o n c e r n e d t o h a v e t h e m e a s u r e s of t h e f i g u r e s
i n v o l v e d . " f r o m t h e s e c o n d p a g e of t h e d r a f t s t a t e m e n t .
The
S e c r e t a r y of S t a t e f o r T r a d e s h o u l d c o n s i d e r t h i s p r o p o s a l a n d a d v i s e
t h e m e m b e r s of t h e C a b i n e t u r g e n t l y i n c o r r e s p o n d e n c e if h e w e r e n o t
able to accept it.
If p r e s s e d o n t h e q u e s t i o n of a n i n t e r e s t s u b s i d y ,
t h e S e c r e t a r y of S t a t e s h o u l d t a k e a n e g a t i v e r a t h e r t h a n a p o s i t i v e
l i n e : h e s h o u l d a l s o a v o i d a c c e p t i n g t h a t S e c t i o n 8 of t h e I n d u s t r y
A c t 1972 w o u l d b e u s e d i f a s s i s t a n c e w e r e t o b e p r o v i d e d .
10
The Cabinet ­
1.
T o o k n o t e , w i t h a p p r o v a l , of 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 ' s s u m m i n g u p of t h e i r
discussion.
2.
Approved the draft s t a t e m e n t a t t a c h e d t o
C(76) 30, subject t o the a m e n d m e n t indicated i n the
F o r e i g n and Commonwealth S e c r e t a r y ^ s u m m i n g up
of t h e i r d i s c u s s i o n .
11
4.
D u r i n g a b r i e f f u r t h e r d i s c u s s i o n , in t h e a b s e n c e of t h e
P r i m e M i n i s t e r , about the P r i m e M i n i s t e r ' s intention to r e s i g n t h e
suggestion was made that, while any f o r m a l t r i b u t e s could m o r e
appropriately come later, the Cabinet during t h e i r p r e s e n t meeting
s h o u l d I s s u e a Bhort s t a t e m e n t .
This was desirable on two grounds:
f i r s t l y , t o e x p r e s s t h e C a b i n e t ' e s e n s e of l o s s a n d i t s p r o f o u n d
g r a t i t u d e to the P r i m e Minister for the unique s e r v i c e h e had given
o v e r 13 y e a r s , a n d s e c o n d l y t o u n d e r l i n e t h e p o i n t t h a t t h i s w a s a
p e r s o n a l a n d I r r e v o c a b l e d e c i s i o n of w h i c h t h e C a b i n e t h a d n o
foreknowledge.
Following f u r t h e r d i s c u s s i o n the Cabinet c o n s i d e r e d the following
draft statement:­
" C a b i n e t thiB m o r n i n g l e a r n e d w i t h d e e p r e g r e t of t h e w h o l l y
unexpected m e s s a g e which the P r i m e Minister had e a r l i e r
conveyed to The Queen.
T h e y would h a v e w i s h e d It o t h e r w i s e .
They must r e s p e c t what he h a s d e s c r i b e d a s a p e r s o n a l and
irrevocable decision.
The P r i m e Minister h a s c a r r i e d the
b u r d e n s of l e a d e r s h i p w i t h o u t s t a n d i n g w i s d o m a n d d e d i c a t i o n .
T h e w h o l e C a b i n e t w i s h e s t o p l a c e on r e c o r d i m m e d i a t e l y i t s
s e n s e of l o s s a n d i t s p r o f o u n d g r a t i t u d e t o H a r o l d W i l s o n f o r
the unique service he h a s given to his country and his P a r t y
o v e r t h e p a s t 13 y e a r s " .
The Cabinet Approved the statement and instructed the S e c r e t a r y
of t h e C a b i n e t t o a r r a n g e f o r i t s i m m e d i a t e r e l e a s e
to the P r e s s .
12
rj
, i
i
EjlL
V^BXJILDING
f^USTRy
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 (C(76) 2 4 ) b y t h e
S e c r e t a r y of S t a t e f o r I n d u s t r y o n t h e f u t u r e p r o s p e c t s f o r t h e
shipbuilding industry.
THE S E C R E T A R Y OF S T A T E F O R INDUSTRY said that the
M i n i s t e r i a l C o m m i t t e e on E c o n o m i c a n d I n d u s t r i a l P o l i c y h a d
r e c e n t l y c o n s i d e r e d t h e f u t u r e p r o s p e c t s of t h e s h i p b u i l d i n g i n d u s t r y
and had a g r e e d that he should m a k e a r e p o r t t o the Cabinet.
In
h i s v i e w this w a s the m o s t s e v e r e i n d u s t r i a l p r o b l e m facing the
Government.
M a r k e t conditions w e r e e x t r e m e l y difficult with
w o r l d d e m a n d f o r s h i p s a t p r e s e n t o n l y 25 p e r c e n t of w o r l d c a p a c i t y .
A s a r e s u l t of t h e e n e r g y c r i s i s n o n e w t a n k e r s w o u l d b e n e e d e d f o r
s o m e y e a r s a n d a s a r e s u l t of t h e w o r l d r e c e s s i o n t h e d e m a n d f o r
d r y c a r g o ships had fallen s h a r p l y .
The British industry was
u n c o m p e t i t i v e - J a p a n e s e y a r d s w e r e quoting p r i c e s 50 p e r c e n t
b e l o w t h o s e of B r i t i s h y a r d s w h i l e E u r o p e a n p r i c e s w e r e 2 0 p e r c e n t
below British.
T h e J a p a n e s e i n d u s t r y a l r e a d y h a d 5 0 p e r c e n t of
t h e w o r l d m a r k e t a n d o n p r e s e n t t r e n d s w o u l d s o o n h a v e 80 p e r c e n t .
T h e B r i t i s h i n d u s t r y h a d s e c u r e d o n l y 1 n e w o r d e r s i n c e O c t o b e r 1975
and Govan Shipbuilders Ltd, a s an example, had taken no o r d e r s since
t h e m i d d l e of 1 9 7 4 .
The i n d u s t r y a t p r e s e n t e m p l o y e d s o m e 70, 000
directly and probably as many again indirectly.
The employment
w a s heavily concentrated i n a r e a s a l r e a d y faced with s e r i o u s u n e m p l o y ­
ment problems.
If n o f u r t h e r o r d e r s w e r e t a k e n t h i s e m p l o y m e n t
w o u l d f a l l b y a h a l f b y t h e e n d of 1977 a n d w o u l d b r i n g u n e m p l o y m e n t
i n t h e a r e a s a f f e c t e d t o 20 p e r c e n t .
The p r o s p e c t s w e r e that it might
r u n a t this l e v e l w e l l into the 1980s.
T h e r e s e e m e d n o p r o s p e c t of
a l t e r n a t i v e j o b s b e i n g c r e a t e d a t t h e n e x t e c o n o m i c u p t u r n Bince t h e
a r e a s affected would a l s o be facing a t the s a m e t i m e the r a t i o n a l i s a t i o n
of t h e s t e e l i n d u s t r y a n d t h e c o n t r a c t i o n of t h e a i r c r a f t i n d u s t r y .
T h o s e unemployed would be a l m o s t a l l m a l e s and the l o c a l p r o b l e m s
would be the w o r s e b e c a u s e the shipbuilding i n d u s t r y had t r a d i t i o n a l l y
b e e n a m a j o r s o u r c e of a p p r e n t i c e s h i p s . T h e B i l l f o r t h e n a t i o n a l i s a ­
t i o n of t h e i n d u s t r y w a s m a k i n g s a t i s f a c t o r y p r o g r e s s t h r o u g h t h e
H o u s e of C o m m o n s a n d w a s n o l o n g e r b e i n g v e r y s t r e n u o u s l y o p p o s e d .
However t h e r e was no point in continuing with the Bill unless steps
w e r e taken to s e c u r e further o r d e r s for the i n d u s t r y .
In a n y event
t h e f u t u r e c o n t r a c t i o n of t h e i n d u s t r y w o u l d b e b l a m e d on n a t i o n a l i s a t i o n .
H e p r o p o s e d t h a t , i n a j o i n t a p p r o a c h w i t h t h e S e c r e t a r y of S t a t e f o r
T r a d e , h e should put the s t r o n g e s t p r e s s u r e on B r i t i s h s h i p o w n e r s t o
place more orders in British shipyards.
While p r o p e r r e g a r d needed
t o b e g i v e n t o t h e i n t e r e s t s of t h e s h i p p i n g i n d u s t r y I t h a d t o b e
r e m e m b e r e d that they had benefitted in the y e a r s 1967-76 from
i n v e s t m e n t g r a n t s of £ 5 8 6 m i l l i o n , of w h i c h £ 4 5 8 m i l l i o n h a d b e e n
towards o r d e r s placed in foreign shipyards.
Although investment
g r a n t s w e r e being p h a s e d out a f u r t h e r £ 80 m i l l i o n h a d b e e n paid the
p r e v i o u s y e a r and e v e n now the i n d u s t r y w e r e a b l e t o c h a r g e
d e p r e c i a t i o n of 1 0 0 p e r c e n t i n t h e f i r s t y e a r f o r s h i p s o r d e r e d a b r o a d .
If t h e v o l u n t a r y a p p r o a c h h e p r o p o s e d d i d n o t b r i n g a d e q u a t e r e s u l t s
m o r e d r a s t i c m e a s u r e s , such a s legislation o r fiscal m e a s u r e s would
need to be seriously considered.
The alternative, that a major
13
shipping nation should have its shipbuilding industry d e s t r o y e d , was
intolerable.
A p a r t from m e a s u r e s to s e c u r e new o r d e r s w o r k was
a l r e a d y I n h a n d on a s p e c i a l r e d u n d a n c y s c h e m e , t o b e f i n a n c e d
d i r e c t l y b y t h e G o v e r n m e n t , t o a l l e v i a t e t h e s o c i a l c o n s e q u e n c e s of
t h e c o n t r a c t i o n of t h e i n d u s t r y .
This did not however need to be
considered at the p r e s e n t stage.
T H E S E C R E T A R Y O F S T A T E F O R N O R T H E R N I R E L A N D Bald t h a t
w h i l e t h e S e c r e t a r y of S t a t e f o r l a d u s t r y ' a r e p o r t d i d n o t c o v e r t h e
i n d u s t r y In N o r t h e r n I r e l a n d the s a m e difficulties a r o s e .
Consideration
w a s b e i n g g i v e n t o a r e d u c t i o n I n t h e l a b o u r f o r c e a t H a r l a n d a n d Wolff
f r o m 9, 0 0 0 t o 4 , 000 m e n .
He was wholly in a g r e e m e n t with the
S e c r e t a r y of S t a t e f o r I n d u s t r y a n d c o n s i d e r e d i t w o u l d b e i n d e f e n s i b l e
t o p e r m i t t h e t h r e a t e n e d r e d u c t i o n of t h e i n d u s t r y .
I n 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 o n t h e g r a v i t y of t h e
p r o b l e m s f a c i n g t h e s h i p b u i l d i n g i n d u s t r y a n d of t h e n e e d f o r a c t i o n
to e n s u r e that it was maintained.
It w a s a r g u e d t h a t i t would be
w h o l l y a g a i n s t t h e n a t i o n a l i n t e r e s t t o a l l o w t h e d e s t r u c t i o n of t h e
r e s o u r c e s of s k i l l w h i c h h a d b e e n b u i l t u p i n t h e i n d u s t r y a n d t h a t
r e d u n d a n c i e s on t h e s c a l e t h r e a t e n e d w e r e i n t o l e r a b l e i n t h e a r e a s
in which the industry was concentrated.
It w a s h o w e v e r p o i n t e d out
t h a t t h e s u r p l u s of
- shipping capacity In the w o r l d would s e v e r e l y
l i m i t t h e a m o u n t of n e w o r d e r s t o b e p l a c e d a n d t h e i n d u s t r y w o u l d b e
faced with v e r y acute o v e r s e a s competition for many y e a r s .
The
shipbuilding industries in other countries, notably Japan and Sweden,
w e r e m u c h m o r e efficient. R e s t r i c t i v e p r a c t i c e s and poor m a n a g e m e n t
in the B r i t i s h i n d u s t r y had s e r i o u s l y d a m a g e d i t s p r o s p e c t s .
There
would be a d v a n t a g e in a m a j o r effort b e i n g m a d e t o b r i n g h o m e to a l l
t h o s e who w o r k e d in the industry, not m e r e l y the t r a d e s union l e a d e r s ,
the difficulties which the i n d u s t r y f a c e d .
While t h e r e was g e n e r a l support for the p r o p o s a l for p r e s s u r e to be
b r o u g h t on the B r i t i s h shipping i n d u s t r y to place f u r t h e r o r d e r s i t
was a r g u e d strongly that the scope for s e c u r i n g o r d e r s in this way
was limited.
The shipping i n d u s t r y now had a m o d e r n fleet and still
had 3 million tons awaiting delivery f r o m B r i t i s h s h i p y a r d s .
They
could not be f o r c e d to o r d e r s h i p s they did not n e e d .
T h e r e was no
point in adopting m e a s u r e s to r e s c u e the shipbuilding industry which
m i g h t s e r i o u s l y d a m a g e t h e p r o s p e r i t y of t h e s h i p p i n g i n d u s t r y .
The
difficulties In shipbuilding w e r e faced not only by the B r i t i s h but by
t h e E u r o p e a n a n d i n d e e d the w h o l e w o r l d i n d u s t r y .
There was a case
for a c t i o n w i t h i n t h e E u r o p e a n E c o n o m i c C o m m u n i t y b o t h t o c o n c e r t
action to deal with Japanese competition and also to deal with the
s t r u c t u r a l u n e m p l o y m e n t p r o b l e m s f a c e d i n a n u m b e r of M e m b e r
States.
A C o m m u n i t y - w i d e a p p r o a c h could b o t h b e beneficial to the
B r i t i s h i n d u s t r y a n d a v o i d t h e d i f f i c u l t i e s w h i c h w o u l d b e f a c e d if
Britain pursued a purely national approach.
14
I n f u r t h e r d i s c u s s i o n i t w a s p o i n t e d o u t t h a t t h e M i n i s t r y of D e f e n c e
would need to place a substantial o r d e r for ships i n coming y e a r s .
Their planned p r o g r a m m e , amounting to £120 million per annum
included 2 l a r g e fleet t a n k e r s , a n u n d e r w a t e r r e s e a r c h v e s s e l ,
and f a s t p a t r o l c r a f t .
- It would b e p o s s i b l e for t h e s e
o r d e r s to be brought forward, and to be placed outside the specialist
p r o d u c e r s , b u t t h i s w o u l d d e p e n d o n funds b e i n g m a d e a v a i l a b l e
o u t s i d e t h e e x i s t i n g p r o v i s i o n s f o r t h e M i n i s t r y of D e f e n c e .
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 , s u m m i n g u p
t h e d i s c u s s i o n , s a i d t h a t t h e g e n e r a l v i e w of t h e C a b i n e t w a s t h a t
a c t i o n m u s t b e t a x e n t o p r e v e n t t h e d e s t r u c t i o n of t h e s h i p b u i l d i n g
industry.
It would b e a b s u r d for a m a j o r m a r i t i m e n a t i o n to
b e c o m e w h o l l y d e p e n d e n t o n o v e r s e a s s u p p l i e r s of s h i p s .
The
S e c r e t a r y of S t a t e for I n d u s t r y h a d p r o p o s e d a v a r i e t y of m e a s u r e s
w h i c h m i g h t b e t a k e n a n d tills a c t i o n s h o u l d b e k e p t u n d e r r e v i e w b y
t h e M i n i s t e r i a l C o m m i t t e e on E c o n o m i c a n d I n d u s t r i a l P o l i c y .
The
p r o p o s a l m a t p r e s s u r e should b e put upon B r i t i s h s h i p o w n e r s t p
p l a c e further o r d e r s in B r i t i s h s h i p y a r d s w a s a p p r o v e d b u t the
p o s s i b i l i t y t h a t m i s m i g h t be followed b y f u r t h e r s t e p s would need
careful consideration.
The M i n i s t e r i a l C o m m i t t e e on E c o n o m i c and
I n d u s t r i a l P o l i c y s h o u l d a l s o e x a m i n e t h e p o s s i b i l i t y of d e f e n c e o r d e r s
being brought forward.
While the c o n s e q u e n c e s for public e x p e n d i t u r e
w o u l d c a u s e d i f f i c u l t y f o r a l l M i n i s t e r s m i s w o u l d b e t r u e of m o s t of
t h e c o u r s e s of a c t i o n w h i c h w e r e o p e n .
T h e C o m m i t t e e should, a l s o
t a k e u p v e r y a c t i v e l y t h e q u e s t i o n of a n i n i t i a t i v e w i t h i n t h e E u r o p e a n
Economic Community.
This might cover not m e r e l y action to d e a l
with the i n t e n s e competition f r o m J a p a n b u t a l s o a c t i o n on a
Community level to deal with the s t r u c t u r a l unemployment in the
industries within E u r o p e .
T h e S e c r e t a r y of S t a t e f o r I n d u s t r y , i n
c o n s u l t a t i o n w i t h 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 a n d
Scotland should c o n s i d e r how b e s t t o b r i n g h o m e t o a l l those who
w o r k e d in the i n d u s t r y , the s e v e r e p r o b l e m s which had t o be faced.
The M i n i s t e r i a l C o m m i t t e e should a r r a n g e to m a k e a further r e p o r t
to the Cabinet on all these proposals at an e a r l y d a t e .
The Cabinet ­
1.
T o o k n o t e , w i t h a p p r o v a l , of t h 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 by the F o r e i g n and Commonwealth S e c r e t a r y .
2.
Instructed the S e c r e t a r i e s to a r r a n g e for the
M i n i s t e r i a l C o m m i t t e e on E c o n o m i c and I n d u s t r i a l P o l i c y
to c o n s i d e r further the p r o p o s a l s outlined i n the s u m m i n g up.
3.
I n v i t e d t h e S e c r e t a r y of S t a t e f o r I n d u s t r y i n
c o n s u l t a t i o n w i t h 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 for Scotland to consider how b e s t to bring home to a l l
t h o s e i n t h e i n d u s t r y t h e s e v e r i t y of t h e s i t u a t i o n .
C a b i n e t Office
16 M a r c h 1976
15