(c) crown copyright
Catalogue Reference:CAB/128/51/18
Image Reference:0001
Pfjca/
SECRET
W
T H I S D O C U M E N T IS T H E P R O P E R T Y
OF HER BRITANNIC MAJESTY'S
CM(73) 17th
GOVERNMENT
COPY NO
g Q
Conclusions
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
held at 10 Downing Street on
TUESDAY 20 M A R C H
at 10. 30
1973
am
PRESENT
The Rt Hon Edward Heath
Prime Minister The Rt Hon Sir Alec Douglas-Home
S e c r e t a r y of State for F o r e i g n
Commonwealth
The EUHon Lord H a i l e h a m of St-Marylfboce..
Lord
Chancellor
Affairs
The Rt Hon Anthony Barber
Chancellor
MP
and
MP MP
The Rt Hon William White law
MP
of t h e
Exchequer
S e c r e t a r y of State for N o r t h e r n
The Rt Hon Lord
Carrington
The Rt Hon Robert Carr
S e c r e t a r y of State for
Defence
Ireland
MP
S e c r e t a r y of S t a t e for the
Home
Department
The Rt Hon James
Prior
L o r d P r e s i d e n t of the
MP
Council
The Rt Hon Geoffrey Rippon QC
S e c r e t a r y of S t a t e for the
MP
Environment
The Rt Hon Sir Keith Joseph
MP
S e c r e t a r y of State for S o c i a l
Services
The Rt Hon Margaret Thatcher
MP
S e c r e t a r y of S t a t e for E d u c a t i o n
and
Science
The Rt Hon Gordon Campbell
S e c r e t a r y of State for
The Rt Hon The E a r l
Lord Privy
MP
Scotland
Jellicoe
Seal
The Rt Hon Peter Walker
MP
S e c r e t a r y of State for T r a d e and
The Rt Hon Peter
T h o m a s QC
S e c r e t a r y of State for
MP
Wales
The Rt Hon Maurice Macmillan M P
The Rt Hon Sir Geoffrey Howe QC
S e c r e t a r y of S t a t e for E m p l o y m e n t
M i n i s t e r for T r a d e and
Affairs
Industry
Consumer
MP
m
THE FOLLOWING WERE ALSO
PRESENT
Mr Tom Boardman MP
Mr Patrick Jenkin
Minister for Industry
Chief Secretary,
The Rt Hon F r a n c i s P y m
Parliamentary Secretary,
MP
Treasury
(Item
MP
Treasury
SECRETARIAT
The Rt Hon Sir Burke
Trend
Mr J J B Hunt
Mr I T
Lawman
M r / F Ellis-Re es
Mr L J
Harris
C O N T E N T S
I t e m
1.
Subject
INDUSTRIAL
Page
AFFAIRS British Railways Board
1
The Gas Industry
1
National Health Service Ancillary Workers
1
The Coal Industry
2
Civil Service
2
Union-s.
N a t i o n a l U n i o n of T e a c h e r s
2
TUC one-day stoppage
2
2 .
S T F E L PRICES
3 .
REORGANISATION OF THE NUCLEAR DESIGN
CONSTRUCTION INDUSTRY
5
AND 8
INDUSTRIAL
1.
THE SECRETARY
OF STATE FOR THE ENVIRONMENT
AFFAIRS
t h a t t h e m e e t i n g o n t h e p r e v i o u s d a y of t h e w o r k i n g p a r t y of
the B r i t i s h Railways B o a r d (BRB) which w a s r e v i e w i n g
d r i v e r s ' pay structure had b e e n conducted in a m o r e
and the
the
favourable
British
atmosphere than might have been expected;
Railways
S o c i e t y of L o c o m o t i v e E n g i n e e r s and F i r e m e n ( A S L E F )
Board
a c c e p t e d that p r o g r e s s had b e e n m a d e .
Associated
It w o u l d n o w
had
be
n e c e s s a r y to a w a i t t h e o u t c o m e of t h e n e g o t i a t i o n s o n t h e
annual
Previous
pay claim,
Reference:
i n o r d e r to a t t e m p t to a s s e s s w h e t h e r the conflict b e t w e e n
CM(73)
and the o t h e r t w o r a i l u n i o n s a b o u t the d i s t r i b u t i o n of the
16th
w h i c h w e r e due to be r e s u m e d on the following
Conclusions,
of m o n e y w h i c h the B R B w o u l d b e entitled to d e v o t e to pay
under the Pay Code could be amicably resolved,
w e r e likely to r e s u m e industrial
The
Gas
day,
ASLEF
amount
Minute
4
said
increases
or whether
ASLEF
action.
T H E M I N I S T E R F O R I N D U S T R Y said that,
despite
Industry
militancy in s o m e a r e a s ,
Previous
w h i c h w a s expected by the following weekend.
continued
there had now b e e n a gradual return to
work by gas manual workers,
p e n d i n g the o u t c o m e of the b a l l o t ,
It h a d
unfortunately
Reference:
p r o v e d n e c e s s a r y for the B r i t i s h G a s C o r p o r a t i o n (BGC) to cut
CM(73)
off s u p p l i e s t o 4 5 , 0 0 0 d o m e s t i c c o n s u m e r s i n t h e W e s t
16th
Midlands
Conclusions,
b e c a u s e of c o n t i n u e d m i l i t a n c y i n that region;
Minute
s u c c e e d e d in doing s o without having to a s k the G o v e r n m e n t
4
invoke Emergency
National
Health
Service
THE SECRETARY
but t h e y
had
to
Powers.
OF STATE FOR SOCIAL SERVICES
said
that
at his m e e t i n g with the unions representing the National
Health
Ancillary
Service
unions
Workers
had adopted a moderate attitude.
(NHS) ancillary w o r k e r s
on the p r e v i o u s day the
They had a g r e e d to
consider
f u r t h e r t h e p o s s i b i l i t y of m a k i n g a n a p p r o a c h to t h e P a y
Board
Previous
f o r c o n s i d e r a t i o n a s a s p e c i a l c a s e d u r i n g S t a g e 3 of t h e p a y
Reference:
and they had s e e m e d attracted b y the s u g g e s t i o n that m o r e
CM(73)
16th
m i g h t b e m a d e of t h e e x i s t i n g a g r e e m e n t w h i c h
Conclusions,
productivity bonus s c h e m e s
Minute
it clear,
4
however,
enabled
to be i m p l e m e n t e d .
They had
made
that t h e y w o u l d p r e f e r that a n y a p p r o a c h to the
P a y B o a r d should initially be m a d e by the m a n a g e m e n t ,
and that
they would w i s h to d i s c u s s with the Trades Union C o n g r e s s
the i m p l i c a t i o n s for the T U C s
took in this context.
policy;
use
(TUC)
p a y p o l i c y of a n y a c t i o n w h i c h
Meanwhile,
9 0 p e r c e n t of t h e
they
normal
h o s p i t a l s e r v i c e s w e r e still b e i n g p r o v i d e d a s a r e s u l t of the
exceptional efforts
staff.
of the h o s p i t a l a d m i n i s t r a t o r s
and the
In c a s e s w h e r e the l o c a l h o s p i t a l M a n a g e m e n t
c o n s i d e r e d that e s s e n t i a l s e r v i c e s could not b e m a i n t a i n e d
a p p r o a c h e s to the unions did not s u c c e e d in inducing a
c o - o p e r a t i v e attitude b y the s t r i k e r s ,
the Health
nursing
Committees
and
more
Departments
w e r e a u t h o r i s i n g the u s e of v o l u n t e e r s .
On balance,
however,
it r e m a i n e d true that to use v o l u n t e e r s on a w i d e r b a s i s
w a s absolutely n e c e s s a r y in o r d e r to maintain
essential
s e r v i c e s w o u l d b e l i a b l e to h a v e a d v e r s e r e p e r c u s s i o n s
attitude of the NHS a n c i l l a r y w o r k e r s
The Coal
Industry
T H E MINISTER F O R I N D U S T R Y said that the
Executive
C o m m i t t e e of t h e N a t i o n a l U n i o n of M i n e w o r k e r s
d e c i d e d to c o n d u c t a ballot of t h e i r m e m b e r s
(NUM) had
on the
desirability
of t a k i n g i n d u s t r i a l a c t i o n i n s u p p o r t of t h e i r p a y c l a i m .
Reference:
t e r m s of q u s s t i o n s a s k e d i n t h e b a l l o t ,
CM(73)
provocative,
The
which w e r e not unduly
r e f l e c t e d the f a c t that t h e r e had b e e n no
great
Conclusions,
e n t h u s i a s m o n t h e p a r t of t h e E x e c u t i v e C o m m i t t e e f o r
Minute
action.
4
on the
generally.
Previous
16th
than
strike
T h e r e s u l t of t h e b a l l o t s h o u l d b e k n o w n b y t h e e n d of
March.
Civil Service
T H E L O R D P R I V Y S E A L r e p o r t e d on i n d u s t r i a l a c t i o n in the
Unions
Civil Service.
recorded
His report and the C a b i n e t s d i s c u s s i o n
are
separately.
Previous
Reference:
CM(73)
16th
Conclusions,
Minute
4
National Union
THE SECRETARY
of T e a c h e r s
s a i d t h a t t e a c h e r s i n L o n d o n b e l o n g i n g t o the N a t i o n a l U n i o n of
Teachers
OF STATE FOR EDUCATION AND
(NUT) w e r e due to strike again on the following
i n s u p p o r t of t h e i r c l a i m for a n i n c r e a s e d L o n d o n
TUC
one-day
stoppage
SCIENCE
THE SECRETARY
OF STATE FOR EMPLOYMENT
Finance and General P u r p o s e s Committee
day
allowance.
said that the
of t h e T U C
intended
to c o n s i d e r on the following d a y their r e c o m m e n d a t i o n to the
Previous
G e n e r a l C o u n c i l of t h e T U C a b o u t the f o r m a n d t i m i n g of the
Reference:
proposed one-day national protest and stoppage.
CM(73)
of the G e n e r a l Council at their m e e t i n g on 23 M a r c h
16th
The
attitude
would
Conclusions,
p e r n a p s d e p e n d to a significant d e g r e e on the p r o g r e s s m a d e
Minute
r e s o l v i n g the dispute with the NHS a n c i l l a r y w o r k e r s .
4
o u t c o m e of the N U M ballot w o u l d a l s o b e influenced b y
ments on these
issues.
in
The
develop­
In d i s c u s s i o n the following m a i n points w e r e m a d e
a.
Continuing efforts
should be m a d e to
the m a x i m u m p o s s i b l e p u b l i c i t y for the
­
secure
Governments
p a y p o l i c y a n d to e n s u r e that the facts of the
various
disputes w e r e as widely known and understood
possible.
In p a r t i c u l a r ,
as
it w o u l d be d e s i r a b l e
to
continue to s e e k to counter e x a g g e r a t e d r e p o r t s
the a d v e r s e effects
ancillary workers.
about
of t h e i n d u s t r i a l a c t i o n b y the
Particular efforts
NHS
should also
m a d e to explain the facts at i s s u e in the m i n e r s '
negotiations while the ballot w a s taking place.
facts about the m i n e r s
1
be
pay
The
leave entitlement and their
for an extra w e e k ' s leave should be
claim
emphasised,
p r e f e r a b l y by the N a t i o n a l C o a l B o a r d ,
who should
also
c o n s i d e r t h e d e s i r a b i l i t y of s e n d i n g a l e t t e r t o a l l
mineworkers
b.
setting out the facts about the
dispute.
It w o u l d a l s o h a v e b e e n d e s i r a b l e t o i s s u e
immediate
an
reply to the c l a i m r e p o r t e d in the P r e s s
the p r e v i o u s day that a study m a d e at the London
on
School
of E c o n o m i c s had s h o w n that,
t a k i n g a c c o u n t of t h e
i n c r e a s e i n the c o s t of l i v i n g ,
few workers with
likely
large
f a m i l i e s would be in an i m p r o v e d financial position as
r e s u l t of p a y i n c r e a s e s i n a c c o r d a n c e w i t h the p a y
There should be an i m m e d i a t e
of the s t u d y ,
limit.
e x a m i n a t i o n of the
w h i c h did n o t t a k e a c c o u n t of t h e
results
possibility
that the l o w e s t paid w o r k e r s m i g h t r e c e i v e m o r e
than
£ 1 plus 4 p e r c e n t or of the r e c e n t d e c i s i o n to e x e m p t
foodstuffs
other hand,
On the
the fact that e a r n i n g s a p p e a r e d to have
r e m a i n e d static i n r e c e n t m o n t h s s u g g e s t e d that
careful
c o n s i d e r a t i o n s h o u l d b e g i v e n t o t h e f a c t u a l b a s i s of
reply to the conclusions r e a c h e d in the
THE PRIME MINISTER,
said that the
should consider
urgently
of e n a b l i n g p u b l i c o p i n i o n to s e e t h e N H S
in a m o r e correct perspective.
any
report.
s u m m i n g up the d i s c u s s i o n ,
S e c r e t a r y of S t a t e for S o c i a l S e r v i c e s
dispute
In p a y i n g t r i b u t e t o the
outstand­
i n g w o r k of the a d m i n i s t r a t i v e and n u r s i n g staff i n h o s p i t a l s ,
m i g h t take the opportunity to s e t out the facts on the pay
and on the effects
all
f r o m V a l u e A d d e d T a x o r of the f a c t t h a t a n
i n c r e a s e d a m o u n t of o v e r t i m e w a s b e i n g w o r k e d .
the b e s t m e a n s
a
of i n d u s t r i a l a c t i o n .
Similarly,
the
he
dispute
Minister
f o r I n d u s t r y s h o u l d s e e k a n o p p o r t u n i t y t o i n f o r m t h e p u b l i c of t h e
facts about the dispute i n the c o a l i n d u s t r y ,
emphasising
particularly that the m i n e r s w e r e now able to take
three
consecutive weeks' leave.
Exchequer
T h e C h a n c e l l o r of the
should a r r a n g e for u r g e n t c o n s i d e r a t i o n to be given to the
r e p o r t a b o u t the l i k e l y f i n a n c i a l s i t u a t i o n of w o r k e r s w i t h
3
large
f a m i l i e s u n d e r the S t a g e 2 p o l i c y and to the p o s s i b i l i t y
countering the unfortunate i m p r e s s i o n which this
had
created.
The Cabinet
Took note,
-
with approval,
of the s u m m i n g up of
their d i s c u s s i o n b y the P r i m e M i n i s t e r
i n v i t e d the M i n i s t e r s c o n c e r n e d to
accordingly.
4
of
report
and
proceed
STEEL PRICES
2.
T h e C a b i n e t c o n s i d e r e d a N o t e b y the S e c r e t a r y of S t a t e
for Trade and Industry (CP(73) 33),
to w h i c h w a s
annexed
Note by the Minister for Industry about p r o p o s a l s by the
Steel Corporation (BSC) to i n c r e a s e
steel prices.
a
British
They also
had
b e f o r e t h e m c o p i e s of a m i n u t e f r o m the H o m e S e c r e t a r y to the
Prime Minister,
same
dated 14 March,
r e p o r t i n g the d i s c u s s i o n of the
subject by the M i n i s t e r i a l C o m m i t t e e on
M e a s u r e s o n 13 M a r c h ,
Counter-Inflationary
t o g e t h e r w i t h c o p i e s of a m i n u t e f r o m
C h a n c e l l o r of the D u c h y of L a n c a s t e r to the P r i m e
m a i n t a i n i n g that d e f e r m e n t of a n i n c r e a s e in p r i c e s w a s
p r a c t i c a b l e but that s o m e a b a t e m e n t of it o n
grounds was desirable,
not
Counter-inflationary
provided that the BSC would put
this
forward on their own account and would not c l a i m that it w a s
c o n s e q u e n c e of G o v e r n m e n t
the
Minister
a
pressure.
THE SECRETARY OF STATE FOR TRADE AND INDUSTRY
said
that,
the
u n d e r the T r e a t y of P a r i s ,
we w e r e obliged not to hold
p r i c e of s t e e l p r o d u c t s b e l o w e c o n o m i c l e v e l s .
The
BSCs
s t e e l p r i c e s w e r e a l r e a d y 15 p e r c e n t b e l o w E u r o p e a n
t h e C o m m i s s i o n of the E u r o p e a n C o m m u n i t i e s h a d
r e m i n d e d u s of o u r T r e a t y o b l i g a t i o n s ;
levels;
recently
and we had p r o m i s e d
w h e n the pay and p r i c e s standstill ended,
the
that,
Corporation^
pricing policy would be free f r o m control by the
Government.
Specific provision had b e e n m a d e for this situation in the
Governments
(Cmnd. 5 2 4 7 ) .
Consultative D o c u m e n t on the P r i c e and P a y
The C o r p o r a t i o n now e s t i m a t e d that,
Code
in order
o b t a i n a r e a l i s t i c r e t u r n of 5 o r 6 p e r c e n t o n c a p i t a l ,
they
to
would
n e e d t o r a i s e d e l i v e r e d p r i c e s b y a n a v e r a g e of 1 3 . 5 p e r c e n t
1 May,
prices.
t h u s a c h i e v i n g a n i n c r e a s e of 1 1 . 6 p e r c e n t i n
If t h e y w e r e n o t p e r m i t t e d t o d o s o ,
that o n e of t h e i r E u r o p e a n
Domestically,
realised
there was a danger
competitors would bring a case
t h e m in the European Court,
w i t h a g o o d c h a n c e of
against
success.
their present artificially low prices were
serious financial difficulties
from
creating
for the p r i v a t e s e c t o r s t e e l
w h o s e p r i c e s had n e c e s s a r i l y to be subject to the s a m e
companies,
constraints;
and the p o s s i b i l i t y that o n e of t h e p r i v a t e c o m p a n i e s i n t h i s
country
might ask the E u r o p e a n Court to c o m p e l t h e m to adopt higher
could not be ruled out.
The disparity between B S C s
steel
a n d t h o s e of E u r o p e a n c o m p a n i e s r e s u l t e d i n a
considerable
p r o p o r t i o n of B S C s
while
production being exported,
not be long d e l a y e d w a s leading to an undesirable d e g r e e
Both these factors w e r e aggravating the
s h o r t a g e of s t e e l for d o m e s t i c u s e r s .
The B S C s
b e e n d i s c u s s e d with the S t e e l C o n s u m e r s ' Council,
5 per cent after 3 months.
of
proposals
who
had
had
of
followed by a second increase
But,
5
could
existing
indicated that they would prefer an i m m e d i a t e i n c r e a s e
8 per cent in realised prices,
prices
the
r e a l i s a t i o n b y B r i t i s h s t e e l u s e r s that an i n c r e a s e i n p r i c e s
stockpiling.
prices
although this might go s o m e
of
way
t o w a r d s holding the p o s i t i o n a s far a s our a s s u r a n c e to the
European Communities was concerned,
it would have
i m p a c t on the p r e s e n t stockpiling p r o b l e m .
little
For these
reasons
the Corporation should be allowed to i m p l e m e n t their
proposed
i n c r e a s e s in full f r o m 1 M a y .
Ministerial
Some members
C o m m i t t e e on Counter-Inflationary M e a s u r e s ,
felt that i m m e d i a t e i n c r e a s e s
of the
however,
had
of t h e o r d e r p r o p o s e d w o u l d h a v e
s e r i o u s effect on the Stage 2 pay and p r i c e s policy and
therefore be postponed for s o m e
a
should
months.
In d i s c u s s i o n it w a s s u g g e s t e d that t h e r e w a s no r e a s o n why
BSC
prices
if
should be raised to match those prevailing in Europe
the British industry w a s m o r e competitive.
Although
we
s h o u l d c l e a r l y b e o p e n t o c r i t i c i s m if t h e C o r p o r a t i o n w e r e
sell s t e e l within the C o m m u n i t y at a l o s s ,
to
it w a s difficult to
how p r i c e s which yielded a positive return on capital,
see
e v e n if the
r e t u r n w a s b e l o w the 5 to 6 p e r c e n t l e v e l thought appropriate
the B S C ,
our Treaty obligations.
T o allow BSC to r a i s e p r i c e s
to the C o m m u n i t y would be d a m a g i n g to our
given
Counter-inflationary
policy and would be widely interpreted as a d i r e c t
of our m e m b e r s h i p of the C o m m u n i t y .
consequence
Our m a i n objective
at
this stage should be to convince the European C o m m i s s i o n
J
the B S C s c o m p e t i t o r s that s o m e genuine m o v e m e n t
higher prices was being made;
and
towards
but this should be effected on the
b a s i s of the m i n i m u m i n c r e a s e s w h i c h w e r e n e e d e d in o r d e r
p r o v i d e the Corporation with a c u r r e n t trading surplus.
had indicated that i n c r e a s e s
a c o n t r i b u t i o n t o t h e i r public d i v i d e n d c a p i t a l .
without
But,
prices
making
although
they w e r e anxious not to p r e j u d i c e the Stage 2 policy,
they
were
a l s o c o n c e r n e d about the p r o s p e c t that their pricing p o l i c y
b e e x p o s e d to a t t a c k i n the E u r o p e a n C o u r t .
It w a s
that they w o u l d b e p r e p a r e d to defend any l e v e l
adopted on c o m m e r c i a l grounds w h i l e the G o v e r n m e n t
e x p r e s s l y said that they would not
THE PRIME MINISTER,
had
said
pay and
They therefore c o n s i d e r e d that only the
prices
minimum
i n c r e a s e in p r i c e s w h i c h could be r e g a r d e d as consistent
our a s s u r a n c e s to the E u r o p e a n C o m m u n i t i e s
a later date,
that
of the o r d e r p r o p o s e d by the
BSC could s e v e r e l y d a m a g e the G o v e r n m e n f s
1 May,
of
freely
intervene.
s u m m i n g up the d i s c u s s i o n ,
t h e Cabito&t-agreed that i n c r e a s e s
from
mignt
unlikely,
i n c r e a s e which involved this risk as one which they had
themselves
to
They
of a b o u t 8 p e r c e n t i n r e a l i s e d
would b e r e q u i r e d to e n a b l e t h e m to b r e a k e v e n ,
therefore,
should be
with
made
l e a v i n g o p e n t h e p o s s i b i l i t y of a f u r t h e r i n c r e a s e
p r e f e r a b l y w h e n S t a g e 2 of the p a y and
policy had ended.
T h e C h a n c e l l o r of t h e E x c h e q u e r
6
of
beyond
the a b s o l u t e m i n i m u m n e c e s s a r y to m e e t the a s s u r a n c e s
policy.
by
could be r e p r e s e n t e d a s involving a subsidy in breach
prices
should
at
consider further,
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 y of S t a t e
for Foreign and Commonwealth Affairs,
for Trade and Industry,
t h e S e c r e t a r y of S t a t e
t h e C h a n c e l l o r of the D u c h y of
and the United K i n g d o m A m b a s s a d o r to the E u r o p e a n
Lancaster
Communities,
the l e v e l of the i n i t i a l i n c r e a s e w h i c h w o u l d b e a p p r o p r i a t e i n the
light of the C a b i n e t ' s d i s c u s s i o n .
T h e S e c r e t a r y of State
T r a d e and I n d u s t r y s h o u l d t h e n s e e k the a g r e e m e n t of the
of the B S C t o t h e s u g g e s t i o n that t h e i n c r e a s e t h u s
The o u t c o m e should b e r e p o r t e d to the
The Cabinet
1.
2.
commercial
Cabinet.
­
Took note,
Minister's
Chairman
agreed
should be announced b y the C o r p o r a t i o n a s their o w n
decision.
for
with approval,
s u m m i n g up of t h e i r
of t h e
Prime
discussion.
I n v i t e d t h e C h a n c e l l o r of t h e E x c h e q u e r ,
c o n s u l t a t i o n with the S e c r e t a r y of State for
and Commonwealth Affairs,
for Trade and Industry,
in
Foreign
the S e c r e t a r y of State
t h e C h a n c e l l o r of the
Duchy
of L a n c a s t e r and the United K i n g d o m A m b a s s a d o r
the European Communities,
to c o n s i d e r further
l e v e l of i n c r e a s e w h i c h s h o u l d b e m a d e i n the
to
the
prices
c h a r g e d by the B r i t i s h Steel Corporation f r o m 1 May,
as indicated in the P r i m e Minister's
3.
summing
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 T r a d e
I n d u s t r y t o d i s c u s s w i t h the C h a i r m a n of the
up.
and
British
S t e e l C o r p o r a t i o n t h e p u b l i c p r e s e n t a t i o n of the
of i n c r e a s e d e c i d e d a s a r e s u l t of the
consideration by Ministers,
Minister's
summing
up.
level
further
a s indicated in the
Prime
REORGANISATION
3.
OF THE
State for Trade and Industry (CP(73) 34) about
NUCLEAR
DESIGN
AND
CONSTRUCTION
The Cabinet c o n s i d e r e d a Note b y the S e c r e t a r y
r e o r g a n i s a t i o n of t h e n u c l e a r d e s i g n a n d
of
the
construction
industry.
INDUSTRY
THE SECRETARY
Previous
OF STATE FOR TRADE AND
INDUSTRY
said that he had now d i s c u s s e d with the G e n e r a l
Reference:
Company (GEC),
CM(73)
Electricity Generating Board (CEGB),
15th
the Electricity Council,
Conclusions,
Atomic Energy Authority (AEA),
Minute
d e s i g n and construction consortia,
7
the
Electric
Central
the United
Kingdom
the two existing
Sir Arnold
nuclear
Hall
(Hawker Siddeley) and Lord M c F a d z e a n (British
Insulated
Callendar Cables) the proposal to establish a single
nuclear
d e s i g n and construction c o m p a n y in the private sector,
by GEC.
led
He had outlined to t h e m the a l t e r n a t i v e s of a
majority shareholding by GEC and a minority
shareholding
coupled with an agreement which would give GEC
managerial authority.
full
He had a l s o explained to t h e m
that
under either alternative the company would be required
o p e r a t e w i t h i n the context of the G o v e r n m e n t s
strategy,
Board;
as r e c o m m e n d e d by the Nuclear
nuclear
Power
Advisory
that the G o v e r n m e n t would r e s e r v e c e r t a i n
to t h e m s e l v e s ,
in
Drder t o s a f e g u a r d ,
purchasing and international links;
rights
in particular,
open
and that they would
t o s e c u r e the p a r t i c i p a t i o n of o t h e r c o m p a n i e s .
Electricity Council,
to
wish
The
the C E G B and the A E A had
confirmed
their v i e w that GEC w e r e the only c o m p a n y at
present
c a p a b l e of l e a d i n g t h e n e w o r g a n i s a t i o n .
Electricity
The
a u t h o r i t i e s f a v o u r e d t h e m a x i m u m c o m m i t m e n t of
resources;
but the A E A b e l i e v e d that a m i n o r i t y
GECs
share­
h o l d i n g b y G E C w o u l d b e m o r e a c c e p t a b l e t o t h e r e s t of t h e
industry.
M o s t of the o t h e r
with s o m e misgiving,
industrial interests
the n e e d for a s i n g l e
c o m p a n y to r e p l a c e the existing c o n s o r t i a ;
control w a s to be v e s t e d in G E C ,
accepted,
powerful
and,
if
they p r e f e r r e d that this
should be effected by a majority shareholding.
The
c o n c e r n of o t h e r f i r m s r e l a t e d to the p u r c h a s i n g
ments which were envisaged.
But,
they
doubted
recognised
that it w a s a n i n e s c a p a b l e c o n s e q u e n c e of a s t r o n g ,
organisation.
rights,
main
arrange­
although they
t h e e f f i c a c y of a n o p e n p u r c h a s i n g p o l i c y ,
mitigated,
management
unified
He h i m s e l f b e l i e v e d that the r i s k s could
since in addition to the G o v e r n m e n t s
be
reserved
there would be opportunity for other f i r m s to be
d i r e c t l y i n v o l v e d i n the n e w c o m p a n y and the C E G B
retain f r e e d o m to place direct o r d e r s for parts
with outside
contractors.
8
would
of t h e
system
G E C t h e m s e l v e s w e r e r e l u c t a n t to s h a r e their i n t e r e s t in the
new company with other firms;
the objections,
but they w e r e fully aware
on both political and industrial grounds,
would be r a i s e d if they w e r e to a s s u m e full control.
The
negotiations had accordingly developed on the b a s i s
would take a 50 per cent holding;
would
and the
of 35 p e r c e n t w o u l d b e o f f e r e d t o o t h e r f i r m s ,
certain conditions,
'.hat G E C
the G o v e r n m e n t
probably take 15 p e r cent (through the A E A ) ;
!
The new company s
balance
subject
including a p r o v i s i o n that their
should be held in a group.
to
shares
capital
would
probably amount to £10 million i s s u e d and fully paid.
would nominate
the c h a i r m a n of t h e m a i n B o a r d ;
GEC
and the
deputy c h a i r m a n might appropriately r e p r e s e n t the
i n t e r e s t s of the o t h e r p r i v a t e f i r m s .
of
which
joint
F o r p u r p o s e s of d a y
to
d a y m a n a g e m e n t the n e w c o m p a n y would o p e r a t e through a
wholly owned subsidiary,
of the m a i n B o a r d .
w h o s e c h a i r m a n would be the
GEC would s u p e r v i s e the
chairman
subsidiary^
o p e r a t i o n s and w o u l d be paid for s e r v i c e s p r o v i d e d .
All
s h a r e h o l d e r s would initially b e a s k e d to participate in joint
and several guarantees although s o m e
t o their limited participation,
of t h e m ,
having
regard
m i g h t b e unwilling to a c c e p t
s u b s t a n t i a l r i s k s i n v o l v e d and it m i g h t in the e v e n t
n e c e s s a r y for the G o v e r n m e n t to u n d e r w r i t e guarantees
t h e s i z e of t h e i r o w n
beyond
shareholding.
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 c o n c u r r e n c e
p r o p o s e d for the new company,
Governmenfs
the
prove
on the
structure
p r o v i d e d t h a t t h e c o s t of the
s h a r e h o l d i n g a n d of G E C s
management
services
w a s m e t f r o m within existing public expenditure provisions.
would a l s o be d e s i r a b l e to e n s u r e that the i n t e r e s t s
component manufacturers
who w e r e not m e m b e r s
of
of the
existing
c o n s o r t i a and w e r e outside the new c o m p a n y would not be
looked,
since s e v e r a l thousand jobs m i g h t be at stake.
p o s s i b i l i t y that g u a r a n t e e s b e y o n d the s i z e of t h e i r
It
over­
The
shareholding
m i g h t have to be underwritten by the G o v e r n m e n t rather than by
GEC,
1
w h o c o u l d e x p e c t t h e m a j o r p a r t of the c o m p a n y s
gave some
c a u s e for c o n c e r n .
profits,
On t h e o t h e r h a n d s o m e of the
m i n o r i t y s h a r e h o l d e r s m i g h t not u n r e a s o n a b l y p r o v e to be
unwilling to a c c e p t the contingent liability for g u a r a n t e e s
m i g h t amount to 40 t i m e s their stake in a c o m p a n y over
which
whose
operations they would have relatively little control;
and it
w a s equally unreasonable to expect GEC to a c c e p t a
corresponding
l i a b i l i t y b e y o n d the e x t e n t of t h e i r o w n s h a r e h o l d i n g ,
they had b e e n confined by the G o v e r n m e n f s
minority interests
stipulation that
should participate in the new
9
to w h i c h
company.
In further d i s c u s s i o n it w a s
s u g g e s t e d that,
although
there
might bo both practical and presentational advantages
in
a r r a n g i n g for the G o v e r n m e n t to be r e p r e s e n t e d on the
proposed
Nuclear Power Advisory Board by a single spokesman,
m i g h t be no l e s s important to e n s u r e that the
c o m p o s i t i o n a d e q u a t e l y r e f l e c t e d t h e i n t e r e s t s of t h e
Departments
regards
concerned in its operation,
it
Board's
various
particularly
as
scientific and regional policies and the control
public expenditure.
It w a s a l s o for c o n s i d e r a t i o n
a Ministerial c h a i r m a n might be preferable to an
chairman drawn from
of
whether
independent
industry.
THE PRIME MINISTER,
s u m m i n g up the d i s c u s s i o n ,
said
that
the C a b i n e t a p p r o v e d i n p r i n c i p l e the p r o p o s e d s t r u c t u r e for the.
new nuclear d e s i g n and construction company.
In the
light
of the v i e w s w h i c h h a d b e e n e x p r e s s e d t h e S e c r e t a r y of S t a t e
for T r a d e and Industry should now c o m p l e t e M s
with GEC and the
other
interests involved;
discussions
and he
should
a l s o d i s c u s s further with the M i n i s t e r s concerned both the
t e r m s of a n e a r l y s t a t e m e n t to P a r l i a m e n t a n d the
c o m p o s i t i o n of t h e N u c l e a r P o w e r A d v i s o r y
The Cabinet
1.
Board.
­
Approved in principle the proposals
set
o u t i n C P ( 7 3 ) 3 4 f o r t h e e s t a b l i s h m e n t of a
nuclear d e s i g n and c o n s t r u c t i o n c o m p a n y in the
private sector,
led by the General
Electric
Company.
2.
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 T r a d e
Industry
i..
­
in consultation with the S e c r e t a r y
State for Defence,
the H o m e S e c r e t a r y ,
L o r d P r e s i d e n t and the Chief
Secretary,
Treasury,
of an
to a g r e e the t e r m s
on which the c o m p a n y w a s to b e
in consultation with the
the
basis
established;
Prime
the C h a n c e l l o r of the E x c h e u q e r ,
of
early
statement to P a r l i a m e n t outlining the
i i .
and
the
Minister,
Secretary
of S t a t e for D e f e n c e and the L o r d P r i v y S e a l ,
c o n s i d e r f u r t h e r t h e c o m p o s i t i o n of t h e
Nuclear Power Advisory
Cabinet
Office
20 March
1973
Board.
to
proposed
T H I S D O C U M E N T IS T H E P R O P E R T Y
OF HER BRITANNIC MAJESTY'S
GOVERNMENT
COPY
NO
CABINET
CONFIDENTIAL
ANNEX
CM(73) 17th C o n c l u s i o n s ,
Minute
T u e s d a y 20 M a r c h 1973 at 10. 30
1
am
INDUSTRIAL
T H E L O R D PRIVY S E A L said that industrial a c t i o n b y the
AFFAIRS
Civil and Public S e r v i c e s A s s o c i a t i o n (CPSA) w a s
on a s e l e c t i v e b a s i s in v a r i o u s D e p a r t m e n t s ;
on a declining s c a l e .
Civil
Service
continuing
but it w a s
T h e r e p o r t s of the i m p a c t of
action by CPSA m e m b e r s e m p l o y e d b y the Civil
Authority apps^sadtto be exaggerated;
should b e c a u s e d to airline p a s s e n g e r s .
now
industrial
Aviation
only limited
inconvenience
The pressure
Previous
further industrial a c t i o n aeemedr*to be d e c r e a s i n g ;
Reference:
probably unlikely that there would be m o r e than
for
and it w a s
isolated
CM (73)16th
i n s t a n c e s after the Counter-Inflation B i l l had r e c e i v e d
Conclusions,
Royal Assent.
Minute
to d i s c u s s the pay i n c r e a s e s w h i c h fell due to b e paid to the
4
The National Staff Side had h i t h e r t o
i n d u s t J r i s x i Giv&L J5&a*!ff£e&
from 1 April.
indicated that,
under the pay policy with
of c o m p a r a b i l i t y ,
the
research
percentage
increases which would in normal circumstances have been
to the l o w e s t paid m e m b e r s
non­
effect
The evidence so far provided by pay
on the b a s i s
the
refused
of t h e n o n - i n d u s t r i a l C i v i l
due
Service
would b e s m a l l e r than those w h i c h would have b e e n due to the
higher and better paid
grades.
In d i s c u s s i o n it w a s n o t e d t h a t y o u n g e r C i v i l S e r v a n t s
finding it i n c r e a s i n g l y n e c e s s a r y to s u p p l e m e n t their
were
existing
s a l a r i e s by taking additional w o r k outside their n o r m a l
hours.
official
In s o f a r a s s o m e of t h e m m i g h t b e e m p l o y e d
sensitive work,
on
the potential s e c u r i t y risk involved should
kept in mind.
The Cabinet
-
Invited the S e c r e t a r y of State for F o r e i g n
and
C o m m o n w e a l t h Affairs and the Lord P r i v y
to consider whether there w a s any risk
Seal
that
s e c u r i t y m i g h t b e e n d a n g e r e d b y the t e n d e n c y of
the l o w e s t paid m e m b e r s
of the public s e r v i c e
seek supplementary employment
Cabinet
Office
21 M a r c h
1973
elsewhere.
to
be